OPM Annuity Booklet, aka The Blue Book

Maybe you’ve heard about the fabled OPM “Blue Book”. If not, this is your goal. To get your disgruntled little former government hands on this thing. If you receive this in the mail-congratulations, your retirement is finalized. This is where you FINALLY get some clarity from OPM. Prior to this, you’re just getting deposits into your account with no explanation. You don’t get to see any calculations how they ACTUALLY arrive at the numbers. Are they correct? Who knows? Once you get the book, though, you have the ability to do your own analysis.

I happen to have one of these books and I’m going to take you on a virtual walk-through of it. A peek behind the curtain if you will.

What’s the purpose of this? Two fold:

1. For those looking to retire soon, just a glimpse into what you will receive so that one more unknown is taken away. And you know what to expect. I find eliminating unknowns also eliminates stress.

2. For those that have retired and have received one, maybe you don’t know exactly how to interpret these numbers and calculations. We’ll go through these so you can verify what you are getting is correct.

Here we go…

The Cover. And how it got it’s nickname. Self-explanatory. (Hint: It’s blue).

---

A glimpse inside….

Page 2 shows the important biographical information. One of the first things you’ll notice is the date of the benefits report at the top. This is the date that your retirement is finalized. This becomes important later on for the calculations.

Another thing to note is the CSA Number. (CSA stands for Civil Service Active. Basically—retirees). That number is crucial. It’s also at the bottom of each page. This is what OPM will need when you contact them. This was assigned to you upon retirement by OPM. So, in all likelihood, you’ll have this number/card before you get this booklet.

Other items to note would be the type of bank account and the account number. Again, there is probably not a mistake here as you would, in all likelihood, have already been receiving interim payments before you got this booklet.

Make sure you keep your mailing address up to date with OPM. This is imperative! But often forgotten by retirees when you guys move to Boca, and start wearing socks with your sandals, for the Bocce ball tournaments.

---

Pages 4 and 5 start to get into the hard numbers and the explanation.

Page 4 shows when the benefits began. For most of you, this will be the first day of the month following your retirement. For example, if you retired October 1st, October 12th, or October 31st of 2022, your benefits began on November 1st, 2022. Think about that when you’re deciding which day to retire.

Date of first regular monthly payment is the date you’ll receive the first “real” payment, or adjudicated payment. This is not that payment that you’ll get during your interim status, but rather your full, actual annuity payment. In this case, you’ll see that the report was finalized in March, so April 1st will be the first real OPM payment.

Initial gross monthly benefit is the full amount you were eligible for on November 1st in this example. This is not what your interim payment, but what your full amount should have been, had they paid you the real amount.

You’ll see the amount changed on December 1, 2022. Why? Because that is when the 2023 COLA kicked in. You can read the article on the COLA HERE, but just understand the COLA is prorated the first year for an SCE for the number of months they were retired prior to December 1st. Again, think about that when you’re deciding when to retire. Retire in June, and this amount is higher. Retire in December and you get zero COLA for the next year. You missed the deadline.

In this case, the $4,694 was raised to $4,722 for a tiny portion of the 2023’s 7.7% FERS COLA.

Supplement: You’ll see what the FERS Supplement amount will be monthly. Remember there is no COLA on the Supplement. EVER. Don’t listen to financial advisors that tell you otherwise.

Page 5 shows you the breakdown of Gross and Net

We have the $4,722 as the gross payment. From that is subtracted Health Insurance and Federal Income Tax. Then the Supplement is added back in. This gives us a net of $4,056.52.

You’ll note there is no state income tax shown here. That is handled separately.

---

Page 6 has some other computations. (And no, I don’t know why everything isn’t laid out on one page in a more user-friendly manner, either. The bits and pieces of information spread out over pages in kinda annoying.)

The main things you want to make sure of on this page is that your High-3 is correct. And that your service time is correct. Don’t take it for granted that OPM computed them correctly. This is why it is so important to have an estimate done by me, or by your agency prior to retirement. So you know what to compare this to. It should be very, very close to the estimate.

Page 7 would be where your survivor benefit election shows up. That will typically be 0%, 25%, or 50% for your spouse, with the corresponding 0%, 5%, or 10% reductions annotated. It also shows your spouse where to file for their benefits if you pass away. So keep that somewhere handy. This report shows 0% survivor benefit. You may have a partial (25%) or full (50%) survivor benefit on yours.

---

Pages 10 and 11 have to do with FEGLI. If you have FEGLI, this is where the information will be. Please make sure this is correct. In my experience, less FEGLI is more common in retirement than more FEGLI. Simply because FEGLI gets very expensive, and most people find an alternative. But regardless, make sure that OPM has things correct here.

---

Now we are getting to retroactive calculations on page 16. What is this exactly?

Remember that when you first retire, OPM will give you some money while they’re calculating your benefits, but it won’t be your full amount you are entitled to. It will be a reduced amount. Once they finalize your paperwork, they’ll then do a calculation back to when you retired to ensure they make up for everything they shorted you.

That’s what is reflected on this page. Let’s walk through each component.

For whatever reason, OPM starts off giving you the net amount at the top. This is not typically how pay stubs, financial statements, and everything else is done outside of OPM, but it’s how OPM does it. Go further down to see how they arrive at that amount.

In this example they figure the amount of annuity that should have been paid since November 1, 2022. (This is not the supplement, just the gross annuity). In this case, that would be 1 month of $4,694 and then 3 months of $4,722 (after the COLA was applied on 12/1/22). You can go back to page 4 and get these numbers. That totals $18,860. That’s what you SHOULD HAVE received had OPM paid you your full amount.

Then they make some adjustments. Before they just send that amount to you. There’s some settling up to do.

First, they take out FEHB premiums. While you are in interim status, you do NOT pay FEHB premiums. OPM takes care of that for you. You don’t have to pay out of pocket or anything like that. But OPM will only front the premiums. When they finalize your paperwork, they pay themselves back. In this case, the total is $1,517.88 so they back that out of the amount they owe you. In other words, they paid your premiums on your behalf, but now they are recovering what they paid for you. Consider it a loan.

Second, they’ll take out the amount they’ve paid you so far. They owe you $18,860 but they already paid you $17,188. They aren’t going to pay you twice. Please note that the $17,188 is the GROSS PAY that they paid you. This will not equal exactly the amounts that went into your bank account. I’ve seen some people get that incorrect.

Third, they are going to back out the federal income tax for this deposit. In this case, they subtract $1,407.20.

Fourth, they are going to add in your Supplement. Why? Because you didn’t get the Supplement when you were interim status. They shorted you on that. So now they are making up for it. You can find the monthly Supplement amount back on page 4. In this case it’s $1,341 a month. Multiply that by the 4 months of interim status and you get the $5,364 on this page.

For you FERS “experts” out there still telling people that there is a COLA on the Supplement, right here is proof. If there was a COLA on the Supplement, the first month Supplement would be less than the other 3 months. Just like the COLA that was applied to the annuity. But that’s not the case. So you see the same, level amount each and every month!

When you do the various reductions and additions to the $18,860, you end up with a net of $4,110.92. That is the net “make-up” pay for the amount OPM shorted you during your interim status.

Summary

There are a few other pages we didn’t cover but none of them have calculations on them. Just general information about keeping your information up to date, how to call OPM, etc. I feel totally confident you guys can figure that out with no help from me.

Hopefully this gives you a little more of what you can expect to receive from OPM ultimately. As far as I know, OPM doesn’t explain this booklet anywhere online so I’m doing my best to help you guys get a little glimpse into your future.

As always, your comments are welcome below.