Feds- a question

[newwithquestions]

My husband is a federal employee but thinking about leaving for a private company.   I’m wondering if he will still be eligible for any type of pension down the road.  He is 45 and has 25 years of service.  Thanks 

[mainelyfoolish]

If he’s covered under FERS, he would still be able to collect a pension based on what he’s earned when he gets to his retirement age.

www.opm.gov/retirement-center/fers-information/types-of-retirement/#url=Deferred-Retirement

[simpsongal]

What a lot of people like him seem to do is go back to the feds right before retirement to establish a higher high-3 salary, so the pension payout is higher. If he didn't come back his high-3 would be set based on his salaries 10+ years away from retirement.

[dragon's breath]

With 25 years of service, he'd have two options for deferred retirement:

Take a reduced pension as early as MRA (57 for him). The reduction is 5% for every year under age 62, prorated by month. (To draw pension at MRA, without the age penalty, requires 30 years of service).

-or-

Take a full pension at age 60 (using 60 + 20).

Either way, he would not get to keep FEHB in retirement, add sick leave to his service time (sick leave conversion), or receive the supplement.

There is no inflation adjustment on the pension, so his high-3 at separation would be the high-3 for pension calculation, and "diet" COLA would not kick in until after turning 62.

Under current rules, he could attempt to return to federal service closer to MRA or age 60 so that he could go out on an immediate pension. The current rules allow for a break in service for FEHB, so he'd only have to come back long enough to restart that and could retire. If he came back, and left again, at MRA, he'd be able to do either immediate pension or postponed pension (you get to keep FEHB coverage with postponed pension, but you'd have a gap before collecting pension).

He'd only be eligible for the supplement if he returned and went out with a combo of either MRA + 30 or 60 + 20.

With a contribution of only .8%, it is not worth cashing out the FERS contributions, as the pension wins in every calculation I've done.

(If you've got follow up questions, please ask! I assumed "regular FERS", and not special category, as retirement combos are different, as well as when supplement and COLA start.)