How Part-Time Service Can Affect a FERS Employee’s Benefits – Part I

There have been a number of FERS-covered federal employees who worked part-time at some point of their federal service. These employees were first hired into federal service as permanent employees sometime after December 31, 1983. Part-time service means they worked less than 80 hours per pay period. For example, the employee could have worked as a “half-time” employee, working 40 hours each pay period.

This is the first of two columns discussing the effect of part-time employment on a FERS-covered employee’s benefits including the FERS annuity and the FERS survivor annuity, annual and sick leave accrual rates, the Thrift Savings Plan (TSP), health insurance benefits, life insurance benefits, dental and vision insurance benefits, and long-term care insurance benefits.

This column discusses the effect of part-time FERS employment on the FERS annuity and the FERS survivor annuity.

How Is FERS Part-Time Service Defined?

Part-time service is defined as any actual service performed on a less than full-time basis by an employee whose appointment describes a regularly scheduled tour of duty.

Note the following:

(1) This definition of “part-time service” is not limited to part-time career (permanent) employment since it includes part-time temporary employment as well;

(2) Part-time federal service does not include intermittent or “when actually employed” (WAE) service; and

(3) In determining eligibility for retirement under FERS, part-time service is creditable to the same extent as full-time service. In other words, a FERS employee with a record of part-time service is not required to work any additional years in order to be eligible for immediate retirement under FERS.

Other important definitions:

1. Full-time service. Full-time service is any actual service in which the employee is scheduled to work the number of hours and days required by the administrative workweek for his or her grade or class – normally 40 hours or 80 hours per pay period.

2. Temporary service. Temporary service is service under an appointment limited to one year or less, excluding intermittent service or WAE service.

3. FERS proration factor. The FERS proration factor is used to compute the FERS annuity of an employee who had both full-time and part-time service during his or her entire period of covered FERS service, including military service credited under FERS. The FERS proration factor is computed as follows:

Actual Hours Worked During All Creditable FERS Service
Total Full-Time Hours Possible During All Creditable FERS Service

The following steps are used in calculating the FERS annuity of a FERS-covered employee who had part-time service at some point during his or her years of federal service:

Step 1.

(1) Determine the total number of hours the employee actually worked during his or her federal service; and

(2) Determine the number of full-time hours that could have been worked for all periods of civilian and military service creditable under FERS. Divide (1) by (2) to determine the FERS proration factor.

Step 2.

Calculate the high-three average salary for the FERS annuity by using any period of three consecutive years of the employee’s service that will produce the highest average. Use only the full-time rates of basic pay for the position. In other words, use “deemed” full-time rates. That is, the employee would have received if the service had been performed on a full-time basis.

Note: The “deemed” full-time rates to compute only the FERS annuity. The proration of the employee’s salary is used in determining the following:

(1) The FERS supplemental annuity that a FERS reemployed annuitant may be eligible for;

(2) The final salary or high-three average salary portion of the Basic Employee Death Benefit; and (3) the FERS disability annuity (computed using 60 percent or 40 percent of the high-three average salary).

Step 3.

Compute the unreduced FERS annuity as if the retiring employee had worked full-time during his or her entire federal service.

Step 4.

Prorate the unreduced annuity in Step 3 to reflect the difference between full-time and part-time service. This is done by multiplying the unreduced FERS annuity obtained in Step 3 by the FERS proration factor computed in Step 1.

The following example illustrates:

Charlotte worked in federal service for 25 years under FERS and recently retired at age 60. During her 25 years of federal service, she worked part-time, 32 hours per week (“3/4 time” employee). Her full-time high-three average salary is $75,000 even though she was only earning $60,000 per year (a result of working 64 hours per pay period:

64/80 equals 0.80.
$75,000 times 0.80 equals $60,000

Part-Time Service Effect on a FERS Survivor Annuity

A FERS-covered employee who has had some years of part-time service can elect to give a FERS survivor annuity at the time he or she retires from federal service. The fact that the employee had part-time service does not affect their eligibility to give a FERS survivor annuity to one individual. That individual can be a spouse, a former spouse, or an insurable interest.

The reduction of a part-time FERS employee’s FERS annuity (in order to give a FERS survivor annuity) is calculated no differently compared to the reduction of the FERS annuity of a FERS employee who had worked full time throughout his or her federal service and elects to give a survivor annuity.