FERS-FRAE (Hired 2014+)

This page documents how FinZot models the FERS-FRAE (Hired 2014+) defined benefit pension plan.

Employee Contributions

Employee contributions are the portion of salary that the employee pays into the pension fund.

Field	Value
Contribution Rate	4.4% of salary
Tax Treatment	Post-tax

Vesting & Retirement Eligibility

Vesting

Vesting determines when an employee has earned the right to receive pension benefits. The following formula must evaluate to TRUE for the employee to be vested:

service_credits >= 5

Retirement Eligibility

Retirement eligibility determines when an employee can begin receiving pension payouts. The following formula must evaluate to TRUE:

OR(AND(commencement_age >= 62, service_credits >= 5), AND(commencement_age >= 60, service_credits >= 20), AND(commencement_age >= 57, service_credits >= 30), AND(commencement_age >= 57, service_credits >= 10))

Formula Variables:

• service_credits: Years of credited service
• commencement_age: Age when pension payments commence

Benefit Calculation

The annual pension benefit is calculated as:

Annual Benefit = Final Compensation × Benefit Factor × Service Credits

Final Compensation

Final compensation is the salary figure used in the benefit calculation, typically an average of the employee’s highest-earning years.

Field	Value
Method	Highest Consecutive Years
Years Averaged	3

Benefit Factor

The benefit factor is a percentage multiplier that typically varies based on retirement age. Higher ages generally yield higher factors.

CASE
  WHEN separation_age >= 62 AND commencement_age >= 62 AND service_credits >= 20 THEN 0.011
  WHEN commencement_age >= 62 THEN 0.010
  WHEN commencement_age >= 60 AND service_credits >= 20 THEN 0.010
  WHEN service_credits >= 30 THEN 0.010
  WHEN commencement_age >= 57 AND service_credits >= 10 THEN 0.010 *(1.0 -(62 - commencement_age) * 0.05)
  ELSE 0.0
END

Formula Variables:

• commencement_age: Age when pension payments commence
• service_credits: Years of credited service

Unused Sick Leave Credit

Unused sick leave converts to extra service credits at 2087 hours per year, added to the annuity multiplier on an immediate retirement. It does not count toward vesting, retirement eligibility, or the benefit-factor thresholds, and is forfeited on a deferred retirement.

Cost-of-Living Adjustment (COLA)

The COLA formula determines how pension benefits grow over time after retirement to keep pace with inflation.

IF(age >= 62, current_pension_benefit *(1 + CASE
  WHEN inflation_rate >= 0.03 THEN inflation_rate - 0.01
  WHEN inflation_rate >= 0.02 THEN 0.02
  ELSE inflation_rate
END), current_pension_benefit)

Formula Variables:

• initial_pension_benefit: The annual benefit amount at retirement
• years_since_retirement: Number of years since retirement began

Tax Treatment

Pension payouts from this plan are taxable as ordinary income.

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Note: FinZot’s pension estimates are for planning purposes only and may not reflect all plan provisions. For official benefit estimates, contact your plan administrator.