Benefit Bits-Parttime Employment

In Reply Refer To: September 19, 2000
Mail Stop 601


MEMORANDUM


Supervisors, Managers, and Team Leaders:  Please ensure that employees without access to
e-mail receive a copy of this message.


To:          All U.S. Geological Survey Employees

From:      Robert Hosenfeld             (signed)
                Personnel Officer

Subject:   Benefit Bits-Parttime Employment

This month's topic will cover parttime employment and how it affects an employee's benefits.

Federal Employees Health Benefits Program

Parttime employees who are enrolled in a Federal health plan and whose 
tour of duty is 16 to 32 hours a week will have the government 
contribution to health benefits prorated.  Consequently, parttime 
employees will pay more for their health insurance as they are required to 
pay a portion of the government's contribution based on the tour of duty 
in addition to the normal employee share.  For example, if an employee is 
working half-time or 20 hours a week, he or she must pay half of the 
government contribution in addition to the employee share. 

Federal Employees Group Life Insurance (FEGLI)

Under FEGLI, the value of the policy is based on an employee's annual 
salary.  Therefore, a parttime employee participating in the program will 
have a decreased value of his or her life insurance.  The value is based 
on actual salary earned, not the salary tables of an employee's grade and 
step.  For example, the fulltime salary for a GS-9, Step 10 in the 
Washington D.C. area for calendar year 2000 is $45,900.   If a parttime 
employee is working 32 hours a week or 64 hours a pay period, the salary 
for that parttime employee would be $36,720, not $45,900.  Therefore, the 
FEGLI value is based on the annual salary of $36,720. 

Thrift Savings Plan (TSP)

Because TSP contributions are made by payroll deduction only and are based 
on an employee's biweekly gross earnings, a parttime employee 
participating in the TSP will have a lesser amount being invested each pay 
period. 

Social Security

When the Social Security benefit is computed, no proration factor is 
applied to the formula.  However, the Social Security benefit is based on 
actual earnings, so since a parttime employee would have lower actual 
earnings than an employee who has been working fulltime, the Social 
Security benefit will be lower.

Leave

Annual and sick leave are accrued on a prorated basis according to an 
employee's tour of duty.  For example, an employee in the 8-hour leave 
category who works half time or 40 hours a pay period earns 4 hours of 
annual leave and 2 hours of sick leave per pay period.

Retirement

The enactment of Public Law 99-272 on April 7, 1986, changed the method of 
computing a retirement benefit for parttime employees.  The legislation 
was intended to correct an anomaly in the government's retirement formula 
that allowed parttime employees to receive credit as full-time workers 
when annuities were calculated.  Before April 7, 1986, an employee who had 
worked parttime for 27 years could change to fulltime for the last 3 years 
of employment and have an annuity that would be the same as an employee of 
the same grade and step who worked fulltime for 30 years.

To correct this, Public Law 99-272 required that annuity computations for 
parttime employees reflect all parttime service.  The crediting of the 
service to be eligible for retirement did not change (a parttime Civil 
Service Retirement System (CSRS) employee who works for 30 years and is 55 
can still retire), but the computation of the actual benefit will reflect 
the parttime service, as a proration factor is applied to the high-3 based 
on the employee's tour of duty. 

Let's see how:

A CSRS fulltime employee with 30 years of service receives 56 percent of 
his/her high-3 salary as an annuity.  With a high-3 salary of $50,000, 
his/her annuity will be $2,343 a month.  A CSRS parttime employee working 
20 hours a week at the same grade and step would have an annuity equal to 
50 percent of his/her high-3 salary, which would be $25,000, for an 
annuity of $1,171 a month.

A Federal Employees Retirement System (FERS) employee with 30 years of 
service receives
30 percent of his/her high-3 salary as an annuity.  With a high-3 salary 
of $50,000 his/her annuity will be $1,250 a month.   A FERS parttime 
employee working 20 hours a week at the same grade and step would have an 
annuity equal to 50 percent of his/her high-3 salary, which would be 
$25,000, or an annuity of $625 month.

It should be noted that changing to a parttime schedule at the end of a 
career can also have a negative impact on the annuity.  If an employee 
changes to a parttime schedule at the end of his or her career (when the 
salary is usually the highest), the annuity is usually calculated using 
the highest salary for the last 3 years of fulltime employment.  As a 
result, the employee's annuity may not reflect 
promotions or step increases incurred while working parttime at the end of 
his or her career.  Legislation has been introduced to address this issue. 
 

If you are a parttime employee and require additional information for your 
specific situation, you should contact your servicing personnel office.