CRPC Military and Government Retirement Benefits

Question 1

Which of the following correctly identifies the three components of the Federal Employees Retirement System (FERS)?

Accepted Answer

Social Security, FERS Basic Annuity, and Thrift Savings Plan

Answer

FERS rests on three pillars: (1) Social Security benefits, (2) the FERS Basic Annuity (a defined benefit calculated as 1% × high-3 average salary × years of service), and (3) the Thrift Savings Plan (a defined contribution plan). Together these form the 'three-legged stool' deliberately designed to replace the older CSRS single-pension model.

Question 2

The standard FERS Basic Annuity formula for a federal employee retiring before age 62 is:

Accepted Answer

1.0% × high-3 average salary × years of service

Answer

The standard FERS formula is 1.0% of the employee's high-3 average salary multiplied by years of creditable service. Employees who retire at age 62 or older with at least 20 years of service receive a slightly enhanced 1.1% multiplier. FERS multipliers are intentionally modest because the plan is designed to work in conjunction with Social Security and the TSP.

Question 3

A federal employee covered entirely by CSRS (Civil Service Retirement System) who also earned Social Security credits from a private-sector job will likely see their Social Security benefit reduced by which provision?

Accepted Answer

Windfall Elimination Provision (WEP)

Answer

The Windfall Elimination Provision (WEP) reduces the Social Security benefit formula for workers who receive a pension from non-Social-Security-covered employment (such as CSRS) but also earned Social Security credits elsewhere. The standard formula overstates the benefit for such workers by treating them as low-lifetime earners; WEP corrects for this. GPO, by contrast, applies when a government pension affects spousal or survivor Social Security benefits.

Question 4

Under the military Blended Retirement System (BRS), government TSP matching contributions vest after:

Accepted Answer

2 years of service

Answer

Under BRS the Department of Defense automatically contributes 1% of basic pay to the TSP starting on day one (vests after two years), and matches service member contributions up to an additional 4% — all matching contributions vest after two years of service. The BRS was designed to provide a meaningful benefit even to service members who leave before completing 20 years, unlike the legacy High-3 pension that requires 20 years to receive any benefit.

Question 5

The military Survivor Benefit Plan (SBP) is BEST described as:

Accepted Answer

A government-subsidized annuity that provides eligible survivors up to 55% of the retiree's pension

Answer

SBP is a government-subsidized annuity continuation program, not life insurance. Military retirees may elect SBP coverage so that an eligible beneficiary (typically a spouse) continues to receive up to 55% of the retiree's pension after the retiree's death. Premiums are paid from the retiree's pension and are partially tax-deductible. The government subsidizes roughly 45% of the actuarial cost.

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC Military and Government Retirement Benefits