Federal Benefits: Pension

[waynecampbell]

I'm within a year of being eligible for the VA pension (thought it was actually a few months but turns out my training year doesn't count..). I'm really feeling stuck because I am totally over VA work. The red tape, bureaucracy, patient population, terrible leadership is just not working for me. However, since I'm close enough to the pension it feels like I should just stick it out. It also feels incredibly convoluted to understand what my benefits are in general, if they're worth it etc.
I plan to do some part time private practice and part time hospital working/teaching upon my departure from the VA. I know there was a recent thread on expected income from private practice so I will consult that but just wondering if anyone has any resources for better understanding/comparing VA benefits and if the pension specifically is worth sticking it out for 1 more year.
TIA!

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[Sanman]

Do you mean that you are one year away from being pension eligible (working 5 years at the VA) or one year away from being eligible for federal retirement? Those are two very different things. If the former just walk away if you feel like it, you can get your pension contributions back if you do not qualify or choose not to defer. You are talking ~$5k/year pension deferred until 62, I believe. If you are talking full federal retirement, you would be crazy not to stick it out for a year. Something tells me it is the former.

 

[AcronymAllergy]

Do you mean that you are one year away from being pension eligible (working 5 years at the VA) or one year away from being eligible for federal retirement? Those are two very different things. If the former just walk away if you feel like it, you can get your pension contributions back if you do not qualify or choose not to defer. You are talking ~$5k/year pension deferred until 62, I believe. If you are talking full federal retirement, you would be crazy not to stick it out for a year. Something tells me it is the former.

Agreed. If you can tolerate for another year (for 5 years total), your pension should amount to 5% of your high-3 annual salary. As Sanman said, this probably somewhere around $5k/year, deferred until age 62. I don't think COLAs start until you actually start to collect the annuity, so unfortunately, you're losing spending power between now and then. Alternatively, as Sanman said, you'd also have the option of taking your personal FERS contribution (i.e., just your portion, not VA's) as a lump sum payment.

Whether $5k/year indefinitely once you hit age 62 is worth an extra year probably depends on how miserable you are, and what alternative employment options you have. I don't imagine it'd be too difficult to fund your own annuity with a similar payout to VA's for you, but I'm pretty sure it'd cost more than what you've contributed to FERS up to this point.

Edit: If you leave your contribution with VA, there's the option of coming back into VA at the end of your career. If you then get the minimum consecutive service time (I think it's 3 years...?), this extra time would be added onto FERS, and you'd be eligible to take your health and life insurance with you into retirement (assuming you began drawing the pension immediately upon retiring).

 

[summerbabe]

but turns out my training year doesn't count..

Does anybody know if postdoc counts? I vaguely feel like mine is counting towards something TSP related based on my last summary that I received in the mail. And if I have questions, is this for my local HR or elsewhere? Thanks!

 

[AcronymAllergy]

Does anybody know if postdoc counts? I vaguely feel like mine is counting towards something TSP related based on my last summary that I received in the mail. And if I have questions, is this for my local HR or elsewhere? Thanks!

Typically not, unfortunately, since most/all postdocs aren't actually making FERS contributions. It counts toward your rate of leave accrual and, if you take a VA job, toward your Grade, but not toward things like retirement vesting.

I honestly don't remember if I was given the option to contribute to FERS when starting postdoc, but I don't think I was.

 

[iliketohelppeople]

Typically not, unfortunately, since most/all postdocs aren't actually making FERS contributions. It counts toward your rate of leave accrual and, if you take a VA job, toward your Grade, but not toward things like retirement vesting.

I honestly don't remember if I was given the option to contribute to FERS when starting postdoc, but I don't think I was.

Correct - technically postdocs/interns at the VA are categorized as temporary positions, and are not eligible for FERS. Only your rate of accrual will count (i.e., if you do a year of internship and a year of postdoc, those two years count towards you moving up to 6 hours of personal leave every two weeks).

 

[waynecampbell]

Do you mean that you are one year away from being pension eligible (working 5 years at the VA) or one year away from being eligible for federal retirement? Those are two very different things. If the former just walk away if you feel like it, you can get your pension contributions back if you do not qualify or choose not to defer. You are talking ~$5k/year pension deferred until 62, I believe. If you are talking full federal retirement, you would be crazy not to stick it out for a year. Something tells me it is the former.

A year out from the pension eligible (5 years). I'm about 4 years in. Putting it that way, I think you're right- it doesn't seem worth it right now.

If you leave your contribution with VA, there's the option of coming back into VA at the end of your career. If you then get the minimum consecutive service time (I think it's 3 years...?), this extra time would be added onto FERS, and you'd be eligible to take your health and life insurance with you into retirement (assuming you began drawing the pension immediately upon retiring).

I didn't realize this was an option to leave the contribution... I like this because I can see returning at some point later on in my career.

Thanks for your responses this was helpful!

 

[AcronymAllergy]

A year out from the pension eligible (5 years). I'm about 4 years in. Putting it that way, I think you're right- it doesn't seem worth it right now.


I didn't realize this was an option to leave the contribution... I like this because I can see returning at some point later on in my career.

Thanks for your responses this was helpful!

👍

I'd still probably verify it with HR, though. That's just always been my understanding.

 

[WisNeuro]

👍

I'd still probably verify it with HR, though. That's just always been my understanding.

Yeah, if you leave VA, you can just leave your FERS contributions there if you want. If you want to pull them out, you have to fill out a bunch of paperwork and such.

 

[The kitchen sink]

can someone kindly explain the va pension system to me?

you have to work 5 years to be eligible, and 20 to lock it in? Is it a set % for all employees or does it vary across profession?
does the age you start the job matter ? Fresh young grad vs older in the twilight of your career

thanks in advance

 

[AcronymAllergy]

can someone kindly explain the va pension system to me?

you have to work 5 years to be eligible, and 20 to lock it in? Is it a set % for all employees or does it vary across profession?
does the age you start the job matter ? Fresh young grad vs older in the twilight of your career

thanks in advance

At 5 years you're vested and will draw a pension eventually (typically at age 62) if you leave your money in. Your pension amount is 1%, per year worked, of the average of your "high 3" (highest 3 consecutive annual salary amounts). So with 5 years of service, it's 5% of your high 3; at 10 years of service, it's 10%; etc.

The 20-year number comes in as follows: if you make it to at least 62 before retiring and have at least 20 years of creditable service, the amount of your pension gets bumped up to 1.1% per year of service.

There are some other stipulations, such as lower minimum retirement ages that would allow you to begin drawing your pension before age 62, and whether you'd get 1% vs. 1.1%; that's when it gets a bit more confusing.

You also get a reduction of the pension amount for a survivor benefit unless your spouse opts out (10% reduction for 50% benefit or 5% reduction for 25% benefit).

 

[NEUROHERO123]

can someone kindly explain the va pension system to me?

you have to work 5 years to be eligible, and 20 to lock it in? Is it a set % for all employees or does it vary across profession?
does the age you start the job matter ? Fresh young grad vs older in the twilight of your career

thanks in advance

Explaining the federal retirement system is sort of complicated but the previous response is pretty much right. Once you have five years in you have a pension - albeit a very small one - to collect in your 60s. The benefits just increase greatly with longevity and there's a lot of rules that govern when/if you take your healthcare with you, survivor benefits of your pension, years in service and retirement age, etc.

The simplified and perhaps ideal retirement model for the career fed psychologists is just working for the feds for 30 years (if you can make it) and retiring at your minimum retirement age (for most youngish people, 57). Fewer years in service than 30 means retiring later to avoid reductions in your benefits like waiting until you turn 60 if you have only 20-29 years or even 62 to draw it if you have even less years than that.

Federal employees who pull off 30 years have two unpenalized retirement income sources: a defined pension that starts at age 57 (could easily be over $45,000 a year pension) as well as an additional let's say $16,000 supplement that gets added to your pension each year from the age 57 until you reach 62 and can draw social security). Career federal employees would also have the same 401k style employer contribution matched account (TSP) that everyone else gets. Maybe the best benefit though is taking your health care benefits into retirement with you. That solves one big barrier to early retirement for most people.

 

[cara susanna]

Hrmm, according to my math I could hit 30 years by the time I turn 60. Assuming the VA is--and also that I am--still around by then. 😉

 

[The kitchen sink]

Explaining the federal retirement system is sort of complicated but the previous response is pretty much right. Once you have five years in you have a pension - albeit a very small one - to collect in your 60s. The benefits just increase greatly with longevity and there's a lot of rules that govern when/if you take your healthcare with you, survivor benefits of your pension, years in service and retirement age, etc.

The simplified and perhaps ideal retirement model for the career fed psychologists is just working for the feds for 30 years (if you can make it) and retiring at your minimum retirement age (for most youngish people, 57). Fewer years in service than 30 means retiring later to avoid reductions in your benefits like waiting until you turn 60 if you have only 20-29 years or even 62 to draw it if you have even less years than that.

Federal employees who pull off 30 years have two unpenalized retirement income sources: a defined pension that starts at age 57 (could easily be over $45,000 a year pension) as well as an additional let's say $16,000 supplement that gets added to your pension each year from the age 57 until you reach 62 and can draw social security). Career federal employees would also have the same 401k style employer contribution matched account (TSP) that everyone else gets. Maybe the best benefit though is taking your health care benefits into retirement with you. That solves one big barrier to early retirement for most people.

Appreciate both of the above responses.

So if im 31 and starting at the VA now, and I stay for another 30 years, i’ll tap into all of the above at the age of 62?

 

[WisNeuro]

Appreciate both of the above responses.

So if im 31 and starting at the VA now, and I stay for another 30 years, i’ll tap into all of the above at the age of 62?

Yes.....subject to the whims of Congress, of course.

 

[NEUROHERO123]

Hrmm, according to my math I could hit 30 years by the time I turn 60. Assuming the VA is--and also that I am--still around by then. 😉

🙂

Appreciate both of the above responses.

So if im 31 and starting at the VA now, and I stay for another 30 years, i’ll tap into all of the above at the age of 62?

Yeah, 30 years you get to leave at your minimum retirement age without penalty at 57. 20 years the retirement age to leave without penalty is 60. 10 years it is 62. You can retire earlier, they just reduce your annuity. There is also what is called deferred and postponed retirement that help you evade penalties but this is probably getting complicated already.

 

[cara susanna]

Explaining the federal retirement system is sort of complicated but the previous response is pretty much right. Once you have five years in you have a pension - albeit a very small one - to collect in your 60s. The benefits just increase greatly with longevity and there's a lot of rules that govern when/if you take your healthcare with you, survivor benefits of your pension, years in service and retirement age, etc.

The simplified and perhaps ideal retirement model for the career fed psychologists is just working for the feds for 30 years (if you can make it) and retiring at your minimum retirement age (for most youngish people, 57). Fewer years in service than 30 means retiring later to avoid reductions in your benefits like waiting until you turn 60 if you have only 20-29 years or even 62 to draw it if you have even less years than that.

Federal employees who pull off 30 years have two unpenalized retirement income sources: a defined pension that starts at age 57 (could easily be over $45,000 a year pension) as well as an additional let's say $16,000 supplement that gets added to your pension each year from the age 57 until you reach 62 and can draw social security). Career federal employees would also have the same 401k style employer contribution matched account (TSP) that everyone else gets. Maybe the best benefit though is taking your health care benefits into retirement with you. That solves one big barrier to early retirement for most people.

You seem to really know your stuff! I've been in the VA for years and I'm just now learning this from you. Is the healthcare benefits perk only available for the 30 years?

 

[AcronymAllergy]

You seem to really know your stuff! I've been in the VA for years and I'm just now learning this from you. Is the healthcare benefits perk only available for the 30 years?

No, you don't unequivocally need 30 years of service to carry FEHB into retirement. The normal retirement rules as a whole (i.e., when you can carry FEHB into retirement and don't receive a reduction in your pension), as best I know them, are: MRA + 30 years of service, age 60 + 20 years of service, or age 62 + 5 years of service. The FEHB into retirement requirements by themselves are bit less-than-straightforward, but here's what OPM states:

Requirements​

Employees are eligible to continue health benefits coverage, upon retirement, if they meet all of the following requirements:

• he/she is entitled to retire on an immediate annuity under a retirement system for civilian employees (including retirements under FERS Minimum Retirement Age + 10); and
• he/she has been continuously enrolled (or covered as a family member) in any FEHB plan(s) for the 5 years of service immediately before the date the annuity starts, or for the full period(s) of service since his/her first opportunity to enroll (if less than 5 years).

So if you go with one of the normal retirement options above and begin drawing your annuity immediately, you're set to carry FEHB into retirement. If you retire through MRA + 10 and begin drawing your annuity immediately, you can also keep FEHB into retirement, but your pension will be reduced (I think by 5% per year <62 prorated into months). If you meet MRA+10 and postpone your annuity until age 62 (to eliminate the early draw reduction), that also qualifies you, but your FEHB is essentially paused and resumes once you start drawing your annuity.

 

[Sanman]

You seem to really know your stuff! I've been in the VA for years and I'm just now learning this from you. Is the healthcare benefits perk only available for the 30 years?

opm.gov has all the details of the FERS retirement program including early retirement. Given that the chart on minimum retirement age ends in 1969, I imagine it will eventually change before any of us hit minimum retirement age.