How To Understand What You Can Expect From A Savings Plan

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1 VERA, VSIP, Early Retirements, Buyouts What Does It All Mean? Presented by: <<Advisor Name>> <<Advisor Title>> <<Date>>

2 Disclaimer This presentation is educational only No specific financial or retirement advice is being offered Facts and opinions expressed are based on research and experience, but are not endorsed by the federal government The Thrift Savings Plan offers investments with low internal expense ratios in comparison to most other investment products. Lower costs have a positive effect on the rate of return on an investment This presentation is being conducted by First Command Financial Services, Inc. (FCFS) to provide federal benefits training to attendees to educate them on the federal retirement systems, both FERS and CSRS. It should not be viewed as a solicitation or recommendation for any particular product or service offered by FCFS or its related entities. FCFS may receive compensation for providing this training. The speaker/presenter for this presentation is associated with First Command Financial Planning, Inc. (FCFP), a subsidiary of FCFS, as a Financial Advisor. Attendees will be given the option to request contact by FCFP. Attendees will not be contacted by FCFP unless they request to be contacted. FCFS, its related entities, including FCFP and its Financial Advisors, will receive compensation if you purchase any products and services offered by FCFS and its related entities. 2

3 Is your agency offering or considering early retirement or buyouts? 3

4 VERA, VSIP, Early Retirements, Buyouts VOLUNTARY EARLY RETIREMENT AUTHORITY (VERA)

5 VERA What is it? Agencies can lower age/service requirements for retirement eligibility Employees can receive immediate annuity years before otherwise eligible Also known as early retirement 5

6 Employee Eligibility Requirements 1. Meet minimum age and service requirements At least age 50 with at least 20 years creditable federal service, OR Any age with at least 25 years creditable federal service; 2. Serve in a position covered by the agency's VERA plan; and 3. Separate by the close of the early out period. 6

7 Effect on CSRS Annuity If employee retires on 1st, 2nd or 3rd day of a month, annuity begins the following day 7

8 Effect on CSRS Annuity Otherwise, annuity begins first day of month following retirement 8

9 Calculation of CSRS Annuity Based on average high 3 salary and years and months of creditable service Unused sick leave can be used for additional service credit If under age 55, calculation is reduced by 1/6 of 1% for each full month they are under age 55 (2% per year) 9

10 Effect on FERS Annuity Annuity begins first day of month following retirement 10

11 Calculation of FERS Annuity Based on average high 3 salary and years and months of creditable service Unused sick leave can be used for additional service credit No annuity reduction 11

12 FERS Annuity Supplement Payable: To employee who has completed at least one calendar year of FERS service upon reaching Minimum Retirement Age (MRA) Age 55 to 57 Until eligibility for Social Security begins at age 62 Subject to an earnings limitation 12

13 Effect on Benefits CSRS and FERS Eligible for FEHB, FEGLI and FLTCIP If covered under FEHB for last 5 years, or if less than 5 years, for all service since eligible for FEHB FEGLI may be continued provided carried coverage at least 5 years prior to retirement FLTCIP coverage will continue 13

14 Employment After VERA Non-Federal Not subject to any restrictions regarding annuity FERS who qualify for annuity supplement could have it reduced or discontinued due to earnings limitation 14

15 Employment After VERA Federal If rehired by federal government, annuitant is a reemployed annuitant New federal salary will be offset by annuity May receive waiver of salary offset Work full time for at least 1 year, annuitant may apply for a supplemental annuity Work full time for at least 5 years, annuitant may choose either supplemental annuity or re computed annuity 15

16 VERA, VSIP, Early Retirements, Buyouts VOLUNTARY SEPARATION INCENTIVE PAYMENTS (VSIP)

17 VSIP What is it? Agency offers employees lump-sum payments up to $25,000 as incentive to voluntarily separate Also known as a buyout 17

18 Employee Eligibility Requirements Employee must: Be serving in an appointment without time limit Be currently employed by Executive Branch for continuous period of at least 3 years Be serving in a position covered by an agency VSIP plan Apply for and receive approval from agency making offer Not be included in any ineligibility categories 18

19 Effect on Benefits If separating: May continue FLTCIP coverage If retiring: Eligible for FEHB, FEGLI and FLTCIP If covered under FEHB for last 5 years, or if less than 5 years, for all service since eligible for FEHB If carried FEGLI coverage at least 5 years prior to retirement May continue FLTCIP coverage 19

20 Effect on Benefits Eligible for FEHB, FEGLI and FLTCIP If covered under FEHB for last 5 years, or if less than 5 years, for all service since eligible for FEHB If carried FEGLI coverage at least 5 years prior to retirement May continue FLTCIP coverage 20

21 Repayment Requirement If accept federal government employment within 5 years must repay entire amount of VSIP Possible waiver of repayment, if: Proposed reemployment is with executive branch agency; Individual possesses unique abilities and is only qualified applicant available for the position; or In case of emergency involving direct threat to life or property 21

22 VERA, VSIP, Early Retirements, Buyouts QUESTIONS/ASSISTANCE

23 Questions to Ask Yourself Are you ready to retire permanently? If not, will you find a private sector position with a comparable salary and benefits? What will you do with the money in your TSP account? Will you need alternatives to FEGLI? If you accept VSIP, what will you do with the lump-sum payment? 23

24 Ask for Assistance Weigh the options available to you Get help from your human resources representative Ask your Financial Advisor for assistance 24

25 2014 First Command Financial Services, parent of First Command Financial Planning, Inc. (Member SIPC, FINRA), First Command Insurance Services, Inc. and First Command Bank. Financial planning services and investment products, including securities, are offered by First Command Financial Planning, Inc. Insurance products and services are offered by First Command Insurance Services, Inc. in all states except Montana, where as required by law, insurance products and services are offered by First Command Financial Services, Inc. (a separate Montana domestic corporation). Banking products and services are offered by First Command Bank. Securities products are not FDIC insured, have no bank guarantee and may lose value. A financial plan, by itself, cannot assure that retirement or other financial goals will be met. In Europe, investment and insurance products and services are offered through First Command Europe Limited. First Command Europe Limited is a wholly owned subsidiary of First Command Financial Services, Inc. and is authorized and regulated by the Financial Conduct Authority. Certain products and services offered in the United States may not be available through First Command Europe Limited. First Command Financial Services, Inc. and its related entities are not affiliated with or endorsed by the U.S. government or U.S. armed forces, and are not affiliated with, authorized to sell or represent on behalf of, or otherwise endorsed by any federal employee benefits programs that may be referenced in this presentation. CD-65 (9/14) Supersedes CD-65 (3/14) which should be destroyed

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