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COVER STORY
THE BENEFITS OF MILITARY SERVICE TO FEDERAL RETIREMENT
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Volume 94 • Number 5
P.34
IS DISABILITY RETIREMENT FOR YOU?
Federal Employee Program
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WASHINGTON WATCH
6
President’s Budget Takes Aim at Federal Pay and Benefits
7
Federal Pay Freeze Proposed for 2019
8
OPM Policy Reversal Sparks Outcry From Federal Retirees
9
Jeff Pon Confirmed as OPM Director
10 NEW: Write, Tweet and Call Your Legislators
26
11
Gerrymandering: What Is It, and How Does It Affect You?
COVER STORY
12
NARFE Bill Tracker
A MILITARY ANTHOLOGY. As we celebrate Memorial Day and recognize the service of members of the military to our country, learn how military service can benefit federal retirement.
COLUMNS
4
From the President
42 Managing Money DEPARTMENTS
16 Questions & Answers
34
IS DISABILITY RETIREMENT FOR YOU? Disability retirement can protect you, but there may be other options to consider before applying.
44 For the Record 46 NARFE News 48 FEDcon18
On the Web
52 The Way We Worked
VISIT US ONLINE AT:
www.narfe.org LIKE US ON FACEBOOK:
NARFE National Headquarters FOLLOW US ON TWITTER:
@narfehq
ON THE COVER
Illustration by GRAPHEK W W W. N A R F E . O R G
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MAY 2018 | Volume 94 | Number 5
EDITOR Susan Boswell ASSISTANT EDITOR Christopher Johnson COMMUNICATIONS ASSISTANT Precious Dorch-Robinson GRAPHIC DESIGN GRAPHEK EDITORIAL BOARD Richard G. Thissen, Jon Dowie, Barbara Sido EDITORIAL OFFICE: narfe magazine 606 North Washington St. Alexandria, VA 22314-1914 Phone: 703-838-7760 Fax: 703-838-7781 Email: communications@narfe.org ADVERTISING SALES: Warren Berger Media People Inc. 122 East 42nd St., Suite 1622 New York, NY 10168 Phone: 212-779-7172, ext. 223 Email: wberger@mediapeople.com
NARFE FOR THE VISUALLY IMPAIRED ON THE TELEPHONE: This publication can be heard on the telephone by persons who have trouble seeing or reading the print edition. For more information, contact the National Federation of the Blind NFB-NEWSLINE® service at 866-5047300 or go to www.nfbnewsline.org. ON DIGITAL AUDIO: Issues of narfe magazine are also available in audio format through the National Library Service for the Blind and Physically Handicapped (NLS). For availability, call 202-727-2142 or your local NLS service provider. The Association, since July 1970, has been classified by the IRS as a tax-exempt labor organization [not a union]; however, dues and gifts or contributions to the Association are not deductible as charitable contributions for income tax purposes.
National Active and Retired Federal Employees Association NATIONAL OFFICERS RICHARD G. THISSEN, President; natpres@narfe.org JON DOWIE, Secretary/Treasurer; natsectreas@narfe.org EXECUTIVE DIRECTOR BARBARA SIDO, execdir@narfe.org
REGIONAL VICE PRESIDENTS
REGION I James P. Crawford (Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) TEL: 603-630-5191 EMAIL: crawfordjim62@gmail.com REGION II Evelyn Kirby (Delaware, District of Columbia, Maryland, New Jersey and Pennsylvania) TEL: 410-604-1141 EMAIL: ekirby@atlanticbb.net REGION III Clarence Robinson (Alabama, Florida, Georgia, Mississippi, South Carolina, Puerto Rico and Virgin Islands) CELL: 404-312-8028 EMAIL: crobin8145@att.net
REGION VI Marshall L. Richards (Arkansas, Louisiana, Oklahoma, Republic of Panama and Texas) TEL: 903-660-2784 EMAIL: pappysdad@cobridge.tv REGION VII Rodney L. Adelman (Arizona, Colorado, New Mexico, Utah and Wyoming) TEL: 623-505-4719 EMAIL: narfe7vp@cox.net REGION VIII Helen L. Zajac (California, Guam, Hawaii, Nevada and Republic of Philippines) TEL: 707-644-7565 EMAIL: HLZajac125@gmail.com
REGION IV Edward J. Konys (Illinois, Indiana, Michigan, Ohio and Wisconsin) TEL: 937-470-0566 EMAIL: region4vp@gmail.com
REGION IX Richard Wilson (Alaska, Idaho, Montana, Oregon and Washington) TEL: 253-210-5609, CELL: 425-736-6899 EMAIL: narfe1404@comcast.net
REGION V Carol R. Ek (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) TEL: 620-241-1131, CELL: 620-504-2202 EMAIL: ek617@att.net
REGION X William Shackelford (Kentucky, North Carolina, Tennessee, Virginia and West Virginia) TEL: 703-830-6590, CELL: 703-201-6304 EMAIL: wshack1951@aol.com
HERE’S HOW TO CONTACT US…
TO JOIN NARFE, RENEW YOUR MEMBERSHIP OR FIND A LOCAL CHAPTER:
CALL (TOLL-FREE) 800-456-8410 OR GO TO www.narfe.org TO CHANGE YOUR ADDRESS, PHONE NUMBER OR EMAIL LISTING:
CALL (TOLL-FREE) 800-456-8410 EMAIL memberrecords@narfe.org OR GO TO www.narfe.org, log in and click on “Update My Record”
TO REACH A FEDERAL BENEFITS SPECIALIST:
EMAIL fedbenefits@narfe.org NARFE HEADQUARTERS
606 N. Washington St. Alexandria, VA 22314 703-838-7760 Hours of operation: Monday-Friday, 8 a.m.-5 p.m. ET
www.narfe.org
narfe (ISSN 1948-4453) is published monthly by the National Active and Retired Federal Employees Association (NARFE), 606 N. Washington St., Alexandria, VA 22314. Periodicals postage paid at Alexandria, VA, and additional mailing offices. Members: Annual dues includes subscription. Nonmember subscription rate $40. Postmaster: Send address change to: NARFE Attn: Member Records, 606 N. Washington St., Alexandria, VA 22314. To ensure prompt delivery, members should also forward changes of address without delay. Because of the volume involved, NARFE cannot acknowledge nor be responsible for unsolicited pictures and manuscripts, although every reasonable precaution is taken. All submissions become the property of NARFE. Copyright © 2018, NARFE. Advertisements in the magazine are not endorsements of products and/or services by NARFE, unless officially stated in the ad. We shall accept advertising on the same basis as other reputable publications: that is, we shall not knowingly permit a dishonest advertisement to appear in narfe, but at the same time we will not undertake to guarantee the reliability of our advertisers.
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From the President
IMPORTANT NARFE DEVELOPMENTS
I
’d like to update you on several important developments. As a NARFE member, you will be happy to learn that our efforts
to stem NARFE’s membership decline are continuing to show progress. Losses have been reduced by approximately two-thirds in the last three years (2014 compared to 2017) and this trend is continuing in 2018. Due to the great work of our Advocacy Department and the grassroots efforts of NARFE members, we continue to be successful in protecting federal employees and retiree benefits. This is in spite of the relentless efforts by the president and Congress to cut benefits, raise employee contributions to the retirement system and modify the Federal Employees Health
NARFE’s Mission Statement To support legislation and regulations beneficial to federal civilian employees and annuitants and potential annuitants under any federal civilian retirement system and to oppose those detrimental to their interests. To promote the general welfare of federal civilian employees and annuitants and potential annuitants, to advise and assist them with respect to their rights under retirement, health and other employee and retiree benefits laws and regulations, and to represent their interests before appropriate authorities. To cooperate with other organizations and associations in furtherance of these general objectives.
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Benefits (FEHB) Program. I want to thank all of you who have written letters, made telephone calls or sent emails to your legislators. As successful as we have been, we must remain vigilant and be ready to respond to any effort to reduce benefits. We remain actively involved in civil service return efforts, however, we continue to advise Congress not to use the reform process to conceal reductions to benefits. The June issue of narfe magazine will provide a report on the audit of NARFE’s 2017 financial records. The audit will show promising and positive results for NARFE’s unrestricted assets. While we continue to provide information on the upcoming election, bylaw amendments and other resolutions, I want to personally ask each member to become educated on the issues and candidates so you will be an informed voter. Visit www.narfe.org/2018Balloting for more information. Remember the bylaw change approved at the 2016 convention provides each of you with the ability and responsibility to vote. The ballot will be inserted in the June issue of narfe magazine; however for those of you that wish to vote electronically, you will be able to do so on a secure website beginning on May 10. I ask each of you to remain active in supporting our advocacy efforts and remember to exercise your right and responsibility to vote.
RICHARD G. THISSEN NARFE NATIONAL PRESIDENT natpres@narfe.org
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Washington Watch
PRESIDENT’S BUDGET TAKES AIM AT FEDERAL PAY AND BENEFITS
P
resident Trump’s budget for fiscal year 2019 (FY19), released on February 12, included a wide range of proposals targeting federal pay and benefits to the
tune of more than $192 billion in cuts over 10 years.
“This budget request is a continuation of unprecedented attacks on the earned pay and benefits of our nation’s public servants by this White House,” said NARFE President Richard G. Thissen. “The budget proposals undermine the value of years of dedicated work by those who proudly served their country and break implicit promises made to these men and women in exchange for their employment,” he continued. Specifically, the budget proposes the following: • Eliminating cost-of-living adjustments (COLAs) for current and future Federal Employees Retirement System (FERS) retirees. • Reducing COLAs for Civil Service Retirement System (CSRS) retirees by 0.5 percent each year from what it would 6
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have been otherwise. When combined with the elimination of the FERS COLA, this would cost federal retirees $50.2 billion over 10 years, and more thereafter. • Increasing contributions for federal employees under FERS by 1 percent each year for the next six years, without any corresponding benefit increase. This would cost FERS employees $68.7 billion over the next 10 years, and more thereafter. ACTION ALERT!
• Eliminating the earned and fully funded FERS Annuity Supplement for new retirees. This would cost federal retirees $18.7 billion over the next 10 years. • Reducing the rate of return on the Thrift Savings Plan’s Government Securities Investment (G) Fund. This would cost federal employees and retirees, as well as military personnel and veterans, $8.9 billion over the next 10 years in reduced returns on their retirement savings. • Basing federal pensions for new retirees on the average of the highest five years of salary instead of the highest three. This particularly harms those
M AY
The president’s fiscal year 2019 (FY19) budget includes a proposal to freeze federal employee pay in 2019. Unlike other proposals in his FY19 budget, the president has the authority to freeze pay absent congressional action. Visit NARFE’s Legislative Action Center now to write, tweet or call your legislators and ask them to reject this pay freeze and authorize a modest pay raise for Feds in the appropriations process.
nearing retirement and would cost federal retirees $5.9 billion over the next 10 years. • Freezing federal employee pay in calendar year 2019. See “Federal Pay Freeze” article below for more information. • Reducing total paid time off by combining sick and annual leave into one pool. This proposal has the potential to decrease annuities, as unused sick leave is counted toward creditable service. • Reducing working and retirement-age benefits for federal workers disabled through their service. This would re-
duce benefits by $117 million over 10 years. That’s the bad news. The good news is many in Congress have called the budget proposal dead on arrival. With congressional action required to turn most of these proposals into law, NARFE members can find relief in the fact that passage of these proposals will be an uphill battle for the administration. But any proposal included in the budget request by the president must be taken seriously. They will not go away without a fight. That’s why NARFE urges members to contact their members of Congress and let them know they strongly
FEDERAL PAY FREEZE PROPOSED FOR 2019
T
he president’s fiscal year 2019 budget proposes a federal pay freeze, singling out federal workers during a time of rising private-sector wages and a strengthening economy. Unlike other budget proposals, absent congressional action, the president has the authority to determine federal pay raises. “President Trump has long touted his support of America’s middle class, yet this sentiment does not hold true for public servants,” said NARFE President Richard G. Thissen. “Denying a modest pay raise during a time of economic prosperity demonstrates disdain for federal workers and needlessly punishes middle-class households,” he continued. “I urge
Congress to intervene and authorize a reasonable pay raise in the appropriations process.” The Federal Employees Pay Comparability Act of 1990 (FEPCA) sets forth procedures for adjusting federal pay rates. Under the law, federal employee pay rates should be adjusted each year to keep federal worker salaries competitive with comparable private-sector occupations. FEPCA’s annual pay adjustment is based on the change in wages and salaries paid to workers in the private sector, as measured by the Employment Cost Index (ECI). For calendar year 2019, that would mean a 2.1 percent increase in federal pay rates. (Pay Freeze continued on p. 8)
oppose the budget’s attacks on your earned pay and benefits. Through the concerted action of thousands of NARFE members across the country, we were able to prevent many of these proposals from becoming law last year. Let’s do it again. —BY JOHN HATTON, DEPUTY DIRECTOR, ADVOCACY
MYTH vs. REALITY MYTH: A pay freeze for current federal employees means that there will be no cost-of-living adjustment (COLA) to federal annuities for federal retirees. REALITY: Pay raises/ freezes for federal employees and COLAs for retirees are determined differently and are completely separate from each other. Pay raises for federal employees must be authorized and determined by Congress or the president on a yearly basis. Pay raises are provided to employees to ensure their pay remains competitive with private-sector pay. Congress and the president do not authorize or determine the COLA. A COLA is provided to help retirees’ annuities keep pace with inflation. Yearly federal retiree annuity COLAs are provided automatically by the Bureau of Labor Statistics using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
W W W. N A R F E . O R G
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Washington Watch
OPM POLICY REVERSAL SPARKS OUTCRY FR0M FEDERAL RETIREES
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vocal subset of federal retirees receiving the Federal Employees Retirement System (FERS) Annuity Supplement has been raising the alarm about a decrease in their supplement over the past couple of years. This decrease stems from a July 2016 decision by the Office of Personnel Management (OPM), in which OPM reversed its 30-year policy regarding the apportionment of the FERS Annuity Supplement for those subject to a state court divorce decree. This abrupt policy development took these federal retirees by surprise and changed their earned benefit both retroactively and without adequate public notice. In short, OPM reversed its long-standing policy and began to retroactively
“We have heard from many NARFE members who are experiencing this retroactive action and are understandably confused and upset.”
(Pay Freeze continued from p. 7)
Congress routinely authorized specific pay rate adjustments through the appropriations process. In 2010, Congress passed a two-year federal pay freeze through appropriations, which was extended a third year, leaving Feds without a raise in calendar years 2011 through 2013. Congress stayed silent on federal pay adjustments for 2014 through 2018, allowing the FEPCA procedures to kick in, which left the decision with the president (Obama in 2014 through 2017, and Trump in 2018). In those years, federal employees’ pay rates increased at a rate determined by the president. As we approach 2019, the question is whether Congress
FEPCA allows the president to propose an alternative pay increase for federal employees if he determines that a pay adjustment would be inappropriate “because of national emergency or serious economic conditions affecting the general welfare.” The president’s FY19 budget proposes a pay freeze, which indicates that the president intends to propose an alternative pay plan allowing for no pay adjustment for 2019. But Congress maintains the power of the purse and retains the authority to appropriate or deny a federal pay increase notwithstanding the provisions of FEPCA. In fact, prior to 2010, 8
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—Richard G. Thissen apportion a part of the FERS Annuity Supplement to a retired federal employee’s ex-spouse, even after a final state court order was set. Before this change, the FERS Annuity Supplement was considered separate from the basic FERS annuity. The FERS Annuity Supplement was not allocated to the
former spouses unless specifically stated otherwise in their divorce agreement. This sudden policy switch placed a heavy financial burden on those living on a fixed income. In some cases, the retroactive implementation of this change caused federal retirees to owe tens of thousands in retroactive payments to their former spouses. For more information on how this could affect you, see the “Federal Benefits In-Depth” article in the “Q&A” section on p. 24. This change did not go unnoticed by OPM’s Office of Inspector General (OIG), which took on the case to determine what happened after a complaint by one of NARFE’s coalition partners. The OIG dove into the issue and released its advisory report in February 2018.
will once again cede its authority to the president under new circumstances. Unlike in 2010, when the country was in the midst of a recession, the economy is growing. Where does your member of Congress stand? Ask your member of Congress to reject the president’s pay freeze and work with congressional colleagues to authorize a modest pay increase for federal workers in 2019 in the FY19 appropriations process. Go to NARFE’s Legislative Action Center today and contact your legislators to find out where your legislators stand and whether they support a modest pay increase for federal employees. —BY JOHN HATTON, DEPUTY DIRECTOR, ADVOCACY
OIG RECOMMENDATIONS
In the report, OIG provided three recommendations to OPM: • Cease implementation of its change in policy and apportion the FERS Annuity Supplement only if the court order specifically directs OPM to do so. • Make whole all those affected by the re-apportionment with a court order that did not expressly address the supplement. • Determine whether OPM has a legal requirement to make this updated guidance publicly available. In response, OPM rejected all three recommendations (see the letter on the NARFE website at http://bit.ly/2FFkFad). The OIG provided comments to OPM,
disagreeing with each of OPM’s responses. The OIG often pointed to OPM’s 30-year history of interpreting court orders and suggested that the sudden transition should to go through proper public notice. The report can be found by going the Inspector General section of OPM’s website and selecting “Management Advisory Reports” (https://bit.ly/2IWbOPH).
NARFE RESPONSE
After receiving notice of this issue by several members, NARFE took action and wrote a formal letter to OPM urging the agency to implement the OIG’s recommendations. “We have heard from many NARFE members who are experiencing this retroactive
action and are understandably confused and upset,” NARFE President Richard G. Thissen said (see the letter on the NARFE website at http://bit.ly/2DwSXXa). Because retirement planning requires analysis of fixed income, retroactive changes, whether from Congress or OPM, create severe financial hardship for federal retirees by imposing unanticipated financial burdens. This case is a reminder to NARFE members that they need to remain vigilant, as changes to their earned pay and benefits can come as an unexpected surprise. NARFE is here to help members who have an unexpected issue with their earned pay and benefits. —BY ROSS APTER, ADVOCACY ASSOCIATE
JEFF PON CONFIRMED AS OPM DIRECTOR
A
fter more than two years without a confirmed director, the Senate confirmed Jeff Pon, Ph.D, as the newest director of the Office of Personnel Management (OPM) in March. Pon was nominated to the position in September 2017. OPM’s last permanent director was Katherine Archuleta, who resigned in July 2015. Pon brings more than 25 years of federal experience, starting as a White House Intern in the Office of Public Liaison under the George H.W. Bush administration in 1991. He then served as deputy director of eGovernment
at OPM, then chief human capital officer at the Department of Energy. He most recently worked in the private sector, serving as chief JEFF PON human resources and strategy officer for the Society for Human Resource Management. “I’m both honored and thrilled to serve as the Director of OPM, and I am excited to get to work immediately on advancing the ambitious agenda the White House has set forth for our
agency, including streamlining the federal workforce to put our nation’s hard-earned tax dollars to effective use in serving the American people,” Pon said. NARFE congratulates Pon on his appointment and is looking forward to working with the new director. In a statement, NARFE President Richard G. Thissen said, “NARFE wishes Dr. Pon success in supporting the vital work that federal employees engage in every day, and much like with previous OPM directors, we look forward to a productive working relationship.” See NARFE’s full statement at www.narfe.org/communications.
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Washington Watch
NEW WAYS TO TAKE ACTION: WRITE, TWEET AND CALL YOUR LEGISLATORS
I
t’s now even easier to use NARFE’s Legislative Action Center to urge your legislators to protect the earned pay and benefits of the federal community. An action letter, call script and tweet are now available in the same location in the Action Center. To start, visit NARFE’s Advocacy page and click on NARFE’s Legislative Action Center. Click on “advocacy campaigns” and select the topic about which you would like to contact your legislators. The first option is to send an action letter. A summary of the issue is located at the top of the screen, followed by a prewritten message. When sending a letter, we strongly suggest that you customize the message based on your legislator’s known Legislative Resources • Legislative Hotline: A weekly update of legislative news, compiled by the NARFE Advocacy Department staff, distributed via email and available by phone (toll-free) at 800-456-8410, option 4 and online at www. narfe.org. • Legislative Action Center: A one-stop site to send a letter to Congress, and more, at www.narfe.org.
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viewpoints and state/district demographics, as well as your own experience to personalize the issue and draw attention to how it affects you. You can do so by clicking on the text in the body of the message. Personalized letters to Congress get more attention than form letters. If you have a Twitter account, help NARFE reach every legislator by using your personal account to amplify NARFE’s message. Press the “Tweet” button on the Action Center to review NARFE’s sample tweet about your chosen issue and then post it to your account. All you need to do is press “Tweet” and follow the steps to connect with your account to send the NARFE message using your Twitter account. It’s that simple. Another action you can take is calling your congressional representative to tell them what you’re concerned about. Use NARFE’s toll-free number (1-800-4568410), then press 5 when prompted to contact Congress. Follow the call script available under the “Call” section of the Action Center. After your call, be sure to answer the questions in the “Response Report” using the drop-down menu under the call script. Making a call is a simple step, and if every NARFE member did this, CORRECTIONS
members of Congress would absolutely take notice. Once you’ve used the Action Center to send a message, tweet at your legislators or complete the “Response Report” after calling a congressional office, a blue check mark will appear above the type of action you took. This way, the next time you visit the Action Center, you know the actions you’ve already taken. A good rule of thumb is to connect with an office every few months about an issue. If you’ve already taken action on an issue, visit the Action Center and send a message, tweet or call your legislators about another issue affecting the federal community. You can contact the Advocacy Department at any time if you have questions about how to take action or if you need help navigating the Action Center. Contact us at advocacy@narfe.org or 1-800456-8410, option 3. —BY MOLLY CHECKSFIELD, GRASSROOTS PROGRAM MANAGER
In the April 2018 issue of narfe magazine, the chart on p. 9 incorrectly listed the date of the Massachusetts primary, which will be held September 4, 2018. On p. 42 of the same issue, the Tennessee tax on interest and dividends should be listed as 4 percent for the 2017 tax year and 3 percent for the 2018 tax year. On p. 43, the District of Columbia “deduction of up to $3,000 on public pension income” was repealed in 2015 and is no longer valid.
GERRYMANDERING: WHAT IS IT, AND HOW DOES IT AFFECT YOU?
T
he namesake of gerrymandering is Governor Elbridge Gerry of Massachusetts who redrew his state’s senate districts in 1810. As a Republican, he wanted to ensure the Federalist Party did not gain any seats in the upcoming election. He drew ridiculously shaped districts to ensure that the majority would be Republican-held. This tactic infuriated the press, which noted that one district was so absurdly shaped that it resembled a salamander. Coining a term for this practice, one journalist combined the governor’s last name and salamander into “gerrymander.” The term is still in use today and refers to deliberately re-drawing legislative districts to favor one group over another. Gerrymandering once again has made the news when Pennsylvania’s congressional map was re-drawn because it was too partisan, and the Supreme Court has agreed to hear two cases about whether partisan maps in Maryland and Wisconsin violate the U.S. Constitution. THE REDISTRICTING PROCESS Each state’s population size determines how many members of Congress will represent that state. Every 10 years, after the census is taken, states must redraw their congressional maps to reflect population changes. States have different processes they use to redraw these maps. In 36 states, the legislature controls the mapdrawing process. In six states, an appointed commission runs the process. The final eight states have
only one “at-large” representative, so they do not require a map. PARTISAN GERRYMANDERING The redistricting process, generally dominated by partisan state legislatures or political appointees, allows for partisan gerrymandering to occur. The results of this partisan-controlled process are evident in some of the most gerrymandered states in the country, with Pennsylvania and North Carolina as two excellent of examples of what this means. In 2012, Pennsylvania House Republicans won 49 percent of the state’s popular vote, but won 72 percent of their house districts. The old map includes districts that resemble an octopus, with large offshoots that snake around the state. The map was redrawn by the Republican-controlled House to secure the seats of several of their members. The Pennsylvania Supreme Court overruled this map after it was challenged, and the new map follows geographical lines in a more logical way and creates greater partisan balance. North Carolina is another example. In 2012, Democrats won 50.5 percent of the total votes statewide for members of Congress, but won only four of the 13 congressional seats. The North Carolina congressional district map is just as geographically incoherent as Pennsylvania’s old map. Notably, it includes two districts that are elongated to connect several spread out urban centers. The 12th and 4th Districts each had a wide margin of victory for the Democratic candidate in
2012. The Democrat won District 12 by a margin of 59.3 percentage points and won District 4 by a margin of 48.9 percentage points.
The redistricting process, generally dominated by partisan state legislatures or political appointees, allows for partisan gerrymandering to occur. Both parties use this practice when drawing maps when they control the process. The Maryland case before the Supreme Court is about Maryland’s 6th District, which the litigants claim was drawn to benefit Democratic Congressman John Delaney. SUPREME COURT CASES The Supreme Court is set to rule on the Wisconsin case by June 2018 and was scheduled to hear arguments for the Maryland case on March 28. While these Supreme Court cases are unlikely to affect the upcoming 2018 elections, they could have an impact on redistricting following the 2020 census. These cases could change the makeup of your state’s congressional delegation or which congressional district you live in. If you have questions about this issue, or how it may affect you, contact Max Goldman at mgoldman@narfe.org. —BY MAX GOLDMAN, POLITICAL ASSOCIATE W W W. N A R F E . O R G
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Washington Watch
narfe bill tracker
THE NARFE BILL TRACKER IS YOUR MONTHLY GUIDE TO THE CONGRESSIONAL LEGISLATION THAT NARFE IS FOLLOWING. CHECK BACK EACH ISSUE FOR UPDATES. ISSUE
BILL NUMBER / NAME / SPONSOR
WHAT BILL WOULD DO
H.R. 756: Postal Service Reform Act of 2017 / Rep. Jason Chaffetz, R-UT Cosponsors: 9 (D), 8 (R)
Requires postal retirees to enroll in Medicare in order to continue receiving their current federal health insurance coverage. Enrollment would be automatic.
Approved by the House Committee on Oversight and Government Reform; pending in two other committees narfe, June 2017
H.Res. 15: As a resolution, it will not be sent to the president and, therefore, cannot become law / Rep. Sam Graves, R-MO Cosponsors: 181 (D), 65 (R)
Expresses the sense of the House that the U.S. Postal Service should take all appropriate measures to ensure the continuation of six-day delivery.
Referred to the House Committee on Oversight and Government Reform
Expresses the sense of the House that the U.S. Postal Service should take all measures to restore service standards in effect on July 1, 2012.
Referred to the House Committee on Oversight and Government Reform
Expresses the sense of the House that the U.S. Postal Service should take all measures to ensure the continuation of door-to-door delivery for all businesses and residential customers.
Referred to the House Committee on Oversight and Government Reform
H.R. 4775 / S. 2295: The Federal Adjustment of Income Rates (FAIR) Act / Rep. Gerald E. Connolly, D-VA Cosponsors (H.R. 4775): 46 (D), 1 (R) Sen. Brian Schatz, D-HI Cosponsors (S. 2295): 10 (D), 0 (R)
Provides for a 3 percent pay raise for federal employees in 2019.
Referred to the House Committee on Oversight and Government Reform (H.R. 4775) and the Senate Committee on Homeland Security and Governmental Affairs
H.R. 3269: Federal Employee Pension Fairness Act of 2017 / Rep. Anthony G. Brown, D-MD Cosponsors: 28 (D), 0 (R)
Repeals laws passed in 2012 and 2013 that increased the Federal Employees Retirement System (FERS) contributions for newly hired federal employees.
Referred to the House Committees on Oversight and Government Reform and Foreign Affairs narfe, October 2017
H.R. 1022: Federal Employees Paid Parental Leave Act of 2017 / Rep. Carolyn Maloney, D-NY Cosponsors: 78 (D), 1 (R)
Provides federal employees with 6 weeks of paid leave in connection with the birth or adoption of a child.
Referred to the House Committees on Oversight and Government Reform and House Administration
POSTAL REFORM H.Res. 31: As a resolution, it will not be sent to the president and, therefore, cannot become law / Rep. Dave McKinley, R-WV Cosponsors: 165 (D), 46 (R) H.Res. 28: As a resolution, it will not be sent to the president and, therefore, cannot become law / Rep. Susan Davis, D-CA Cosponsors: 184 (D), 57 (R)
FEDERAL COMPENSATION
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NARFE’s Position:
Support
LATEST ACTION(S)
Oppose
No position
EDITOR’S NOTE: These bills are all listed online at www.narfe.org/legislation/votervoice.cfm.
ISSUE
DC STATEHOOD
TAXES
COLA
GPO/WEP
CAMPAIGN FINANCE
BILL NUMBER / NAME / SPONSOR
WHAT BILL WOULD DO
LATEST ACTION(S)
H.R. 1291 / S. 1278: Washington, DC Admission Act / Del. Eleanor Holmes Norton, D-DC Cosponsors (H.R. 1291): 151 (D), 0 (R) Sen. Thomas Carper, D-DE Cosponsors (S. 1278): 21 (D), 1 (I)
Sets forth procedures that would allow the District of Columbia to become a state known as the State of Washington, DC.
H.R. 2929: Federal Employee Combat Zone Tax Parity Act / Rep. Rob Wittman, R-VA Cosponsors: 7 (D), 2 (R)
Extends the tax credit available Referred to the to military personnel who serve House Committee on in combat zones to civilian Ways and Means federal employees. narfe, September 2017
H.R. 3200: The TaxpayerFunded Pension Disclosure Act / Rep. Ron DeSantis, R-FL Cosponsors: 0 (D), 7 (R)
The legislation would allow for public disclosure of federal pension data, including: name of annuitant, last agency of employment, grade, monthly annuity and total annuity contributions.
Referred to the House Committee on Oversight and Government Reform narfe, October 2017
H.R. 1251: CPI-E Act of 2017/ Requires Social Security and Rep. John Garamendi, D-CA many federal retirement programs to use the Consumer Price Index for the elderly Cosponsors: 48 (D), 1 (R) (CPI-E) to calculate cost-ofliving adjustments (COLAs) to retirement benefits.
Referred to the House Committees on Ways and Means, Veterans’ Affairs, Oversight and Government Reform, and Armed Services narfe, May 2017
H.R. 1205 / S. 915: Social Security Fairness Act of 2017 / Rep. Rodney Davis, R-IL Cosponsors (H.R. 1205): 126 (D), 50 (R) Sen. Sherrod Brown, D-OH Cosponsors (S. 915): 17 (D), 4 (R), 1 (I)
Repeals both the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).
Referred to the House Committee on Ways and Means (H.R. 1205), and the Senate Committee on Finance (S. 915) narfe, May 2017
H.R. 20: The Government By the People Act of 2017 / Rep. John Sarbanes, D-MD
Reforms campaign finance Referred to three laws to put small donors on par House committees with wealthier donors. Provides a tax credit or contributions and government matching contributions.
Cosponsors: 158 (D), 1 (R)
Referred to the House Committee on Oversight and Government Reform, and Committee on Rules
The Access to Insurance for All Americans Act, H.R. 1408, has been removed from the tracker. The legislation has failed to garner any cosponsors and is unlikely to be considered by the House of Representatives. W W W. N A R F E . O R G
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Questions & Answers
The following Questions & Answers were compiled by NARFE’s Federal Benefits Institute staff. NARFE does not provide legal, financial planning or tax advice or assistance.
EMPLOYEES SOCIAL SECURITY STATEMENTS
Q
I used to receive a statement in the mail from Social Security that provided me with an idea of what I might expect to receive once I stop working, and it also reflected the earnings that were used by my employer for the basis of my Social Security and Medicare taxes. I haven’t received this statement in a while. Since I’m not drawing Social Security yet, should I still be receiving this in the mail each year?
A
The Social Security Administration (SSA) has changed its policy on mailing statements to workers several times in the past. For further details, refer to www.ssa.gov/policy/docs/ssb/ v74n2/v74n2p1.html. The SSA currently mails statements to workers age 60 and over who aren’t receiving Social Security benefits and have not yet established their online “my Social Security account.” These individuals usually receive their annual statements three months prior to their birthday. 16
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For everyone else, it’s recommended that you establish your online account with Social Security so you can review your statement at www.ssa.gov/myaccount. SSA also provides online tools that allow you to run detailed benefit estimates that aren’t reflected on the statement. The estimates on the statement make certain assumptions that may not be applicable to you, so it’s recommended that you use the SSA online calculators (www.ssa.gov/ planners/benefitcalculators.html) to obtain more accurate estimates.
PLACEMENT IN FERS RETIREMENT SYSTEM
Q
I completed just over three years of temporary federal service and just over three years of Civil Service Retirement System (CSRS) service in the 1970s. When I left federal service, I was refunded my CSRS contributions. When I returned to federal service in the 1990s, my agency placed me under the Federal Employees Retirement System (FERS) and told me that my six years of prior service is only creditable under FERS if I pay a deposit into FERS. I also was told that since I had less than five years of CSRS service, I wasn’t vested so they had to give me FERS retirement coverage. Is this correct?
A
Your three years of temporary federal service may be potentially creditable for federal retirement
purposes, so your agency is not correct. They made a mistake in automatically placing you under FERS when you were rehired in the 1990s. The retirement coverage law for rehires doesn’t say that you must have five years of CSRS service to be vested. It simply states that you must have at least five years of potentially creditable federal civilian service before 1987 to be vested. You can ask your agency to contact the Office of Personnel Management (OPM) for assistance, if necessary, but it seems like you had just over six years of potentially creditable federal civilian service prior to 1987. If your rehire appointment in the 1990s was a position that allowed coverage under CSRS, then your agency should have placed you under CSRS and FICA (aka CSRS Offset), and they should have given you a six-month opportunity to elect FERS coverage as an option. Once your agency has done their homework, they will most likely discover that an error has been made and that they must provide you relief and options under the Federal Erroneous Retirement Coverage Corrections Act (FERCCA; www.opm.gov/retirement-services/benefits-officers-center/aids/#url=FERCCA). You will most likely be given the option to remain under FERS or be corrected to CSRS Offset. Regardless of whether you choose to remain under FERS or be corrected to CSRS Offset, your prior service of over six years will always be computed under CSRS
rules because you are vested under the law. Due to relief under FERCCA, you will receive service credit for both eligibility and computation purposes whether or not you put money into the retirement system for those years. The relief under FERCCA will allow you to take a small yet permanent
RETIREES reduction to your annuity for your unpaid deposit service, similar to your unpaid redeposit service.
EFFECT OF WEP ON SOCIAL SECURITY
Q
I am retired under the Civil Service Retirement System (CSRS), although I have enough employment outside of federal service to qualify for Social Security, as well. My Social Security is reduced by the Windfall Elimination Provision (WEP). My wife also earned and collects Social Security. Currently, we collect my CSRS annuity; my Social Security, which is reduced under the WEP; and my wife’s Social Security. I also chose to have my CSRS annuity reduced to cover the cost of a spousal survivor benefit for my wife, should I die before her. If I predecease my wife, does she collect any of my Social Security?
A
It depends. If your wife outlives you, the Social Security widow benefit that you earned for her would not be affected by the WEP. However, if the Social Security
benefit that she earned for herself is higher than the unreduced widow benefit that you earned for her, then she would most likely continue to receive her own benefit. But if her widow benefit is higher, her Social Security would increase accordingly. Regardless, the CSRS spousal survivor benefit that you elected for her will not diminish her Social Security at all.
DISABILITY RETIREMENT AND FERS SUPPLEMENT
Q
If I'm receiving a Federal Employees Retirement System (FERS) Annuity Supplement from the Office of Personnel Management (OPM), would a disability retirement from Social Security affect this supplement?
A
No. Qualifying for disability retirement benefits from Social Security does not affect your FERS Annuity Supplement from OPM. However, the FERS Annuity Supplement will stop automatically when you reach age 62.
PAYING FOR MEDICARE PART B PREMIUM
Q
My Social Security benefit isn't large enough to cover my Medicare Part B premium. What are my options to pay the difference?
A
Medicare will send quarterly bills. You can choose to pay by W W W. N A R F E . O R G
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Questions & Answers
check, money order, credit card or automatic electronic transfer from your checking or savings account. If paying three months of premiums at a time causes hardship, call Medicare’s help line at 1-800-633-4227 to request an arrangement to pay monthly. Or you can sign up for a free service called Medicare Easy Pay (www. medicare.gov/your-medicarecosts/paying-parts-a-and-b/ medicare-easy-pay.html), in which the payments are automatically deducted from your bank account each month.
NEW MEDICARE CARDS TO MAIL IN APRIL 2018
Q
When will Social Security send us new Medicare cards without Social Security numbers so we can replace our old cards?
A
Starting in April 2018, the Social Security Administration (SSA) will begin mailing new Medicare cards with new Medicare Numbers to help protect you from identity theft and fraud. They will use the name and address you have on file with Social Security, so it’s important that this information is up-to-date. You can verify or update your address by:
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• Visiting your online my Social Security account (www.ssa. gov/myaccount); • Calling Social Security at 1-800-772-1213; • Contacting your local Social Security office. For more details about your new Medicare card, visit www.medicare.gov.
FEHB COVERAGE FOR GRANDCHILDREN
Q
Can my grandchild be covered by my Federal Employees Health Benefits (FEHB) Self Plus One or Self and Family enrollment?
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Questions & Answers
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Your grandchild may be eligible for FEHB coverage if he/she meets the eligibility requirements for foster children. These requirements are: • The child must be under age 26 (if the child is over age 26, he/she must be incapable of self-support due to a disability that existed before age 26); • The child must currently live with you; • The parent-child relationship must be with you, not the child's biological parent; • You must currently be the primary source of financial support for the child; and
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• You must expect to raise the child to adulthood. For your grandchild to be covered under your FEHB enrollment, you must sign a certification stating that your grandchild meets all the above requirements and that you will notify the Office of Personnel Management (OPM), or your employing office, if still federally employed, if the child moves out of the home or stops being financially dependent on you. You submit this certification to OPM or your employing office for their determination that your grandchild meets these requirements. OPM or your employing office will then notify your FEHB
plan that your grandchild should be added to your enrollment.
RE-ENROLLING IN FEHB AFTER CANCELLATION
Q
I'm a civil service annuitant and a military retiree. Now that TRICARE is forcing me into Medicare at the age of 65, I'm thinking about canceling my Federal Employees Health Benefits (FEHB) coverage. If I cancel FEHB, will I have the option to re-enroll later, if desired?
A
Although you may cancel your FEHB coverage as an annuitant at any time,
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unless you're cancelling to be under a spouse's FEHB plan, you won't be able to re-enroll into the FEHB program later. Keep in mind that once you cancel FEHB, you can never get it back. If you want to drop your FEHB plan, a better option would be to suspend your FEHB for TRICARE so if you ever want to re-enroll into the FEHB program, you can do so later during any future Open Season. As an annuitant, you can use the RI 79-9 form, “Health Benefits Cancellation/Suspension Confirmation,” (www.opm. gov/forms/pdf_fill/ri79-9.pdf)
to suspend your FEHB coverage for TRICARE by mailing the request to OPM via certified mail. As of February 2018, OPM recommends submitting this form to the address below: U.S. Office of Personnel Management, Retirement Benefits Branch, P.O. Box 17, Washington, DC 20044. To obtain an answer to a federal benefits question, NARFE members should call 800-456-8410 and select option 2 for the Federal Benefits Institute; send the question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.
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800-456-8410, Option 2
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Don’t miss out on these upcoming WEBINARS from the NARFE Federal Benefits Institute:
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FEDERAL BENEFITS IN-DEPTH
FERS ANNUITY SUPPLEMENT NOW
DIVIDED IN DIVORCE
W
hen the Federal Employees Retirement System (FERS) was created, it was structured to allow federal employees to plan their retirement around three sources of retirement income: annuity, Social Security and the Thrift Savings Plan (TSP), sometimes called the “three-legged stool.” It was never intended that the individual separating from federal service would have to initiate drawing from all three sources of income at the same time, and there are many situations in which individuals might qualify for one source before another. FERS offers several types of retirement options that allow an individual to separate from federal service and qualify for an annuity payable immediately, with no reduction for early age prior to age 62. Since many individuals don’t qualify for Social Security until the minimum retirement age of 62, FERS has an extra benefit to allow individuals to receive a FERS Annuity Supplement to bridge this gap between their retirement from federal service and their eligibility for Social Security. For further details about the FERS Annuity Supplement, visit http://bit.ly/2FSBQSO.
POLICY REVERSAL
Without public notice, the Office of Personnel Management (OPM) reversed its 30-year policy regarding the apportionment of the FERS Annuity Supplement for those subject to a state court divorce decree. OPM decided to include a former spouse share of the FERS Annuity Supplement with the former 24
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spouse’s share of the annuity, even when not expressly awarded in a court order acceptable for processing (COAP). See the “Washington Watch” section for news about this action on p. 8. Many NARFE members are upset because OPM is now dividing the FERS Annuity Supplement in all cases, even if it wasn’t originally specified, and this policy reversal was implemented on a going forward basis as well as a retroactive basis, forcing many divorced annuitants to become indebted to their former spouses for years of previous underpayments. The policy reversal was particularly painful to those who retired under the FERS special group provisions (i.e., for law enforcement officers and firefighters subject to a mandatory retirement age) who are eligible to receive the FERS Annuity Supplement after separating from federal service in their late 40s or early 50s and who potentially receive the supplement for a longer period of time than non-special group annuitants. Many of these annuitants had counted on this income and would have made different plans for their retirement had they been told that this rug was going to be pulled out from underneath after retirement. The FERS Annuity Supplement was intended to mirror benefits from Social Security, although the benefit does not come from Social Security and has no impact on the annuitant’s future Social Security benefits.
REPLACING WORK INCOME
The purpose of Social Security always has been to replace a certain
percentage of one’s work income once they stop working. The FERS Annuity Supplement fills the same purpose until the annuitant qualifies for Social Security at age 62. For this reason, the FERS Annuity Supplement, payable between the annuitant’s FERS minimum retirement age (MRA) and age 62, has an earnings test, similar to Social Security benefits payable before full retirement age. In other words, if you’re still working, the benefit payable could be reduced by your work income. An annuitant who is working elsewhere with a certain level of income may have a reduction in the FERS Annuity Supplement, which also would have a negative impact on the former spouse’s share of the FERS Annuity Supplement even if the former spouse is not working. Conversely, if the FERS annuitant was no longer working but the former spouse was employed, the spouse’s work income would not reduce his or her share of the FERS Annuity Supplement. This is not consistent with the purpose of the FERS Annuity Supplement, which is to replace work income when an annuitant is done working. OPM does not apply this same earnings test on the former spouse, even though Social Security would apply the earnings test if the former spouse was working and attempting to draw a former spouse’s Social Security benefit before his/her full retirement age. It should be further noted that under Social Security, divorce decrees do not dictate the former spouse’s benefits. Instead, the Social Security law has provisions for this and these provisions have
no negative impact on the annuitant’s benefits or the annuitant’s current family benefits from Social Security. In other words, Social Security has made it much easier for divorced Americans to plan their retirement with very few surprises. Based on OPM’s current reversal of the FERS Annuity Supplement policy, if you are going through a divorce and want to keep the FERS Annuity Supplement out of your former spouse’s hands, it’s recommended that your lawyer specify this in the COAP. The Office of Inspector General (OIG) Management Advisory
(http://bit.ly/2I2ugFy) lays out a strong argument against the OPM policy reversal on the FERS Annuity Supplement apportionment. The OIG found that OPM violated the Administrative Procedures Act, did not interpret 5 USC 8421(c) correctly and did not have statutory authority to enforce retroactively. If you are affected by this policy reversal, you might find the OIG Management Advisory (http:// bit.ly/2I2ugFy) useful when seeking opportunities for individual reconsideration and appeals. At press time, NARFE has learned that at least one indi-
vidual was notified by OPM that the requirement will be waived to pay back what was retroactively owed and paid to the former spouse. However, this waiver may not have been granted in the absence of an appeal. For this reason, NARFE recommends filing an appeal if you disagree with an agency decision. —JAMES MARSHALL, DEPUTY DIRECTOR, FEDERAL BENEFITS INSTITUTE.
VOTE IN THE 2018 NARFE ELECTIONS You are eligible to vote in the election if you are a NARFE member in good standing as of March 15, 2018. Information about NARFE elections is available at www.narfe.org/2018Balloting
Vote online:
Vote by mail:
https://www.esc-vote.com/narfe2018 Check your email inbox for a voting eblast on May 10 with online voting information, if you have an email address on file with NARFE.
Look for a ballot in the June issue of narfe magazine and complete voting instructions.
Voting ends on June 30, 2018 at 11:59 p.m. ET W W W. N A R F E . O R G
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Cover Story 26
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A MILITARY ANTHOLOGY: THE BENEFITS OF MILITARY SERVICE
TO FEDERAL RETIREMENT By James Marshall
On Memorial Day, we will honor the members of the military who have spent the first part of their lives serving our country in uniform and also recognize those that went on to spend many more years in service to our country with the federal civilian workforce. This anthology is a collection of stories that highlight the benefits that military service might have on retirement planning for federal employees. Due to space limitations, not all benefits will be covered, but the stories will reflect details that are not easily found elsewhere. The following are real stories that reflect a compilation of the thousands of federal employees that I’ve spoken with over more than 20 years in the process of assisting them with their benefits. The names are fictional, but each story may represent many individuals who have experienced similar situations.
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A MILITARY ANTHOLOGY: THE BENEFITS OF MILITARY SERVICE TO FEDERAL RETIREMENT
After getting permission from his parents to join the military at age 17, Jim spent 10 years on active military duty. After working in the private sector, Jim became a federal civilian employee under the Federal Employees Retirement System (FERS) in 1996 at age 37. Within the first few weeks of his federal career, Jim kept hearing his coworkers talk about “military buybacks,” which was slang for military deposits. During a new employee orientation, Jim learned that his military service could count toward the eligibility and computation of his retirement under FERS if he paid a deposit into the Civil Service Retirement and Disability Fund (CSRDF). (The CSRDF was briefly described in the “Focus on Federal Benefits” Q&A section in the February 2018 issue of narfe magazine, p. 18). In his case, Jim discovered that his military service could be used to allow him to retire sooner from his federal career and provide him with more money in retirement for the rest of his life. Prior to becoming a federal civilian employee, Jim didn’t expect to receive retirement income for his military service because his tenure wasn’t long enough to qualify for a retirement from the military. Jim followed-up with his agency retirement office early in his federal career to learn more. Because Jim was not a federal civilian employee prior to his appointment in 1996, his military service was creditable under FERS rules, although his military service occurred before FERS was introduced. Under FERS, the initial military deposit amount due for the active duty that he performed prior to his appointment was 3 percent of the basic pay earned during military service. Jim never bothered to keep his military pay records, so his agency retirement office assisted him with using form RI 20-97, “Estimated Earnings During Military Service,” to request an estimate of the basic pay earned for the dates listed on his DD-214, “Certificate of Release or Discharge from Active Duty.” Several weeks later, Jim received the information that his agency 28
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retirement office needed to compute the military deposit due. His agency also assisted Jim with completing the SF 3108 form, “FERS Application to Make Service Credit Payment,” so they could follow-up with the necessary paperwork to allow Jim to pay his military deposit through his agency payroll office. Jim felt confident that he could pay the 3 percent of his estimated earnings for his military service, which was just over $6,000, within two years. Since interest isn’t charged to the military deposit until three years after the initial appointment under FERS, Jim was able to complete the deposit payment without paying any interest, even though it had been almost a decade since he had left the military. In 2016, after 20 years of federal service, with an additional 10 years of military service added for both retirement eligibility and computation purposes, Jim was able to separate from federal service at age 57 and receive an immediate retirement under FERS with no reduction for early age. He also qualified for a FERS Annuity Supplement, which in his case was an additional $1,200 per month, payable until age 62. If Jim had not paid his military deposit, he would have had enough creditable service only to qualify for a permanently reduced annuity in 2016, and no FERS Annuity Supplement.
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Jim: A FERS Story
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Jim took the time to run an estimate of what his FERS annuity would have been if he had not paid his military deposit. Based on his high-three average salary and 20 years of FERS service, he would have been eligible for just over $15,000 per year if he collected the permanently reduced annuity immediately at age 57 or $20,000 per year if he separated and postponed the annuity until age 60.
As a NARFE member, Jim now believes that local military bases could use someone like him to let young service men and women know about career opportunities. However, since he paid a military deposit, his annuity payable immediately upon separation was $30,000 per year. Jim wasn’t planning to work anymore, so he expects to continue to receive the additional $1,200 per month FERS Annuity Supplement for the five years between his separation and age 62 (totaling $72,000). Jim wondered, where else could he have invested $6,000 once to receive twice as much annuity at age 57? In his case, Jim will receive an extra $15,000 per year for the rest of his life, and $72,000 in a FERS Annuity Supplement. As a NARFE member, Jim now believes that local military bases could use someone like him to let young service men and women know about career opportunities upon separation from military service, especially for those who separate before they quality for military retirement. Not all federal employees will work in federal government as long as Jim did,
but if they work at least five years under FERS and pay the military deposit before separation, those years serving their country in the military can now benefit them in retirement, whether they qualify for an immediate retirement upon separation or a deferred retirement years later.
Tony, Bill and John: A CSRS Story
Years ago, Tony, Bill and John served on active duty in the military together for six years, which could potentially increase their high-three average salary by 12 percent in a Civil Service Retirement System (CSRS) annuity. Tony and Bill were hired under CSRS in February 1982 and John was hired under CSRS in December 1982. According to their Social Security statements, available at www.ssa.gov, none of them currently have enough credits to qualify for Social Security, but they are close and need only a few more work credits to qualify. Since Tony and Bill were hired under CSRS rules prior to October 1, 1982, their military service will be used for retirement eligibility with or without paying the military deposit. However, they both heard about a “catch-62 rule,� which states that any unpaid military deposit will be removed from the computation of the CSRS annuity if the individual becomes eligible for Social Security at age 62 or at the date of retirement, if older than 62 at the time of separation from federal service. Neither one of them expect to have enough credits to qualify for Social Security by the time they retire from federal service. However, both individuals expect to work part-time after retirement, and they both expect to have enough credits to eventually qualify for Social Security. They are retiring at different ages, and they also know that if they want to make the military deposit payment, they must do so before they separate. W W W. N A R F E . O R G
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A MILITARY ANTHOLOGY: THE BENEFITS OF MILITARY SERVICE TO FEDERAL RETIREMENT
Under the “catch-62 rule,” Tony and Bill found out that the Office of Personnel Management (OPM) checks with Social Security one time for verification. When an unpaid military deposit service is included in the CSRS annuity, and the individual retires before the age of 62, OPM contacts Social Security when the annuitant reaches age 62. However, if the individual retires after the age of 62, OPM contacts Social Security during the adjudication process of the annuity. At that time, if Social Security confirms that the individual has enough credits to qualify for Social Security, OPM permanently removes the unpaid military deposit service from the computation of the CSRS annuity. Since Tony is retiring under CSRS before age 62 and expects to have enough credits to qualify for Social Security by age 62, he has decided to pay his military deposit before he separates from federal service so OPM will continue to include his military service in the computation of his annuity beyond his 62nd birthday. In this case, there would be no need for OPM to contact Social Security later since his deposit is paid in full before Tony retires from federal service. Tony’s agency helped him use the RI 20-97 to request his estimated earnings during military service and they processed his SF 2803, “CSRS Application to Make Deposit or Redeposit.” Tony just wishes he had become a NARFE member earlier in his career because if he had known all of this, he would have paid his military deposit years ago before all the interest had accrued. If he had done so back in the mid-1980s, he would have owed only about $3,000. However, since he didn’t look into this until last year, he owed over $15,000 including interest. In his opinion, it was still worth paying to keep 12 percent of his high-three average salary every year for the rest of his life. Since Bill is retiring from federal service after the age of 62, he knows that OPM will contact Social Security during the adjudication process of his retirement, and they will find out that he doesn’t have enough credits to qualify for Social Security. For this reason, Bill has 30
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decided not to pay his military deposit. He knows that OPM contacts Social Security one time for this verification, so even if he later works enough to obtain the necessary credits to qualify for Social Security, his unpaid military deposit service will continue to be included in the computation of his CSRS annuity. John’s situation is different because he didn’t obtain a CSRS-covered position until after October 1, 1982. The “catch-62 rule” does not apply to him. His situation is similar to the current rule for FERS military deposit service. If he pays the deposit, he gets credit for both retirement eligibility and computation of his annuity. If he doesn’t pay the deposit, he won’t get credit for the military service at all. So regardless of whether or not he ever intends to qualify for Social Security, he thought it was in his best interest to pay the CSRS military deposit so OPM would include the service
[John] became a NARFE member many years ago so he had this important information and paid his military deposit long before interest had accrued.
in his annuity. Unlike Tony, he became a NARFE member many years ago so he had this important information and paid his military deposit long before interest had accrued. Tony, Bill and John have come across many CSRS retirees who didn’t know this information while they were employed. Bill has come across several retirees who were just like him; however, instead of receiving service credit for unpaid military deposit service in the computation of their CSRS annuity for free, they unknowingly paid thousands of dollars to their agencies for unnecessary military deposits.
Mark: A Military Reservist Story
Mark had approached his agency’s retirement office to discuss his military deposit options, but as soon as the agency learned that he was a military retiree, with very little explanation, they told him that it’s best for him to keep his military retirement separate from his federal civilian retirement. As a NARFE member, Mark called the Federal Benefits Institute and he was able to uncover more details to fully understand his options after having a thorough discussion that he wasn’t able to have with his agency. Mark received a military reserve retirement (under 10 U.S.C. 1223), which began when he reached age 60. He learned from NARFE that this type of military retirement was an exception to the typical rules regarding military retirement. There would be no need to waive this type of military retirement regardless of whether or not he wanted to pay a deposit under FERS for his creditable active duty. This same rule also applies to active duty retirees whose military retirement was awarded based on a serviceconnected disability incurred in combat or caused by an instrumentality of war. Mark learned that not only were his four years of active duty (reflected on his DD Form 214, “Certificate of Release or Dis-
As a NARFE member, Mark called the Federal Benefits Institute and he was able to uncover more details to fully understand his options. charge from Active Duty,”) creditable for deposit purposes, but he also had several periods of active duty for training that he performed prior to his initial appointment as a FERS employee that were also creditable for deposit purposes. This included the two-week training periods he performed each summer with his reserve unit. Mark found out that he could contact the National Personnel Records Center (NPRC; www. archives.gov/st-louis/military-personnel/ about-ompfs.html) and request the service dates of active duty periods that were not already reflected on his DD Form 214. He received a document that included the exact service dates and the characterization of service for each period (i.e., honorable).
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A MILITARY ANTHOLOGY: THE BENEFITS OF MILITARY SERVICE TO FEDERAL RETIREMENT
Mark knew that his weekend drills were not considered active duty for training, so this service wasn’t creditable. However, he did go on leave without pay (LWOP-US) for a couple of periods of active duty while federally employed, and he learned those periods of LWOP-US would not be creditable toward his FERS retirement unless he paid the military deposit. He was happy to find out that the military deposit amount due for his periods of LWOP-US was the lesser of either 3 percent of his military basic pay earned or the amount of FERS deductions that would have been withheld from his civilian pay had he not gone on LWOP-US. At first, his agency didn’t compute this properly and they attempted to charge him the higher of the two. He also had new interest accrual dates (IAD) for these periods of LWOP-US that gave him extra time from the effective date of his return to civilian duty to pay those deposits with no interest. His agency mistakenly attempted to charge him interest on these periods of LWOP-US using the older IAD for the military service he performed prior to his initial FERS appointment. If he hadn’t contacted NARFE, Mark would have assumed that his agency computations were correct and would have paid much more than necessary. These types of mistakes are frequently not identified or are corrected years later. Mark found out that he didn’t need to pay a deposit for the periods of military leave he used while federally employed to perform active duty with his reserve unit each summer. He realized that he had already paid into FERS while receiving the civilian pay for military leave. That service is already creditable toward his FERS retirement.
If he hadn’t spoken to NARFE, Mark would have assumed that his agency computations were correct and would have paid much more than necessary. Once the dust settled, Mark ended up paying approximately $5,000 for all his periods of creditable military service. Mark will have approximately 18 years of federal civilian service under his belt when he retires at age 62, but the addition of more than four years of military service will give him over 20 years of creditable service in the computation of his FERS annuity. Instead of getting 1 percent of his high-three average salary for each of the 18 years of FERS service, OPM will give him 1.1 percent of his high-three average salary for each of his more than 24 years of total creditable service. In Mark’s case, this was an additional $9,000 per year for the rest of his life. That’s not a bad deal for $5,000.
Conclusion
Those who have prior and concurrent military service should communicate clearly with their agency benefits and retirement officers to discuss how their military service might affect various federal benefits and/or retirement options as federal employees. There are other factors to consider, which include but are not limited to, veterans’ preference in job appointments as well as certain protections during agencywide reductions-in-force. For those who are having difficulty getting straight answers to questions regarding federal benefits, NARFE’s Federal Benefits Institute can help you plan for retirement with full benefits for your service to our country. —JAMES MARSHALL, DEPUTY DIRECTOR, FEDERAL BENEFITS INSTITUTE.
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CONTROL WHAT YOU CAN. INSURE WHAT YOU CAN’T.
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• In-Hospital cash benefits paid to you starting the first day you’re Hospitalized for a covered Injury or Illness. • At-Home cash benefits paid to you as soon as Medicare approves post-Hospital home recovery treatments your doctor recommends. • Cash benefits paid in addition to any other coverage you may have, and you can use the money however you choose. • Coverage cannot be canceled because of your health or your age. • Economical group rates specifically negotiated by NARFE for our members.
NARFE Hospital Income and Short Term Recovery Insurance Plan: Available to NARFE Members and spouses age 65 and older with guaranteed acceptance.* To learn more or enroll in the NARFE Hospital Income and Short Term Recovery Insurance Plan, Call 1-800-233-5764 or visit us at www.narfeinsurance.com Request Number 081524-1-1-1
*This policy is guaranteed acceptance, but it does contain a Pre-Existing Conditions Limitation. All benefits are subject to the terms and conditions of the policy. Policies underwritten by Hartford Life and Accident Insurance Company detail exclusions, limitations, reduction of benefits and terms under which the policies may be continued in full or discontinued. Plans may vary by state. The Hartford® is The Hartford Financial Services Group, Inc., and its subsidiaries, including issuing company Hartford Life and Accident Insurance Company. Hospital Indemnity Form Series includes SRP-1151, or state equivalent.
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IS DISABILITY RETIREMENT FOR YOU? For those who become disabled while in government service, there are alternatives to filing a disability claim. By Everett A. Chasen
A disability retirement annuity is a benefit the U.S. government provides to protect its employees who are no longer able to provide “useful and efficient” service in their current grade or pay levels because of a medical condition. According to the Office of Personnel Management (OPM), disability retirement should be “a last resort” and is “appropriate only when reasonable efforts to preserve the person’s employment has failed.”
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IS DISABILITY RETIREMENT FOR YOU? In the July 2014 issue of narfe magazine (p. 30), an article, “A Mixed Blessing: Disability Retirement,” explained the benefit and questioned whether applying was worth the effort. The answer, for some employees, was no. Less than adequate benefits, considerable delays in obtaining them, paperwork issues and unsympathetic supervisors were all cited as hurdles those with disabilities or health issues had to consider and overcome. Despite these obstacles, OPM receives 8,000 to 9,000 applications for disability retirement from federal employees every year. If you are considering filing a disability claim, what should you know before you apply? What can you do to increase your chances of success? What alternatives may allow you to avoid applying for disability retirement altogether, yet still take care of yourself and your family properly while managing your disability or health issue?
Marshall suggests you begin the application process as soon as possible. “The worst-case scenario,” he says, “is that you are approved for disability retirement, but feel that you can still keep working in your current job for a while. If that’s the case, just keep on working and turn down the disability retirement. If it gets worse, you can always reapply.” As narfe magazine previously noted, it’s quite a process to get approval from OPM for disability retirement. “But it’s worth it,” Marshall believes, “especially if you’re not old enough to retire.” If your application for disability retirement is approved, you receive 60 percent of your high-three average salary for the first 12 months after approval. After that, as long as you are still unable to do your job and cannot be accommodated, you receive 40 percent of your high-three salary until age 62. At that time, if you are in the Federal Employees Retirement System (FERS), your benefits are recalculated.
WHAT TO EXPECT WHEN APPLYING
START A DIALOGUE EARLY
James Marshall, deputy director of NARFE’s Federal Benefits Institute, offered the first step any federal employee considering disability retirement should take. “As soon as you start finding yourself in a situation when your health is interfering with your job performance, you need to start talking to your supervisor and to Human Resources,” he emphasizes. “Too many people wait until they have a bad relationship with their boss because their boss is unhappy they can’t do their job anymore.” 36
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Being upfront about a health issue makes it easier for agencies to make job accommodations. Software or equipment is available for people with low vision and for those who have motor difficulties. Physical relocation, increased telework or job reassignments are all possible and are easier to obtain before an employee has a confrontation with a supervisor about deteriorating performance. According to Ken Zawodny, OPM’s associate director of retirement services, “agencies should attempt to retain employees with disabilities by accommodating their disability and must exhaust all reasonable efforts to alleviate service deficiencies through accommodation before counseling an employee to seek disability retirement or support a request for disability.” The Rehabilitation Act of 1973 obligates agencies to apply reasonable accommodation in both the employee’s current position and any vacant position to which an employee could be reassigned.
The solution is to start a dialogue about disability early. Have a discussion with your supervisor and see if you can work out an accommodation. If you can’t, there’s nothing wrong with going through the process of applying for disability retirement.
An agency cannot force you to apply for disability retirement, nor can it keep you from doing so. The agency’s role is to tell OPM whether it believes you can continue to do your job in your current situation, and whether the agency can provide accommodations that will enable you to do so if you cannot. OPM bases its decision on your job description, the opinion of your physician and whether or not your agency can find ways to accommodate your needs. The solution is to start a dialogue about disability early. Have a discussion with your supervisor and see if you can work out an accommodation. If you can’t, there’s nothing wrong with going through the process of applying for disability retirement. Susan J. Aitel was able to continue working for the U.S. Department of Education after spinal fusion surgery because she and her agency were able to work out a way to accommodate her needs. Before her back troubles grew serious, she had signed a telework agreement with the department, allowing her to work from home one day a week, the maximum amount the organization permitted under such agreements. After surgery, she was physically unable to commute to her Washington, D.C. office, and entered into a special agreement that allowed her to telework while she recovered. She did so for a few years, adding hours as her health permitted, until she decided to take regular retirement. “If you have a telework agreement where you are, get on it as soon as you can, even if you don’t imple-
ment it,” she suggests. “And be careful not to abuse it. Keep good records of what you’re doing.” Your agency may tell OPM they believe you can do your job satisfactorily, but OPM can still approve disability retirements because of the cumulative effect the work may have on your future health. OPM gives great weight to physician testimony, and letters from doctors should be clear, specific and comprehensive on why your physician thinks you cannot do your job. Zawodny explains that detailed medical information is required to confirm you are disabled. The medical documentation must state symptoms and functional impairments associated with your diagnosis, and you must keep OPM informed if your disability status changes or you receive additional documentation. Those with terminal illnesses may also have a choice to make: whether to retire or to take whatever sick leave they have left in anticipation they might die while still a federal employee. Find out what your family gets if you die while employed or after being separated. First get an estimate, and then decide what to do. Most agencies will work with you in this situation. Employees with a life-threatening illness also may be eligible for the alternative form of annuity (AFA) retirement option, in which they receive a lump-sum payment of their Civil Service Retirement System (CSRS) or FERS retirement contributions plus a reduced annuity. Although the actuarial reduction is applied to the annuity, it does not apply to any applicable spousal survivor benefits. Those taking disability retirement are not eligible for AFA. There are two ways to lose disability retirement: Up to the age of 60, you may be subject to an earnings test or a medical review. OPM may ask you to visit a physician to determine whether your disability has improved or not, and the agency will not allow you to earn more than 80 percent of the salary you earned when you separated from government (although that salary is adjusted for inflation every year). After age 60, this no longer applies. W W W. N A R F E . O R G
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IS DISABILITY RETIREMENT FOR YOU? ALTERNATIVES TO DISABILITY RETIREMENT
OPM SUGGESTIONS
To speed up claims processing, Zawodny suggests FERS applicants “work closely with their agencies to gather the information OPM will need to make the disability determination,” and that “a complete application with all necessary paperwork and medical documentation” will help OPM make final decisions more quickly. He also suggests that if you are not covered under the Civil Service Retirement System (CSRS), you should apply for Social Security disability as soon as you are no longer working. Social Security will deny applications if you are still receiving earnings for work you performed. Social Security disability affects the amount FERS and CSRS Offset employees may receive under disability retirement until you reach age 62—after that, it no longer does. Other OPM suggestions include keeping applicant and agency contact information up-to-date, including home and email addresses and phone numbers, and promptly responding to all OPM requests related to your application. OPM has hired additional employees recently to process claims and is continuing to identify opportunities to further streamline the process. 38
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If you’re old enough to qualify for a regular, voluntary retirement and your plan was not to retire anytime soon, but you have to because of your deteriorating health, contact your agency retirement office and have them prepare two retirement estimates: one for a voluntary retirement and the second for disability retirement. Compare the two; understand that voluntary retirement claims are processed more quickly and with less paperwork; then decide what’s best for you. “Again, get estimates on both,” Marshall said. “Sometimes it’s worth doing one, sometimes the other. Sometimes agencies tell employees they’re not going to qualify for disability retirement because they are eligible for regular retirement – but that is not true.” There are also non-disability retirement options available to those not yet eligible to retire, such as deferred annuities for those who have completed enough creditable civilian service to have their annuity rights vested but are not yet old enough to retire, or postponed annuities for those who face reductions in their annuity because they have not yet met the age requirements for a full annuity. Those options are only worth considering if OPM turns down your request for disability retirement. FERS employees can also consider the MRA + 10 retirement option, for those who reach the minimum retirement age with 10 years of creditable service, determined by the year you were born. To see if you are eligible, see www.opm.gov/retirement-services/ fers-information/eligibility/. Federal employees whose disability was caused by an on-the-job injury have another alternative to consider: workers’ compensation. If you sustain a personal injury while performing your duties, or develop a disease related to your employment, you are entitled to the medical, surgical and hospital services and supplies you will need to treat your injury and transportation for obtaining care. If you sustain a disabling, job-related traumatic injury, you can receive your regular pay for up to 45 calendar days.
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IS DISABILITY RETIREMENT FOR YOU? Employees who are seriously disabled while working should apply for both disability retirement and workers’ compensation at the same time. Keep in mind that you have only 12 months to apply for disability retirement from the date of separation, and that there are advantages and disadvantages for both. After that, if you still cannot go back to work, you can use sick or annual leave, enter a leave without pay status, or be terminated and claim compensation from the U.S. Department of Labor’s (DOL) Office of Workers’ Compensation Programs. Compensation is generally paid at the rate of two-thirds of your salary if you have no dependents and three-quarters of your salary if you claim one or more. Employees who are seriously disabled while working should apply for both disability retirement and workers’ compensation at the same time. Keep in mind that you have only 12 months to apply for disability retirement from the date of separation; that you can only participate in one of these programs; and that there are advantages and disadvantages for both. At age 62, federal employees covered under FERS receive disability benefits commensurate to the retirement benefits they would have gotten had they worked until that time, plus inflation and anticipated step increases on the GS schedule. However, those on workers’ compensation can continue to receive full benefits as long as they live, but when they die, their spouses cannot collect an annuity and cannot continue to participate in the Federal Employee Health Benefits (FEHB) Program, unless the employee’s death was directly caused by their injury. The DOL will help employees receiving workers’ compensation to find a job – including a new job with the federal government – once they start to get healthier and 40
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are able to work again, while OPM does not help those with disability retirement to get another job. (Those who do return to federal service immediately after receiving workers’ compensation receive retirement credit for all the years they were receiving compensation.) It is also possible to be approved for disability retirement but to suspend that retirement while receiving workers’ compensation. Later in life, if you want to switch – or if you lose your workers’ compensation benefits because the DOL thinks you are getting better and can work again – you can only do so if you’ve already been approved for disability retirement within 12 months of separation from federal service. You can also switch back in your 60s or 70s, so that your spouse can continue to get benefits after you die. Federal employees also should consider whether or not taking out a long-term disability insurance policy before an injury occurs is worthwhile. Most government agencies do not offer such insurance, but there are insurance agencies, such as AFLAC, that will provide an additional source of income for those who cannot work and have exhausted their sick and annual leave. In the first year after FERS employees are disabled, they receive 60 percent of their high-three annual salary; starting with the 13th month, they receive only 40 percent. For some people, especially single parents or those who are the only wage earners in their household, this may not be enough, and they should consider taking out such insurance from a private provider. Aitel concludes, “I think it’s more mentally healthy to be working than not, but if you need disability retirement, that’s what it’s there for!” For more information, read Chapters 60 and 61 of OPM’s CSRS/FERS Handbook (available online at https://www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/) that deal with disability retirement and survivor annuities. —EVERETT A. (EV) CHASEN IS A WRITER AND COMMUNICATIONS CONSULTANT IN THE WASHINGTON, D.C., AREA. HE RETIRED FROM THE FEDERAL GOVERNMENT AFTER 35 YEARS OF SERVICE.
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TAX CUTS AND JOBS ACT: PLANNING STRATEGIES
L
ast month’s column discussed the Tax Cuts and Jobs Act of 2017 (TCJA) and a few of the changes that will affect nearly all taxpayers. In this month’s
column, I will highlight a couple strategies taxpayers may want to consider in light of the new rules. To start, we will pick up with the example of the 65-yearold couple (described in last month’s column) who has $30,000 in itemized deductions, which consists of $10,000 in charitable donations, $10,000 in state and local taxes (SALT) and $10,000 in mortgage interest. Due to the TCJA increasing the standard deduction to $26,600 (including the extra $2,600 for both spouses being age 65 or older), this couple will effectively receive a tax benefit of only $3,400 on their $10,000 charitable contribution. However, by utilizing a “bunching” strategy, it’s possible for them to increase the tax benefit they claim on their charitable contributions. Rather than donating $10,000 each year, the couple could instead bunch their donations and contribute multiple years’ worth of donations in a single calendar year. For example, if the couple bunched together four years’ worth of donations in one year, and then made no donations the next three years, they’ll increase their itemized deductions in
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that first year to $60,000. Without any charitable contributions in years two through four, their itemized deductions will fall to $20,000, which means they will be claiming the $26,600 standard deduction in those years. By bunching their charitable contributions, the couple will receive a tax benefit on the entire $30,000 additional charitable contribution the couple made that first year. Over the four-year period, the bunching strategy will produce $139,800 in total itemized and standard deductions ($60,000 the first year, followed by $26,600 in years two, three and four). On the other hand, if the couple continues donating $10,000 per year, their itemized deductions would only total $120,000 ($30,000 in itemized deductions per year for four years). Assuming a tax rate of 22 percent, the bunching strategy will produce an additional tax savings of about $4,356 over the four-year period. If you don’t like the idea of giving a charity multiple years’ worth of donations at once, you may want to consider using
BY MARK A. KEEN,
CFP®
a donor-advised fund. These funds are essentially charitable investment accounts, which donors can establish to support any IRS-qualified public charity. You may contribute cash, securities or appreciated assets to the donor-advised fund and you typically will be allowed to claim a charitable deduction in the year the contribution was made. The funds may then be invested for tax-free growth until the time you direct grants to your IRS-qualified public charity(s) of choice. I’ve focused primarily on charitable donations, because this is the one itemized deduction in which taxpayers have complete control when it comes to the timing and amount. There may be some limited opportunities with state income taxes and medical expenses, but it’s very difficult, if not impossible in many cases, to bunch other itemized deductions. For those taxpayers whose itemized deductions are less than the standard deduction, bunching will work only if they bunch enough deductions to push them over the standard deduction amount. For example, if the couple’s itemized deductions totaled $20,000, they would need to increase their charitable contributions (or other itemized deductions, if possible) by more than $6,600 in order to itemize deductions
BENEFITS RESOURCES NARFE offers members a wide range of information on federal benefits. Visit www. narfe.org/federalbenefits and www.narfe.org/ FederalBenefitsInstitute.
rather than claim the standard deduction. However, if you’re subject to required minimum distributions (RMDs), the qualified charitable donation (QCD) may be an attractive alternative to bunching deductions. The QCD involves sending money directly from your IRA to your charity of choice. The primary benefits of the QCD are you don’t have to recognize the amount you send from your IRA to the charity as taxable income like you
do a normal IRA distribution, and the QCD will go toward satisfying your RMD. While you don’t recognize the QCD as taxable income, you don’t get to claim it as an itemized deduction either. But that’s exactly why the TCJA made the QCD more attractive – the $10,000 cap on State and Local Tax (SALT) deductions, coupled with the higher standard deduction, will result in far more taxpayers claiming the standard deduction, which means they wouldn’t receive a write-off for their charitable contributions anyway. The TCJA ushered in the most sweeping changes to the tax code since 1986. Hopefully the ideas presented this month will help you. MARK A. KEEN, CFP®, IS PARTNER, KEEN & POCOCK, AND AN INVESTMENT ADVISER REPRESENTATIVE AND REGISTERED PRINCIPAL OF THE STRATEGIC FINANCIAL ALLIANCE, INC. (SFA). SECURITIES AND ADVISORY SERVICES ARE OFFERED THROUGH SFA.
NARFE NATIONAL LIFE MEMBERSHIP APPLICATION National Life Membership offers a hedge against future dues increases and affirms a member’s ongoing support of NARFE’s mission to serve federal employees and retirees. National dues are paid for life; applicable chapter dues are billed annually.
CONTACT INFORMATION o Mr. o Mrs. o Miss o Ms. Full Name _____________________________________________ Street Address _________________________________________ Apt./Unit ______________________________________________ City _______________________ State _____ ZIP _____________ Phone (__________) ____________________________________ Email ________________________________________________ Date of Birth _____ /_____ /_________ dd
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Recruiter ID # (if applicable) _______________________________ Chapter Number (if applicable) ____________________________ (call 800-456-8410 for chapter information) MEMBERSHIP INFORMATION Member Number: _______________________________________ (New members) Membership is open to civilians in any agency of the federal or D.C. (before Oct. 1, 1987) governments eligible for a federal annuity.
Thank you for becoming a National Member for Life. You will receive a membership card, certificate and special lapel pin. Please allow six weeks for processing. Dues payments & gift contributions to NARFE are not deductible as charitable contributions for income tax purposes.
I am a (check all that apply)
o Active Federal Employee o Active Federal Employee Spouse
o Annuitant o Annuitant Spouse o Survivor Annuitant
Life Membership Fee Schedule Ages 30-39 40-50 51-55 56-60 61-65 66-70 71-75 76-80 81-90 91-100+
Single or Quarterly Payment Installments $1,796 $450.25 1,408 353.25 1,127 283.00 960 241.25 801 201.50 653 164.50 514 129.75 392 99.25 251 64.00 127 33.00
PAYMENT INFORMATION o Single Payment or o Quarterly Installments (4 payments) Life Membership fee amount: $ _____________________ PAYMENT OPTIONS o Check or Money Order (Payable to NARFE) o Charge my: o MasterCard o VISA o Discover o American Express Card No. _________________________________________ Expiration Date _____ /_______ mm
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Name on Card _____________________________________ Signature ________________________ Date ___________ MAIL THIS APPLICATION TO NARFE Member Records 606 N. Washington St. / Alexandria, VA 22314-1914 W W W. N A R F E . O R G
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MARCH
0.24%
0.65%
-2.55%
0.69%
-0.76%
FEBRUARY
0.21%
-0.96%
-3.69%
-3.79%
-5.07%
JANUARY
0.20%
-1.14%
5.72%
3.34%
5.00%
YTD
0.66%
-1.45%
-0.77%
0.11%
-1.08%
1 YEAR
2.40%
1.37%
13.96%
13.18%
15.56%
3 YEAR*
2.13%
1.48%
10.81%
8.25%
6.04%
5 YEAR*
2.13%
2.20%
13.36%
12.01%
6.92%
10 YEAR*
2.36%
3.88%
9.55%
10.48%
3.08%
Uncertainty about the economic impact of potential trade negotiations seemed to drive much of the investor sentiment and contributed to mixed equity results. Meanwhile, the Federal Reserve observed enough economic strength to justify a federal funds target rate increase to try stave off future inflation. The C Fund and the I Fund had losses, although weakness in the dollar buffered international returns. The S Fund held a slight gain as did the F Fund, which benefitted from some Treasury rates declining. The L Funds all had negative returns.
L INCOME
L 2020
L 2030
L 2040
L 2050
—BY SEAN MCCAFFREY, CHIEF INVESTMENT OFFICER, THRIFT SAVINGS PLAN
MARCH
-0.08%
-0.33%
-0.78%
-0.96%
-1.11%
FEBRUARY
-0.70%
-1.34%
-2.48%
-2.98%
-3.41%
JANUARY
1.10%
1.84%
3.12%
3.66%
4.15%
YTD
0.32%
0.14%
-0.22%
-0.39%
-0.53%
1 YEAR
4.72%
6.90%
9.75%
11.06%
12.26%
3 YEAR*
3.61%
4.89%
6.50%
7.19%
7.80%
5 YEAR*
4.09%
6.43%
8.13%
9.06%
9.88%
10 YEAR*
3.93%
5.48%
6.52%
7.03%
N/A
2018
G FUND
F FUND
C FUND
S FUND
I FUND
2018
*ANNUALIZED
*ANNUALIZED
RETURNS are net of the effect of accrued administrative expenses and investment expenses/costs. Source: TSP (For additional monthly returns, go to www.tsp.gov.) G Fund: Government securities (specially issued to the TSP) F Fund: Government, corporate and mortgage-backed bonds C Fund: Stocks of large- and medium-size U.S. companies S Fund: Stocks of small- to medium-size U.S. companies (not included in the C Fund) I Fund: International stocks of 21 developed countries L Fund: (Lifecycle) Invested in the G, F, C, S and I Funds (The proportion of L Fund balance invested in each of the individual TSP funds depends on the L Fund chosen.)
OPM RETIREMENT CLAIMS PROCESSING STATUS
2017
’18
For the Record
UNCERTAINTY ABOUT TRADE NEGOTIATIONS YIELDS MIXED RESULTS
THRIFT SAVINGS PLAN FUND RETURNS
Claims Received
Inventory Avg # of Days (Steady State % Processed in to Process Case in is 13,000) 60 Days or Less (FYTD) More Than 60 Days
FEBRUARY 9,114 23,916 MARCH 7,216 20,530 APRIL 6,581 18,932 MAY 5,548 16,140 JUNE 6,141 14,530 JULY 10,070 17,091 AUGUST 7,136 17,125 SEPTEMBER 8,810 16,828 OCTOBER 8,850 18,860 NOVEMBER 5,572 19,294 DECEMBER 5,568 14,515 JANUARY 14,590 20,467 FEBRUARY 13,290 24,225
56% 61% 56% 54% 55% 55% 57% 57% 59% 58% 62% 60% 64%
104 105 80 89 99 98 105 93 93 97 96 100 109
FOR THE NUMBER of new retirement cases the Office of Personnel Management (OPM) receives each month by agency and the percent with errors that it returns to those agencies, go to www.opm.gov/retirement-services/. Source: OPM 44
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COUNTDOWN TO COLA
T
he Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.44 percent in February 2018. To calculate the 2019 cost-of-living adjustment (COLA), the indices of July, August and September 2018 will be averaged and compared with the 2017 third-quarter average of 239.668. The percentage increase determines the COLA. February’s index, 242.988, is up 1.39 percent from the base. Benefits awarded under the Federal Employees’ Compensation Act (FECA) to individuals suffering work-related injuries or illnesses are adjusted according to each calendar year’s percentage change in the CPI-W. February’s index is 1.02 percent higher than the December 2017 base index of 240.526. The CPI represents purchases of food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. Included are various government fees, such as water charges, auto registration fees, and sales and excise taxes.
MONTH
CPI-W
OCTOBER 2017
240.573
NOVEMBER DECEMBER
Monthly % Change
% Change from 239.668
-0.15
0.38
240.666
0.04
0.42
240.526
-0.06
0.36
JANUARY 2018
241.919
0.58
0.94
FEBRUARY
242.988
0.44
1.39
MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER
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NARFE News
DID YOU KNOW?
PREFERENTIAL VOTING EXPLAINED
T
he adoption of the “one member, one vote” governance change in 2016 didn’t just change who elects NARFE officers, it changed how they are elected. One consequence is that there’s no practical way to conduct the election without a separate ballot. With four candidates on the ballot for one office, it’s likely that no one candidate will get a majority on the first ballot, causing an incomplete election and requiring yet another round of balloting. The following are responses to questions you may have. Isn’t it “most votes wins?” The NARFE bylaws require a majority vote, which is “more than half.” Plurality, which is the most votes whether or not a majority, would be a direct violation of the bylaws. How about a runoff election? This option is not in the bylaws and violates a member’s right to run for office. Dropping names from the ballot indicates that those candidates didn’t have the same opportunity as the top two candidates to win a runoff. So, what do we do? One solution is to have the voters rank the candidates in order of preference, aptly named preferential voting. The one potential complication is that Robert’s Rules states that this method must be allowed in the bylaws. However, this voting method violates no one’s rights, has been shown to be legal in court cases, and leaves everyone on the ballot.
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The NARFE Federal Benefits Institute offers a series of Benefit Briefs on key federal benefits topics, including “Speeding the Retirement Journey,” “Survivor Benefits Guide,” and “How Much Money Do You Need To Retire?” These briefs are free for members. Access them at www.narfe. org/federalbenefitsinstitute/ ?fa=BenefitBriefs.
The NEB decided to ask the membership on the first ballot for permission to suspend the rules and use preferential voting on the next ballot, if needed. Acting on the advice of the NARFE parliamentarian, the National Executive Board (NEB) decided to ask the membership on the first ballot for permission to suspend the rules and use preferential voting on the next ballot, if needed. Thus, the ballot for the election of NARFE officers this year will include a question to that effect, which will require a twothirds vote. But, what if it doesn’t pass? If preferential voting doesn’t pass, the election for president will be re-balloted repeatedly until a winner is determined. This would have significant financial implications, as well as an impact on when the new national president would assume office. What is preferential voting? If there is a two-thirds vote to suspend the rules, NARFE will send out the next election ballot with spaces to rank your choices in order of preference. Once the second ballot is received, an independent and impartial voting company will first tally to see if the first-place votes return a majority for any candidate. If no majority, the first, second, third and fourth place votes will be assigned a value, such as 3 points
for first, 2 points for second, 1 point for third, and 0 points for fourth place. There’s no advantage to not filling out all the preferences; it just means that you lose your voice if your top candidate(s) aren’t elected. For example, assume there are four candidates: Adams, Barker, Cooper and Denmark. The voter prefers Cooper, so that candidate is marked with a “1” for the first choice. Then the voter chooses Barker as the second choice, marking it with a “2.” Denmark, the third choice, is marked with “3” and Adams, as the last choice, is marked with “4.” In the tally, Cooper gets 3 points, Barker gets 2 points, and Denmark gets 1 point. All preferences from all voters are taken into account. In this case, Adams and Barker could be the first choice for two different groups of people, and Cooper (their second choice) could be a compromise candidate on whom all agree. In a preferential vote, that preference comes to the surface, and the candidate truly favored by the bulk of the voters is revealed. Preferential voting doesn’t violate anyone’s rights and returns a reliable answer. —COLETTE COLLIER TROHAN SERVES AS NARFE’S PARLIAMENTARIAN.
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NARFE’S PREMIER CONFERENCE AUGUST 26-28, 2018 • JACKSONVILLE, FLORIDA HYATT REGENCY JACKSONVILLE RIVERFRONT
5 REASONS TO ATTEND LEARN With more than 30 sessions designed to benefit the federal community, FEDcon18 attendees have unlimited opportunity to learn from the best! Nationally recognized experts help you take full advantage your federal benefits, master the retirement process, stay financially fit, and much, much more!
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Protecting and preserving your federal benefits starts at the local level. Workshops on advocacy and local leadership help you develop skills that will help you strengthen the voice of the federal community where you live and work.
CONNECT
This one-of-a-kind conference gives attendees, speakers and vendors the opportunity to lean in and learn from one another in a forum not available until now!
DEVELOP
Professionally and personally, Fedcon18 offers tools and training to enrich your health, wealth and lifestyle.
CELEBRATE
FEDcon18 celebrates NARFE’s 97 years of continued service to the federal community. Celebrity speakers, evening entertainment and events will honor the contributions of those who serve.
MAKE PLANS TODAY TO BE AT FEDcon18! AUGUST 26-28, 2018 IN JACKSONVILLE, FL NARFE Annual Business Meeting, August 29, 2018
REGISTER
Register today at www.narfe.org/fedcon18. Registration by phone is also available by calling 571-483-1265. Registration Fee: $175 | Gala Ticket: $75
CHOOSE YOUR SESSIONS
Everyone has access to the General Sessions, two lunches and Florida Night. You will have the opportunity to customize your experience by choosing sessions and workshops you would like to attend.
ADD A DAY TO VISIT JACKSONVILLE
There’s so much to do and see in Jacksonville, Florida! Beyond the majestic downtown skyline, you’ll find quaint riverfront streets, live music venues and sidewalk cafes. Make plans to add a day or two your trip and make a vacation out of it! Tours organized for conference attendees will be available soon.
BOOK YOUR HOTEL ROOM
Hyatt Regency Riverfront Jacksonville 225 East Coastline Drive | Jacksonville, FL 32202 Conference rate for accommodations is $99 plus tax per night. To make your reservation, visit www.narfe.org/fedcon18 and click on Travel > Hotel or call 888-421-1442.
FLYING IN?
NARFE has negotiated discount rates for FEDcon18 attendees.
Delta Air Lines – Visit www.delta.com/meetings and select “Book a Trip,” then enter meeting ID NMR9W in the “Meeting Code” box. A $25 charge will apply if you book your flight by phone (800-328-1111). United Airlines – Visit www.united.com and select “All Search Options” under “Book Travel,” then enter offer code ZEC9550455 in the “Promotions and Certificates” box. A $25 charge will apply if booking by phone (800-426-1122).
Member Perks
SAVE MONEY WITH NARFE PERKS NARFE appreciates your service, and so do businesses across the country. Whether you are planning your next vacation or planning for retirement, members can save money on everyday purchases, thanks to our Affinity Partners. It’s just one more way we’re able to say “thank you” for being a NARFE member. INSURANCE
NARFE Insurance Services 800-233-5764 www.narfeinsurance.com Designed exclusively for NARFE members, plans administered by Mercer Health & Benefits Administration LLC: Group Term Life Insurance, Senior Age Whole Life Insurance, Senior Term Life Insurance, Group Hospital Income Insurance, Hospital Income and ShortTerm Recovery Insurance, and Pet Insurance.
NEW FEDERAL EMPLOYEE PROGRAM ADMINISTRATOR
Starr Wright 800-424-9801 StarrWrightUSA.fepla.com/ NARFE PROTECT YOURSELF and YOUR CAREER ... Introducing Special Federal EMPLOYEES and CONTRACTORS Professional Liability Insurance with a NARFE DISCOUNT. Starr Wright USA is offering up to $2,000,000 of coverage including LEOSA coverage. Congress has legislated up to 50% reimbursement from Agencies for qualified EMPLOYEES and we even offer CONTRACTORS coverage too! Visit https:// secure.fepla.com for more information.
MOVING SERVICES
Bekins Van Lines 800-456-6832 narfe@bekins.com All NARFE members will receive contracted pricing for all interstate shipments. This will apply to packing, 50
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transportation and full-value coverage against damages. Please mention you are a NARFE member.
MiniMoves 800-300-6683 MiniMoves is America’s only national mover exclusively focused on small shipments; a piece, a room or a full condo. There’s no minimum weight charge. Our binding quote helps you plan your move with confidence. Member discount - $25 off 500 pounds; $50 off larger moves. Use code 1292.
Wheaton World Wide Moving 800-248-7960 narfe@wvlcorp.com At Wheaton, we know interstate relocating is much more than trucks and boxes. Moving is not simply an address change. It’s a life change. With a network of top-quality agents throughout the United States, Wheaton provides peace of mind with every relocation. We offer you, as a NARFE member, benefits to help you have a positive interstate relocation experience. Call today and mention you are a NARFE member to start the moving process.
PRODUCTS NEW
Office Depot and OfficeMax 855-337-6811, extension 2897 www.officediscounts.org/ narfe Office Depot and OfficeMax are one company! NARFE Members can save up to 80% on over 93,000 products. Great for your printing, cleaning and of-
fice needs. Shop online or in any Office Depot or OfficeMax store. Enjoy FREE next-day delivery on online orders over $50! Visit www.officediscounts. org/narfe to shop online or print off a FREE Store Purchasing Card or call 855.337.6811 x 2897 to place your order over the phone.
Purchasing Power 866-670-3479 purchasingpower.com/NARFE With Purchasing Power, thousands of brand-name products are within reach. As members of NARFE, you can buy today and pay over time through payroll or annuity allotment. Choose from the latest computers, appliances, vacation packages and more. Never worry about hidden fees, credit checks or interest. Pay over 6 or 12 months, and you’re done. Save 5% with code NARFEVIP.
TELECOMMUNICATIONS
Verizon FiOS www.narfe.org/memberperks NARFE members can save up to $10 a month on a new qualifying Triple Play bundle with Verizon Fios Internet, TV and home phone service – savings of up to $120 per year. This exclusive onlineonly savings is only available to new Verizon customers or those upgrading to the Triple Play Package.
TRAVEL
Alamo 800-462-5266 www.alamo.com Drive Happy® with Alamo® where
NARFE members receive year-round discounts. Call or visit our website today and reference Contract ID 262544.
Avis Car Rental 800-633-3469 www.avis.com Avis Car Rental is one of the world’s best-known car rental brands with approximately 5,500 locations in more than 165 countries. Avis has a long history of innovation in the car rental industry and is one of the world’s top brands for customer loyalty. Call or book your reservation now at Avis.com using the NARFE AWD number A701900.
Budget Car Rental 800-218-7992 www.budget.com Budget Car rental was founded in 1958 for the “budget-minded” renter. Today, with approximately 3,500 locations around the world, Budget is a leading rental car supplier now offering discounts to members of NARFE. Call or book your reservation now at Budget. com using the NARFE BCD number D871500.
Choice Hotels International 800-258-2847 www.choicehotels.com With 6,400 hotels in the United States and throughout the world, Choice Hotels® offers something for everyone. As a NARFE member, receive 20% off your next stay at participating hotels when you use Special Rate ID 00801967. This offer is subject to availability and cannot be combined with any other offer. Advance reservations required through phone number or website above; cannot be redeemed at individual hotels. Choice Hotels brands are: Comfort Inn, Comfort Suites, Sleep Inn, MainStay Suites and more.
WELLNESS
National 800-CAR-RENT www.nationalcarrental.com You Drive A Hard Bargain. Receive up to 20% off rentals at National Car Rental. To make a reservation, call National Car Rental at 1-800-CARRENT® and reference Contract ID 5282909. For complete terms and conditions, visit www.narfe.org/ memberperks.
Wyndham Hotel Group 877-670-7088 NARFE members receive up to 20% off the “Best Available Rate” at participating locations. Call and give the agent your special discount ID number, 8000002694, at time of booking to receive discount. Call to reserve your room today at one of these fine hotels: Wyndham Hotels and Resorts, Days Inn, Ramada Inn, Microtel Inns and Suites and more. Advance reservations required through phone number above; cannot be redeemed at individual hotels.
Wyndham Extra Holidays 800-428-1932 www.extraholidays.com Excellent service and the finest comforts are standards you can always rely on with Wyndham Extra Holidays. With more spacious floor plans than a regular hotel, you can enjoy a One-, Two- or Three-Bedroom suite with separate living areas and partial or fully equipped kitchens. Please use promo code 8000002694 when calling or booking online.
HearUSA www.hearusa.com/narfe The Nation’s Most Trusted Name in Hearing Care. Choose from 250+ hearing aids from 11 manufacturers with $0 co-pay for many plans. Wireless. Bluetooth. Smartphone compatible. Nearly invisible. Risk-free 60-Day trial. Free follow-up care. Free 3-Year warranty. Call 1-855-845-2706 to see if you qualify for 2 FREE hearing aids.
Life Line Screening 800-324-9906 www.lifelinescreening.com/ NARFE Life Line Screening, America’s leading provider of community-based preventive health screenings, will conduct health screenings using state-ofthe-art ultrasound technology in your neighborhood. To schedule an appointment, please call the number above and give the operator code number BKHN075 or visit the website.
Sunrise Senior Living www.SunriseSeniorLiving.com Sunrise Senior Living, a leading provider of high-quality, individualized, senior living services, offers NARFE members a special, discounted rate. Mention code: NARFE-discount during your visit and receive a one-time 5% off of suite/room rates at any of Sunrise’s U.S. communities for one year. For a complete list of Sunrise locations, visit www.SunriseSeniorLiving.com. For a complete list of any restrictions, visit www.narfe.org/ memberperks. For new move-ins only.
NARFE Member Perks are designed to provide NARFE members with a quality option in their search for commonly used products and services. NARFE makes no guarantee on any products and services listed and encourages its members to shop and compare before making a decision on any financial matter. Check out these additional Member Perks on the NARFE website for more details!
W W W. N A R F E . O R G
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The Way We Worked
RESTORING THE FISH POPULATION In this photo from 1962, an agent from Minneapolis Regional Office of the U.S. Fish and Wildlife Service is gathering fish egg samples to aid with restocking and restoring efforts. For over 100 years the Fish and Wildlife Service, part of the Department of Interior, has conserved, restored, enhanced and managed the nation’s fishery resources and aquatic ecosystems. Today, the Fish and Wildlife Services applies scientific data to focus conservation activities on high-priority species and habitats throughout the United States. They currently hold 20,702,488 acres of protected land in the National Wilderness Preservation System, legally defined in the Wilderness Act of 1964. PHOTO from the Records of the U.S. Fish and Wildlife Service, National Archives, courtesy of the National Archives History Office; in collaboration with the Society for History in the Federal Government (SHFG), bringing together government professionals, academics, consultants, students and citizens interested in understanding federal history work and the historical development of the federal government. To join, visit http://shfg.org. CORRECTION: In the April 2018 issue of narfe magazine, “The Way We Worked” featured an undated photo. 52
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DID YOU KNOW? Created by Congress, the U.S. Fish and Wildlife Service was formed in 1871 with the purpose of studying and recommending solutions to a noted decline in the stocks of food fish. It is dedicated to natural resource conservation, the management of fish, wildlife, and natural habitats. Beginning in 1884, the Commission published the seminal work “The Fisheries and Fisheries Industries of the United States.” Visit www.fws.gov.
Introducing
The World’s lightest portable power chair... The Zinger It folds to a mere 10 inches at the touch of a button. More and more Americans are reaching the age where mobility is an everyday issue. Whether it’s from arthritis, bone density loss, knee and back conditions, injuries and falls or just the everyday aches and pains that come with getting older– getting around isn’t as easy as it used to be. You may have tried a power chair or a scooter. Unlike bulky power chairs, the Zinger is quick and nimble, yet it is not prone to tipping like many scooters. Best of all, it weighs only 42 pounds and folds and unfolds with ease so you can take it almost anywhere, providing you with independence and freedom. Years of work by innovative engineers have resulted in a mobility device that’s truly unique. They created a battery that provides powerful energy at a fraction of the weight of most batteries. The Zinger features two steering levers, one on either side of the seat. The user pushes both levers down to go forward, pulls them both up to brake, and pushes one while pulling the other to turn to either side. This enables great mobility, the ability to turn on a dime and to pull right up to tables or desks. Best of all, no one has to push you around. The controls are right on the steering arm so it’s simple to operate, and its exclusive footrest swings out of the way when you stand up or sit down. With its rugged yet lightweight aluminum frame, the Zinger is sturdy and durable yet lightweight and comfortable! What’s more, it easily folds up for storage in a car seat or trunk– you can even gate-check it at the airport like a stroller. Think about it, you can take your Zinger almost anywhere, so you don’t
One-touch Folding
Easy-Steer Throttle Inflatable Tires
Powerful Battery/Motor
Swivel Footrest
Available in Green (shown) and Black
Just think of the places you can go:
• Shopping • Air Travel • Bus Tours • Restaurants– ride right up to the table! • Around town or just around your house have to let mobility issues rule your life. It folds in seconds without tools and is safe, reliable and weatherproof. It holds up to 250 pounds, and it can go up to 6 mph and operates for up to 8 hours on a single charge. Why spend another day letting mobility issues hamper your independence, quality of life… or even your health?
Less than any folding travel scooter or joystick chair
Zinger Portable Power Chair Call now toll free
1-888-861-2144 Please mention code 108745 when ordering. © 2018 firstSTREET for Boomers and Beyond, Inc.
83903
10” The Zinger folds to a mere 10 Inches.
Comfortable Seating
Sturdy yet Lightweight Frame