What If I Get Fired?
I wish this article didn’t have to be written, but I’ve had this same conversation with many people over the last few weeks. So clearly there is a need for this.
Unfortunately there is a lot of bad information going around, some of it even coming from agencies’ headquarters. I don’t know if they are ignorant, or just trying to threaten employees, but the following is what actually happens to your FERS benefits if you get fired.
This article is full of links. And that’s intentional. I want you to be able to research for yourself what happens for your situation. I also want you to have the ability to refute others who are merely regurgitating falsehoods.
Annuity, aka The Pension
There are some nuances here based on how long you have on, but the general rule is that you won’t lose what you’ve already accrued as far as time on, and your average High-3 salary at the time you leave the government.
If you have at least 5 years of creditable FERS service time, you will be eligible to file for a retirement at age 62.
If you have 10 years on, you can file as early as your Minimum Retirement Age (MRA), but your pension will be reduced 5% for every year you are under 62. And that reduction is permanent.
If you have 20 years on, you will be able to file for the reduced pension at your MRA, or an unreduced pension at age 60.
If you have 30 years on, you can file for an unreduced pension at your MRA.
These years will be calculated at 1% per year, even if you are LEO and would normally get 1.7% a year. The percentage would apply to your average High-3 salary.
Here are a few examples:
John has 6 years on and gets fired. John would only be able to apply for a retirement at age 62. At that time, he would get 6% of his High-3.
Mary has 12 years on and gets fired. Mary has the choice of filing for a reduced pension at her MRA (let’s say it’s 57 years of age). Because she is filing under the MRA +10 rule, she will have her pension reduced 5% for every year she is under 62. So in this case, they will reduce her pension by 25%. Say her High-3 is $60,000. The calculations would be like this: 12% x $60,000 = $7,200. $7,200 - 25% = $5,400. That is what Mary would get annually. If she wanted to avoid a reduction, she could wait to file until age 62 and then she would get the full 12% x $60,000, or $7,200 a year.
Jacob has 22 years on and gets fired. He is eligible for a reduced pension at his MRA, or a full pension (22%) at age 60. If Jacob was a LEO, he would normally get 36% for 22 years of LEO service, but if he does not actually retire, he would only get 1% per year of his service, so 22 years x 1% a year = 22%.
Michelle has 4 years on and gets fired. Michelle doesn’t meet the minimum 5 years so she would not be eligible for any retirement. Her only option would be to ask for a refund of all FERS contributions that she had contributed toward her retirement for the 4 years she employed. Incidentally, anyone can get a refund of their FERS contributions when they separate from the government. But most people that have 5 years or more on would probably not want to go this route.