Chapter 6.3, Problem 3R

To determine

To analyze: The way through which the federal government helps people invest for retirement.

Explanation of Solution

The majority of federal workers enroll in the Federal Employee Retirement System (FERS) or the Civil Service Retirement System (CSRS), one of the two retirement savings programs. Employees will also participate in the Federal Thrift Savings Plan (TSP) in both programs.

A defined benefit program for federal workers working after 31 December 1983 is the Federal Employee Retirement System Basic Pension Package. Federal agencies shall contribute funds to the FERS on behalf of employees to the amount stated by the law. The members of the FERS shall, upon retirement, be paid on the basis of their three consecutive years of salary and the number of years of service.

FERS candidates have the ability to receive retirement benefits after five years of credible civilian service, even if they leave federal government employment before retirement.