On December 26, 2007, Public Law 110-161 established special retirement provisions for CBP Officers which became effective July 6, 2008. CBP Officers employed as of December 26, 2007 had an opportunity to "opt out" of those special provisions; those employed on or after December 27, 2007 are automatically covered.
The new CBPO retirement coverage is similar to the retirement coverage for law enforcement officers and firefighters, but is applicable to only those CBPOs who are not currently eligible for law enforcement officer (LEO) retirement coverage.
Because you are currently eligible for law enforcement officer (LEO) coverage, the new CBPO retirement coverage does not apply to you. Therefore, your retirement coverage and all related conditions associated with that coverage, such as deductions, annuity benefit accrual rates, and mandatory age retirement, will remain unchanged.
As an eCBPO employee, you are able to retire under the following early retirement provisions:
- If you were hired prior to 07/06/2008: you will follow your retirement system’s (CSRS or FERS) normal guidelines for retirement.
- If you were hired on or after 07/06/2008, you are able to retire under the following guidelines:
- Age 50 with 20 years of covered eCBPO service
- Any age with 25 years of covered eCBPO service
*Special Retirement Coverage can be combined with other special retirement coverage groups in order to meet the 20/25 year requirement (such as eCBPO, Firefighters, law enforcement officers, etc.)
If you were hired prior to 07/06/2008, you are not subject to mandatory retirement.
If you were hired on or after 07/06/2008, your mandatory retirement date is determined as follows.
Your mandatory retirement date would be the last day of the month in which you meet BOTH of the below requirements:
- Age 57, and
- 20 years of covered eCBPO service
FERS (Special Retirement Covered CBPOs Onboard Before 07/06/2008):
Receive the Proportional Annuity calculation as follows:
1.7% * (High 3) * (up to 20 years of eCBPO service) PLUS 1% * (High 3) * (each year of service over 20 years)
Note: Those retiring at age 62 with 20 or more years of total service will have their benefit calculated using the 1.1% factor for all remaining service, instead of 1%.
What is "High 3"?
High 3 is your highest rate of basic pay in effect over any three consecutive years in service.
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FERS (Special Retirement Covered CBPOs Onboard After 07/06/2008):
Receive the Special Retirement Annuity calculation as follows:
1.7% * (High 3) * (20 years of eCBPO service) PLUS 1% * (High 3) * (each year of service over 20 years)
Note: Only CBPOs hired prior to 07/06/2008 receive a proportional annuity calculation.
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CSRS (Special Retirement Covered CBPOs Onboard before 07/06/2008):
Receive the Proportional Annuity calculation as follows:
2.5% * (High 3) * (up to 20 years of eCBPO service) PLUS 2% * (High 3) * (each year of service over 20 years of CBPO)
Note: Other percentage factors are used if a CSRS employee served less than 5 years of CBPO covered service if they moved to a non-CBPO covered position and retirement coverage.
Definitions
Primary CBPO Retirement Coverage: A primary position is one which an employee serves as a CBPO, GS-1895 (or predecessor positions i.e., Customs Inspectors, GS-1890, Immigration Inspector, GS-1816 and Canine Enforcement Officer, GS-1801) whose duties include activities relating to the arrival and departure of persons, conveyances, and merchandise at ports of entry.
Secondary CBPO Retirement Coverage: A secondary position in one which an employee serves in a 2nd or 3rd level Supervisory, Managerial, or Administrative positions whose duties include activities relating to the arrival and departure of persons, conveyances, and merchandise at the ports of entry for which the primary CBPO, GS-1895 position is a mandatory prerequisite.
Conditions of Coverage
Movement from a primary to a secondary position: In order for an employee to obtain secondary coverage, the employee must move from a primary position directly into a secondary position without a break in service exceeding 3 days; and
Movement from a secondary to secondary position: In order for an employee to maintain his/her secondary coverage, the employee must continuously move from a secondary position to a secondary position without a break in service exceeding 3 days since moving from the above primary position.
Note: An employee who is permanently assigned to a primary position, but who is detailed or temporarily promoted to a secondary position should be covered as a primary employee, not secondary.
Section 535 of Division E, Public Law 110-161, which was enacted on December 26, 2007, established special retirement provisions for Customs and Border Protection Officers (CBPOs) and became effective July 6, 2008. The CBPO retirement coverage is similar to that applicable to law enforcement officers and firefighters. It changes retirement deductions and accrual of benefits and also provides CBPOs employed in a covered position on December 26, 2007, with an opportunity to "opt out" of the CBPO retirement coverage by making an election.
If eligible for this coverage, an employee's retirement income will be increased as a result of the new provisions. Therefore, most employees will not choose to opt out. Eligible employees do not need to take any action. They will automatically be covered under the new provisions beginning July 6, 2008.
Those employees with 41 years and 11 months or more of Federal service may wish to opt out because they have already attained the maximum retirement benefit for which they are eligible (80% of their average high-three salary), and no additional contributions on their part will increase their retirement annuity. Those employees should consult with a retirement counselor before making the decision to opt out.
This notice applies to you if you are a CBPO who was onboard on December 26, 2007. Unless you make an election to opt out of the CBPO retirement coverage by June 22, 2008, you will be covered under the new retirement provisions.
The new law defines a CBP Officer as an employee:
- Who holds a position within the GS-1895 job series, or any future reclassifications of this position; and
- Whose duties include activities relating to the arrival and departure of persons, conveyances, and merchandise at Ports of Entry.
Also included in this definition are employees within the Department of Homeland Security who transfer directly to secondary supervisory or administrative positions after performing the above CBPO duties for a period of at least 3 years.
Election Decision Information (Needs to be Reviewed, Seems Out of Date)
The following material highlights key provisions of this new legislation, and is designed to assist you in making an informed decision concerning your retirement coverage.
- Electing Coverage. If after reviewing the following information, you wish to become covered by the CBPO retirement coverage, you do not need to take any further action. Your CBPO retirement coverage will be effective with the pay period beginning July 6, 2008.
- Opting Out of the CBPO Retirement Coverage. If after reviewing the following information you elect to opt out of the CBPO retirement coverage, you must sign and date the "Election to Opt Out of CBPO Retirement Coverage" Form and return it to HRM BMW Retirement Operations no later than June 22, 2008. Your opt-out election is irrevocable after that date.
Note: If you intend to opt out of the CBPO retirement coverage and you do not return the attached form, the new law requires that you be covered beginning on the statute's July 6, 2008, effective date.
| Impact of Election | If You Choose Not to Respond to this Retirement Coverage Notice and Become Subject to the New CBPO Retirement Coverage | If You Chose to Opt Out of the CBPO Retirement Coverage and You Completed and Returned the Opt Out Form By June 22, 2008, Deadline |
|---|---|---|
| Effective Date | Your CBPO special retirement coverage will become effective on July 6, 2008. | There will be no change to your retirement coverage. |
| Contribution Date | Your employee retirement contribution rate will increase by ½ of 1% (.5%). | Your retirement contribution will remain the same. |
| Retirement Benefit | Your retirement benefit for all service up to 20 years performed as a CBPO beginning July 6, 2008, will be calculated based upon the special provisions rate for CBPO retirement coverage. | The calculation of your retirement benefit will be based on your current retirement coverage. |
| Basic Pay | Your basic rate of pay will not be affected. | Your basic rate of pay will not be affected. |
| Maximum Entry Age | Maximum entry age does not apply to CBPO's who are onboard on or before July 5, 2008. |
Not applicable |
| Mandatory Retirement | Mandatory retirement does not apply to CBPO's who are onboard on or before July 5, 2008. | Not applicable |
| Early Optional Retirement Eligibility | Under CSRS, CBPOs may retire at age 50 with a minimum of 20 years of service in a covered position after July 6, 2008; and under FERS, a CBPO may retire at age 50 with a minimum of 20 years or at any age with 25 years or service in a covered position after July 6, 2008. Also, under both CSRS or FERS, covered CBPO service after July 6, 2008, may be combined with service performed in other special retirement categories, including law enforcement officer, fire fighter, nuclear material courier; and, under FERS only, may also be combined with service as member of the Capitol or Supreme Court Police in order to qualify for early optional retirement. |
Not applicable |
| Other Benefits | The CBPO retirement coverage has no effect on your other benefits. | No effect |
| Overtime and Premium Pay | No effect | No effect |
Examples of Retirement Calculations
The following are comparative examples of how the CBPO retirement coverage may affect your retirement.
Federal Employees Retirement System (FERS) Examples
(Generally FERS applies to employees hired after 1986.)
Impact of CBPO Retirement Coverage: An employee who is onboard as of July 6, 2008, is covered under FERS, retires at age 59, as of July 5, 2016, with 30 years of service - 10 years of which were performed as a CBPO after the effective date of the CBPO retirement coverage. The employee's high three is $100,000.
The retirement formula is as follows:
1.70% * (High 3) * (10 years of service plus)
1.00% * (High 3) * (20 years of service)
Onboard on 12/26/07, FERS, 30 Years of Service
(Of Which 10 Years Are Under the CBPO Retirement Coverage)
| Percentage | Of High 3 | Multiplied by Years of Service | Equals Total Benefit |
|---|---|---|---|
| 1.70% | $100,000 | 10 | $17,000 |
| 1.00% | $100,000 | 20 | $20,000 |
| Estimated Annual Annuity | $37,000 |
Note: Under FERS, the 1.70% accrual rate in the example above will apply to all full months and years of CBPO retirement coverage beginning July 6, 2008. The maximum credit allowed at the 1.70% accrual rate is 20 years of service.
As with CSRS, the more years you work under the FERS CBPO retirement coverage, the greater your annuity, as the comparison below indicates.
FERS, 30 Years of Service
(Including 1, 10, and 20 Years of CBPO Retirement Coverage at 1.70%)
| Percentage | Of High 3 | Multiplied by Years of Service | Equals Total of Benefit | Multipled by Years of Service | Equals Total Benefit | Mulitplied by Years of Service | Equals Total Benefit |
|---|---|---|---|---|---|---|---|
| 1.70% | $100,000 | 1 | $1,700 | 10 | $17,000 | 20 | $34,000 |
| 1.00% | $100,000 | 29 | $29,000 | 20 | $20,000 | 10 | $10,000 |
| Estimated Annual Annuity | 1 Year CBPO Retirement Coverage | $30,700 | 10 Years CBPO Retirement Coverage | $37,000 | 20 Years CBPO Retirement Coverage | $44,000 |
Impact of Opting Out of CBPO Retirement Coverage: The same FERS employee in 2a above, is onboard as of July 6, 2008, is not covered by the CBPO retirement, retires at age 59, as of July 5, 2016, with 30 years of service, and whose high three is $100,000.
The retirement formula for this employee is as follows:
1.00% * (High 3) * (30 Years of Service)
Onboard on 12/26/07, FERS, 30 Years of Service
Opted Out of CBPO Retirement Coverage
| Percentage | Of High 3 | Multiplied by Years of Service | Equals Total Benefit |
|---|---|---|---|
| 1.00% | $100,000 | 30 | $30,000 |
| Estimated Annual Annuity | $30,000 |
Note: A FERS employee who retires at age 62 with at least 20 years of creditable service is entitled to computation of 1.1% rate per year, instead of 1%.
Civil Service Retirement System (CSRS) Examples
(Generally, CSRS applies to employees hired before 1986.)
Impact of CBPO Retirement Coverage: A CBPO who is onboard as of July 6, 2008, is covered under the CSRS CBPO retirement coverage and retires on July 5, 2009, with 30 years of service - 1 year of which was covered under the CBPO retirement coverage. The employee's high three is $62,333.
The enhanced retirement formula for this employee is as follows:
2.50% * (High 3) x (1 year of service) plus
1.50% * (High 3) * (4 years of service) plus
1.75% * (High 3) * (5 years of service) plus
2.00% * (High 3) * (all years of service over 10)
CSRS, 30 Years of Service
One year of CBPO Retirement Coverage
| Percentage | Of High 3 | Multiplied by Years of Service | Equals Total Benefit |
|---|---|---|---|
| 2.50% | $62,333 | 1 | $1,558.33 |
| 1.50% | $62,333 | 4 | $3,739.98 |
| 1.75% | $62,333 | 5 | $5,454,14 |
| 2.00% | $62,333 | 20 | $24,933.20 |
| Estimated Annual Annuity | $35,685.65 |
Note: Under CSRS, the 2.50% accrual rate in the example above will be earned for all full months and years of CBPO service beginning July 6, 2008. The maximum credit allowed at the 2.50% accrual rate is 20 years. Service beyond 20 years is accrued at 2.0% per year.
As the number of years under the CBPO retirement coverage increases, the 1.50 and 1.75 percentages will be replaced with a factor of 2.0. The following example shows the different calculations with 1, 3, 5, 10, 15, and 20 years of CBPO service.
CSRS Replacement Calculations
One, Three, Five, Ten, Fifteen, and Twenty Years of CBPO Retirement Coverage
The difference in the estimated annuity between 1, 10, and 20 years under the CBPO retirement system is as follows:
CSRS, 30 Years of Service
One, Ten, and Twenty Years of CBPO Retirement Coverage
| Percentage | Of High 3 | Multiplied by Years of Service | Equals Total Benefit | Multiplied by Years of Service | Equals Total Benefit | Multiplied by Years of Service | Equals Total Benefit |
|---|---|---|---|---|---|---|---|
| 2.50% | $62,333 | 1 | $1,558.33 | 10 | $15,583.25 | 20 | $31,166.50 |
| 1.50% | $62,333 | 4 | $3,739.98 | 0 | $0.00 | 0 | $0.00 |
| 1.75% | $62,333 | 5 | $5,454.14 | 0 | $0.00 | 0 | $0.00 |
| 2.00% | $62,333 | 20 | $24,933.20 | 20 | $24,933.20 | 10 | $12,466.00 |
| Estimated Annual Annuity | 1 Year CBPO Retirement Coverage | $35,685.65 | 10 Years CBPO Retirement Coverage | $40,516.45 | 20 Years CBPO Retirement Coverage | $43,633.00 |
As you can see, if you choose to be covered, the more years you work as a CBPO after July 6, 2008, the greater your estimated annuity.
Impact of Opting Out of CBPO Retirement Coverage: Just as in 1a above, a CBPO is onboard as of July 6, 2008, is not covered under the new CSRS CBPO retirement coverage and retires on July 5, 2009, with 30 years of service. The employee's high three is $62,333.
The retirement formula for this employee is as follows:
1.50% * (High 3) * (5 years of service) plus
1.75% * (High 3) * (5 years of service) plus
2.00% * (High 3) * (all years over 10)
Onboard on 12/26/07, CSRS, 30 Years of Service
Opted Out of CBPO Retirement Coverage
| Percentage | Of High 3 | Multiplied by Years of Service | Equals Total Benefit |
|---|---|---|---|
| 1.50% | $62,333 | 5 | $4,674.98 |
| 1.75% | $62,333 | 5 | $5,454.14 |
| 2.00% | $62,333 | 20 | $24,933.20 |
| Estimated Annual Annuity | $35,062.32 |
If you opt out of the CBPO retirement coverage, your calculation for 30 years of service will be calculated according to the example above, and the percentages would remain.
Section 535 of Division E, Public Law 110-161, which was enacted on December 26, 2007, established special retirement provisions for Customs and Border Protection Officers (CBPOs), and became effective July 6, 2008. The CBPO retirement coverage is similar to that applicable to law enforcement officers and firefighters. The new provisions provide a more generous retirement benefit.
This guidance applies to you if you were hired as a CBPO between December 27, 2007, and July 6, 2008, and you will be covered by the new CBPO retirement coverage which becomes effective July 6, 2008.
Beginning July 6, 2008, you will automatically be covered under the new provisions. You do not need to take any action and you may not opt out.
The new law defines a CBPO as an employee:
- Who holds a position within the GS-1895 job series, or any future reclassifications of this position; and
- Whose duties include activities relating to the arrival and departure of persons, conveyances, and merchandise at Ports of Entry.
- Also included in this definition are employees within the Department of Homeland Security who transfer directly to secondary supervisory or administrative positions after performing the above CBPO duties for a period of at least 3 years.
The following chart highlights the key provisions of this new legislation which is effective July 6, 2008, and the impact it has on you.
| Provisions | CBPO's Hired Between December 27, 2007 and July 6, 2008 |
|---|---|
| Effective Date of Change | Your retirement coverage will change effective with the pay period beginning July 6, 2008. |
| Opt Out | Not applicable to those CBPOs hired between December 27, 2007 and July 6, 2008. |
| Contribution Rate | Your employee retirement contribution rate will increase by ½ of 1% (.5%) effective July 6, 2008. |
| Basic Pay | Your rate of basic pay will not be affected. |
| Retirement Benefit | Beginning July 6, 2008, your retirement benefit for all service as a CBPO, up to 20 years, will be calculated based upon the special provisions rate for CBPO retirement coverage. |
| Maximum Entry Age | Maximum entry age does not apply to CBPOs who are onboard on or before July 5, 2008. |
| Mandatory Retirement Age | Mandatory retirement ages does not apply to CBPOs who are onboard on or before July 5, 2008. |
| Early Optional Retirement Eligibility | Under CSRS, CBPOs may retire at age 50 with a minimum of 20 years of service in a covered position after July 6, 2008; and under FERS, a CBPO may retire at age 50 with a minimum of 20 years or at any age with 25 years of service in a covered position after July 6, 2008. Also, under both CSRS or FERS, covered CBPO service after July 6, 2008, may be combined with service performed in other special retirement categories, including law enforcement officer, fire fighter, nuclear material courier; and, under FERS only, may also be combined with service as member of the Capitol or Supreme Court Police in order to qualify for early optional retirement. |
| Other Benefits | The new CBPO retirement coverage has no effect on your other benefits. |
| Overtime and Premium Pay | The new CBPO retirement coverage has no effect on your overtime or premium pay. |
Comparative Examples of FERS Retirement Calculations
Demonstrates the impact of eligibility for early optional retirement, and the new CBPO retirement accrual rate of 1.7%
Two employees are hired on January 6, 2008. One is hired subject to the retirement provisions for regular employees and the other is hired as a CBPO. Both employees are 27 years old and have no prior Federal service. Each has a high three average pay of $100,000 at the time of retirement.
| Regular FERS Employee | CBPO FERS Employee | |
|---|---|---|
| Earliest Eligibility for Unreduced Annuity | On January 5, 2038 at a Minimum Retirement Age (MRA), in this example, age 57 with 30 years of service | On July 5, 2031, at age 50 with 23.5 years of service as a CBPO |
| Annuity Estimate | 1% * $100,000 * 30 years = $30,000 | 1.7% * $100,000 * 20 years = $34,000 plus 1% x $100,000 x 3.5 years = $3,500 = $37,500 |
In the previous example, the regular FERS employee is not eligible for optional retirement until nearly 7 years after the CBPO who has only 23 years of service. Further, although the CBPO is retiring earlier, he/she will receive a higher annuity. The CBPO earns retirement benefits at the rate of one percent a year for the six months from January 6, 2008 through July 5, 2008, and for each of the three years beyond the first 20 years of CBPO service after July 6, 2008.
Demonstrates how the new CBPO retirement coverage increases a FERS annuity for service accrued beginning July 6, 2008
When he is hired as a CBPO on January 6, 2008, George is 41 years old and has 14.5 years of creditable service under regular FERS, which includes 10 years of military service for which he has paid the deposit. George works for 6 months prior to the July 6, 2008, effective date of the CBPO retirement coverage, which gives him a total of 15 years of creditable service prior to July 6, 2008. George's high three average pay is $100,000 at the time of retirement. The following example compares George's annuity benefits under the law enacting CBPO retirement coverage with the benefits he would have received had the law enacting CBPO retirement coverage not been enacted.
Annuity Comparison of 30 Years of Regular FERS to 15 Years of CBPO FERS Retirement Coverage and 15 Years of Regular FERS
| Regular FERS Employee | CBPO FERS Employee | |
|---|---|---|
| Earliest Eligibility for Unreduced Annuity | Age 56 and 6 months Date of birth in 1967 30 years of service |
Age 56 and 6 months Date of birth in 1967 30 years of service |
| Annuity Estimate | 1% * $100,000 * 30 years = $30,000 | 1% * $100,000 * 15 years = $15,000 plus 1.7% x $100,000 x 15 years = $25,500 = $40,500 |
Note: Unless the individual meets the requirements for CBPO retirement coverage, or another special retirement category, a FERS employee who retires at age 62 with at least 20 years of creditable service is entitled to computation at a 1.1 percent rate per year, instead of 1 percent.
For additional resources available to support you in understanding how the law affects your retirement benefits, visit the Retirement and Benefits Portal.