At current pay rates, new Foreign Service Specialist earn a basic annual salary depending upon the grade they enter. Normally, the entry salary is set at step one of the appropriate grade. Additional salary steps at entry may be awarded based on experience and market conditions.
Health Insurance
Foreign Service Specialists are eligible to enroll in a number of health insurance plans, including fee-for-service plans and health maintenance organizations. The government contributes approximately 60% of the cost of the health insurance premium. For 1992, the maximum monthly government contribution toward an employee's health insurance is $131.08 for a self-only enrollment, and $282.92 for a family enrollment. The employee's portion is paid through payroll deductions.
Foreign Service Specialists and their families are eligible for immediate health insurance coverage from the date of enrollment.
Life Insurance
Foreign Service Specialists are eligible to participate in the Federal Employees' Group Life Insurance plan (FEGLI). The FEGLI plan offers low rates that can be paid for through convenient payroll deductions. The U.S. Government pays one-third of the cost of this insurance.
Participation in the FEGLI plan is voluntary. The plan is intended as a form of immediate protection against financial hardship or loss in the event of death. It is not offered as a form of term life insurance with a cash value, such as might be purchased through private insurance agents.
Retirement Benefits
Members of the Foreign Service participate in the Foreign Service Pension System, a program designed to provide retired personnel with an annuity, Social Security benefits, Medicare coverage, and additional retirement income.
Under the Foreign Service Pension System, Foreign Service Specialists who have reached the age of 50 years, and who have served for more than 20 years, are eligible for retirement with a full annuity. Specialists who have served for 10 years and are at least 57 years of age (55 years of age under certain conditions) are eligible to retire with a reduced annuity. Retirement at 65 years of age is mandatory.
The Foreign Service Pension System is a three-tiered program. The three tiers of the program are listed below.
- Foreign Service Basic Benefit
- Social Security and Medicare
- Thrift Savings Plan
Foreign Service Basic Benefit
The Foreign Service Basic Benefit is designed to provide retired Foreign Service Specialists with an annuity upon retirement. The plan provides for an annuity equivalent to a certain percentage of the average of a retiree's highest three annual salaries.
The percentage of the annuity is determined by multiplying the number of years of service by 1.7% for the employee's first 20 years of service, and by 1.0% for each year of service in excess of 20 years. For example, someone retiring with 20 years of service would receive an annuity of 34% of the average of his or her three highest annual salaries. An individual retiring with 25 years of service would receive an annuity of 39%.
Foreign Service Specialists who retire before their 62nd birthday, and who are otherwise eligible for a full annuity, will receive an annuity supplement. This supplement is roughly equivalent to the Social Security benefits the retiree would receive if he or she met the age requirement.
Participation in the Foreign Service Basic Benefit is paid for by a payroll deduction of 1.3% of a Foreign Service Specialist's basic pay. Participation in the plan is mandatory.
Social Security and Medicare
Retired Foreign Service Specialists also are eligible to receive Social Security and Medicare, provided that they have reached the minimum age requirements and have contributed to the appropriate funds for a minimum period of time.
Social Security provides cash benefits to fully insured workers who retire at the age of 62 or later and to the survivors of fully insured workers. Medicare is a federal health insurance program that provides coverage beginning at age 65. Medicare includes inpatient hospital coverage and medical coverage.
Mandatory participation in Social Security and Medicare is paid through a payroll deduction of 7.65% of total earnings (up to a certain limit, whereupon contributions cease).
Foreign Service Specialists may participate in the Thrift Savings Plan, a long-term savings and investment program for federal employees designed to provide retirement income. The Thrift Savings Plan allows Foreign Service Specialists to invest money in three different investment funds: the Government Securities Investment Fund, the Common Stock Index Investment Fund, and the Fixed Income Index Investment Fund.
Specialists become eligible to participate in the Thrift Savings Plan approximately 12 to 18 months after their entry on duty. At this point, the employing agency automatically begins to contribute one percent of a specialist's basic salary to a Thrift Savings Plan account in his or her name. Specialists may also choose to contribute up to 10% of their salaries to their Thrift Savings Plan account. The specialist's employing agency will make a matching contribution on a sliding scale for the first 5% that a specialist contributes.
The Thrift Savings Plan provides two tax benefits. First, contributions to the plan are made on a before-tax basis. This means that contributions are deducted from an employee's paycheck before income taxes are calculated. Second, the money that is contributed to the Thrift Savings Plan account, as well as the earnings generated on that account, are tax-deferred; no income tax is due until the money is withdrawn from the account, usually after retirement.
