Using Retirement Benefits as a Recruiting Tool
Retirement benefits can be complex, but there are special federal retirement benefits that employers in the private sector may not offer, so it’s important to be aware of them and to share these benefits when recruiting potential employees.
The Federal Employees Retirement System (FERS) is a defined contribution system, which means the employee and the employer both contribute to FERS so eligible employees can receive a retirement income, with the government contributing the major portion. FERS is a three-tiered system.
The three tiers are the FERS basic retirement annuity, Social Security benefits and the Thrift Savings Plan (TSP).
The basic retirement annuity under FERS is a defined benefit plan that provides a guaranteed monthly income based on years of service and average salary. In the past, guaranteed annuities and even pensions were a common benefit in the private sector, but they are now becoming more and more rare. With FERS, employee contributions are withheld as payroll deductions and, after you retire, you receive an annuity payment each month for the rest of your life. FERS defines annuity as a regular, recurring payment made to a retired federal employee. Your basic annuity is determined based on your length of federal service and “high 3” average salary. Your “high 3” average pay is the highest average basic pay you earned during any three consecutive years of service. Learn more about FERS retirement.
FERS’ second tier is Social Security benefits, which provide an additional source of retirement income based on the employee’s earnings history. Learn more about Social Security and federal employees.
TSP, the third tier, is a 401(k)-style retirement savings plan that allows federal employees to contribute a portion of their salary and receive up to 5% in matching contributions from the government. The employee has control over how much to contribute to the TSP to maximize your savings up to the Internal Revenue Service annual limit. TSP provides portability, meaning that employees can retain and manage their account, subject to balance limits, if they leave federal service. Learn more about TSP.
Retirement may not be the first thing a prospective employee thinks of when applying for a federal job, but it is definitely a considerable benefit!