Employee Retirement System (FERS)

The Federal Employees Retirement System (FERS) is a retirement plan for U.S. federal employees, established in 1986. It consists of three main components: a basic annuity plan, Social Security benefits, and the Thrift Savings Plan (TSP), which is a defined contribution plan similar to a 401(k). Employees contribute to FERS through payroll deductions, and their retirement benefits are calculated based on years of service and the highest three years of salary.

For instance, a federal employee who has worked for 30 years and has an average highest salary of $70,000 may receive a monthly annuity based on a percentage of that salary. Additionally, if they contribute to the TSP, they can further enhance their retirement savings through matching contributions from the government, subject to certain limits.

In cases where an employee retires early or separates from federal service, the benefits and the specific calculations may differ, impacting the total retirement package they receive.