The rules that govern which retirement system you should be covered under are complicated and there have been many coverage errors made by agencies, especially since the Federal Employees Retirement System (FERS) was introduced in 1987.

Are you FERS when you should be CSRS (or vice versa)? Are you CSRS when you should be CSRS Offset (or vice versa)? Are you FERS when you should be CSRS Offset (or vice versa)? Are you confused yet?! If so… take a deep breath and continue reading.

It’s like a cruel game of rock-paper-scissors… and that doesn’t even take into account the appointments that are supposed to be FICA Only. Congress did their best to confuse you when they designed the rules that govern retirement coverage, it’s no wonder that so many mistakes are made by agencies.

As a federal employee, your retirement plan should be listed on all your Notification of Personnel Actions (SF-50s). Although there are “special group” categories for federal law enforcement, firefighters, Foreign Service, and Congressional employees, most federal employees today are covered by one of the following plans:

  • Federal Employees Retirement System (FERS and Social Security)
  • Civil Service Retirement System (CSRS Only)
  • CSRS Offset (CSRS and Social Security)
  • FICA (Social Security Only)

It doesn’t make much sense to counsel you on your retirement benefits and options if there is a chance that an agency has placed you in the wrong retirement system when they brought you on board. Since these errors can affect your federal pension, Social Security, and your Thrift Savings Plan (TSP), this sort of issue needs to be resolved before you can do any useful retirement planning.

The Federal Erroneous Retirement Coverage Corrections Act (FERCCA) has specific guidelines that address the long-term harm to retirement planning when this happens to a federal employee, and it addresses the steps that agencies must take to make amends for the coverage error. But what if the error is never caught?

Many coverage errors go unnoticed by agencies during an employee’s federal career, and can sometimes be overlooked by the Office of Personnel Management (OPM) when the employee retires. This could affect one’s retirement income for the rest of their life.

Although OPM has the potential of catching coverage errors upon receipt of an employee’s retirement application, a discovery this late in the game will almost certainly delay the adjudication of one’s retirement. And those monthly bills of yours don’t take a vacation just because you are retiring from the federal government, do they? Bills have to be paid on time whether or not your monthly pension is processed in a timely manner.

For the past few years, I have been catching coverage errors for about 1 out of every 50 employees in my retirement classes. This statistic should startle most agencies and OPM, as well as you. Some of these errors were recently identified by the agencies, but many others were not identified until the employee attended my class. I’m noticing this average is beginning to taper off a little this year, but I can only speak to so many employees per year. I always have to wonder about the folks who I don’t have the opportunity to meet with.

Now is the perfect time to catch any retirement coverage errors that you might have… BEFORE you decide to retire. But it’s never too late either. If you are about to retire (or have already retired), most errors can still be corrected retroactive to when the error first occurred. Some errors give employees/retirees more options than other errors, but the sooner you learn about this, the better off you would be.

If you are identified as a FERCCA case, there is a significant amount of individual counseling the agency is responsible to provide to you. If you don’t believe you are getting all the counseling you need from your agency, you can spend money (out-of-pocket) to hire a financial advisor to assist you with the information you are seeking. In most cases, if the out-of-pocket expense is spent on financial planning (due to the error), you can be reimbursed by OPM.

I remember catching a coverage error for someone who had been retired for over ten years. She had asked me to take a look at a letter she had received from OPM stating that they had been overpaying her. They were about to begin taking that overpayment back from her which was essentially going to cut her monthly pension in half for the next 18 months.

After reviewing her case, I told her that OPM was correct in their discovery, but that’s only IF she was supposed to be a retiree under FERS. She initially didn’t understand what that really meant, so I took the time to break it down for her.

I explained that OPM had missed the coverage error that her agency had made after she had returned from a break in federal service in the middle of her career. Her agency automatically placed her under FERS when she should have been under CSRS with the option to elect FERS. She never elected FERS coverage. I explained to her that under FERCCA, her retirement could still be retroactively corrected to CSRS.

Once she understood all of her options in regards to this coverage error, she elected to be corrected to CSRS. Long story – short: In her case, she no longer owed OPM any money… they owed her more than $30,000… and her monthly pension was almost doubled for the rest of her life (not to mention certain Social Security and TSP perks).

Soon, I will take the time to discuss some of the basic coverage rules and the most common coverage errors. Once that information is out, I wouldn’t be surprised to find out that several folks reading this information will be scheduling appointments with their agency retirement officers to double-check these issues.

Meanwhile… happy holidays!!