In June of 2011, CBS News reported that the U.S. Post Office was suspending pension plan payments to employees, one consequence of the troubling financial issues facing the U.S. Post Office. Nevertheless, at time of publication, retirees from the post office still have all retirement programs in place, and postal workers have various possible sources of retirement income available.
The Civil Service Retirement System
The Civil Service Retirement System, or CSRS, is the source of federal retirement income for those who started work at the post office before 1984. Anybody working at the post office beginning after 1984 is currently using the Federal Employee Retirement System, or FERS. CSRS works similarly to FERS, through employee contributions. Under CSRS, postal employees have a choice of making contributions of 7, 7 1/2, or 8 percent from their paychecks, with the post office matching contributions. They are required to pay Medicare tax, but no Social Security taxes.
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Federal Employee Retirement System
The Federal Employee Retirement System is better known for more recent post office employees. FERS consists of three parts, providing basic retirement benefits, Social Security benefits, and a Thrift Savings Plan. Employees pay their share of their paychecks into the basic plan and Social Security each month, while the postal service puts an amount equal to 1 percent of an employee's basic pay into a Thrift Savings Plan. An employee can also make contributions to the Thrift Savings Plan, which will be matched by the postal service. FERS provides a monthly annuity after retirement.
Calculating CSRS Annuity
Calculate your future CSRS annuity by using several methods. First figure your High-3 salary, or the highest average pay you were receiving during a three-year period of your post office service. The amount of a basic CSRS annuity after your first five years of post office service is 1.5 percent of your High-3 salary. After an additional five years, it's 1.75 percent. For all years of service after 10 years, it's 2 percent. For a disability retirement annuity, it's 40 percent of your High-3 salary. The maximum CSRS annuity available is 80 percent of your High-3 salary, plus sick leave credits.
Calculating FERS Annuity
Your High-3 salary is also applicable in calculating your FERS annuity. For a basic annuity, it's 1 percent of your High-3 salary if under age 62, or age 62 and older with less than 20 years with the post office. If you are 62 or older with 20 years or more of post office service, figure 1.1 percent of your High-3 salary. Reduce 5/12 of 1 percent off your annuity each month if retiring before age 62 with 10 or more years with the post office. There are no reductions if you have 30 years of post office service or 20 years of service when retiring at age 60. For a disability annuity after age 62, figure 1 percent of your High-3 salary if 20 years with the post office and 1.1 percent of High-3 salary with more than 20 years of service.