FRC Federal Retirement Consultant Exam
Question 1 Which retirement system was introduced to replace the Civil Service Retirement System (CSRS) for most newly hired federal employees after 1983?
- Foreign Service Pension System
- Federal Employees Retirement System (FERS)
- Military Retirement System
- Railroad Retirement System
Answer: B
Explanation: FERS was implemented in 1987 to replace CSRS for employees hired after 1983, offering a three-tiered structure that includes Social Security, a Basic Benefit Plan, and the Thrift Savings Plan.
Question 2 In the Federal Employees Retirement System (FERS), which of the following is NOT part of its three-tiered structure?
- Social Security
- Thrift Savings Plan (TSP)
- Basic Benefit Plan
- Federal Employee Disability Insurance Program
Answer: D 1 / 4
FRC Federal Retirement Consultant Exam
Explanation: FERS is composed of Social Security, the Basic Benefit Plan, and the Thrift Savings Plan. Disability benefits can exist within FERS, but there is no separate “Federal Employee Disability Insurance Program” as a standalone tier.
Question 3 Which of the following statements best describes the Civil Service Retirement System (CSRS)?
- A defined contribution plan with mandatory employee contributions
- A defined benefit plan established prior to FERS
- A hybrid plan including employer matching contributions
- A retirement system for private contractors of the federal government
Answer: B
Explanation: CSRS is an older defined benefit retirement system for federal employees and was the primary system before FERS was introduced.
Question 4 Which of the following is a key difference between CSRS and FERS?
- CSRS does not provide any survivor annuity benefits
- FERS includes mandatory participation in Social Security
- FERS offers no Thrift Savings Plan to employees
- CSRS includes a government-matching TSP contribution
Answer: B 2 / 4
FRC Federal Retirement Consultant Exam
Explanation: CSRS employees generally do not pay into Social Security, while FERS requires participation in Social Security for all covered employees.
Question 5 What is the common factor used to compute retirement annuities under both CSRS and FERS?
- Basic pay history for the last 10 years
- High-5 average salary
- High-3 average salary
- Hourly wage rate over the final 6 months
Answer: C
Explanation: Both CSRS and FERS retirement annuities base their calculations on the employee’s highest three consecutive years of average basic pay, known as the “high-3.”
Question 6 What was a primary reason for transitioning from CSRS to FERS?
- CSRS was found unconstitutional
- To make the federal retirement system more comparable to private-sector retirement
- To eliminate defined benefit plans completely
- To reduce employee participation in retirement programs
systems
Answer: B 3 / 4
FRC Federal Retirement Consultant Exam
Explanation: FERS was introduced partly to align federal retirement benefits more closely with those common in the private sector, including Social Security coverage.
Question 7 Under FERS, which of the following federal retirement benefit components is funded by both employee and employer contributions on a tax-advantaged basis?
- Basic Benefit Plan
- Thrift Savings Plan
- Military Pension Offset
- Retiree Health Insurance
Answer: B
Explanation: In FERS, employees contribute to TSP, and the government provides matching contributions up to a certain limit, making it a jointly funded, tax-advantaged savings plan.
Question 8 What is the main responsibility of the Office of Personnel Management (OPM) in federal retirement?
- Collecting state taxes for federal retirees
- Providing legal services to federal agencies
- Administering federal retirement programs and processing retirement claims
- Setting monetary policy for retirement funds
- / 4