Federal Employee Retirement System - FERS

The Federal Employees Retirement System, a.k.a. “FERS,” is the special retirement plan that all U.S. civilian employees (think: federal government workers, with the exception of military; they’ve got their own thing) are entitled to. If this is your first time hearing about it, that’s probably because you’ve been floating around in the private (rather than public) work sector.

So what's all the fuss about FERS? Want to know what your Congressmen and women are getting in retirement, even if they do a bad job at getting anything done? Federal workers have a fixed-amount pension plan, meaning the money they put into the system doesn’t determine what they get out of it later (which is how it is in the private sector).

So how is that amount of retirement benefits determined? The longer you’re “serving” the federal government, the more you’ll get, and the higher up you are, the more you’ll get. There’s something in the federal public sector called the “high-3,” which is the highest-ranking federal job you’ve had for three years. Since most people climb the public ladder (just as folks climb the corporate ladder), their high-3 is usually their last job before they retire (or move to the private sector).

The basic calculation for the Federal Employee Retirement System is: High-3 salary x Years on the job x Pension multiplier = Annual pension payout. That doesn’t include any bonuses, overtime, or other extras, but them's the basics of FERS.