Q. I have read that the VCP based on my age of 64 could pay as much as 8.8 percent in an annuity. Is that true? Can one elect a survivor benefit? And if so, at what cost/reduction? Who is the company behind the product?
A. Each $100 in the voluntary contributions account provides an additional annual annuity of $7, plus 20 cents for each full year the retiree is over age 55 at the time the annuity begins. You may elect a survivor benefit, but the terms are different from those of the regular CSRS retirement annuity. The cost of the survivor benefit varies between 10 percent and 40 percent of the unreduced annuity, depending upon the age difference between the annuitant and the beneficiary. You should also note that the annuity purchased with voluntary contributions does not have a COLA provision. As far as I know, the annuity is backed by the U.S. government.