Recently, section 401 of the “Bipartisan Budget Act of 2013,” signed into law by the President on December 26, 2013, created another class of FERS coverage, FERS-Further Revised Annuity Employee (FRAE). New career employees (as designated in the statute) hired on or after January 1, 2014, will be covered under FERS-FRAE. The Postal Service retirement coverage codes for FERS-FRAE and FERS-FRAE (LEO) employees have been designated as “E” and “F” respectively.
FERS-FRAE applies to:
- Any employee who receives an appointment not excluded from FERS coverage on or after January 1, 2014, and would normally be placed in FERS or FERS-RAE.
- There are three exceptions to this general rule; however, the date December 31, 2013, is a key date for each of these exceptions.
An individual will be excluded from FERS-FRAE coverage if any of these exceptions apply:
- The individual on December 31, 2013, was covered under FERS or FERS-RAE; or
- The individual on December 31, 2013, was performing civilian service which is creditable or potentially creditable service under FERS or FERS-RAE; or
- The individual on December 31, 2013, was not covered under FERS or FERS-RAE and was not performing civilian service which is creditable or potentially creditable service under FERS or FERS-RAE, but as of December 31, 2013, had performed at least five years of civilian service creditable or potentially creditable under FERS-RAE, including service creditable for CSRS and/or CSRS Offset.
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Human Resources
Understanding FERS-RAE and FERS-FRAE
Recently hired career employees fall into one or two categories under the Federal Employees Retirement System (FERS). The date of the career employee’s appointment will determine in which category they will be placed.
Employees hired on or after January 1, 2013, with no previous Federal service, or who had less than five years of creditable career service, are covered under a retirement plan known as FERS-Revised Annuity Employee (RAE). FERS-RAE employees are required to pay 3.1% of their basic pay towards their retirement contributions.
Employees hired on or after January 1, 2014, with no previous Federal service, or who had less than five years of creditable career service, are covered under a retirement plan known as FERS-Further Revised Annuity Employee (FRAE). FERS-FRAE employees are required to pay 4.4% of their basic pay towards their retirement contributions.
One exception to the above contribution requirements is for law enforcement officers, who are required to pay 3.6% of their basic pay under FERS-RAE and 4.9% of their basic pay under FERS-FRAE.
Rules for retirement eligibility under FERS remain the same for both FERS-RAE and FERS-FRAE. To learn more about preparing for retirement, visit https://liteblue.usps.gov/humanresources/retirement/home.shtml.
source: USPS