Where do retirement funds come from? Plus, NAFTA

A Reader Writes:

How is the Federal Employees Retirement System (FERS) supplement actually funded? Is it from the general retirement fund or is it done via Social Security?

Milt Replies:

The supplement is funded by FERS, not Social Security.

The FERS basic annuity was designed to supplement Social Security retirement benefits. FERS retirees under age 62 who retire with an unreduced pension are eligible for a temporary supplement to their FERS pension to fill in until Social Security eligibility is reached at age 62.

The supplement is an amount estimated to equal the Social Security benefits accrued from federal service, and is paid from the time of retirement until age 62. The FERS supplement ends at age 62 regardless of whether the individual applies for Social Security at that time. Like Social Security benefits paid before the full retirement age, the supplement is reduced if the retiree has earnings above a specified annual limit.

A Reader Writes:

Could the North American Free Trade Agreement have an impact on the Office of Management and Budget Circular A-76 process of contracting government jobs? It seems Mexico and Canada could compete for jobs identified in the A-76 process.

If the military organizations are not careful, foreign nationals could subcontract with these companies and create a situation similar to the Reliability and Maintainability Information System at Wright-Patterson Air Force Base, Ohio, having Chinese nationals as subcontractors.

Milt Replies:

I think there's plenty of domestic interest in bidding for government work without having to worry about NAFTA. If there are security issues involved, don't you think the government will cover them?

A Reader Writes:

In 1996, I elected to take a buyout at age 55. I had 16 1/2 years with civil service and 20 years' Army retirement (36 1/2 years total). I elected to make a deposit for my post-1956 military service. (No choice if I wanted to retire.) Now that I will be turning 62 this year, how does this affect my Social Security retirement?

Milt Replies:

You haven't told me whether you have coverage under Social Security. If you have 40 quarters of coverage, you're fully insured and eligible for Social Security benefits.

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at [email protected]

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