FERS


Federal Employees Retirement System 

Transfer Handbook


A Guide to Making Your Decision 

U.S. Office of Personnel Management 

RI 90-3 

Revised December 2008 

Previous edition is not usable. 
Table of Contents


Introduction ...................... 1

Your Chance to Choose ....................... 1

Simplifying Your Decision. .................... 1 


Making Your own Decision .................... 2 


What Happens If I Do Nothing?................. 2 


How This Handbook is Organized ............... 2 


What Things Do You Need To Make


Your Choice?.............................. 3 


Making Your Election ........................ 3 


Points to Consider............................ 3 


CSRS and FERS: How Do They


Work? ........................... 5 


Federal Employees Retirement System


(FERS)........................... 7 


Overview .................................. 7 


When You Can Receive Retirement Benefits ...... 7 


How Much You Will Receive After Retirement .... 9 


Cost-of-Living Adjustments (COLA's) .......... 10 


Cost to Participate........................... 10 


Thrift Savings Plan for FERS ................. 11 


Important Conclusions About FERS ............ 12 


Civil Service Retirement System


(CSRS).......................... 15 


Overview ................................. 15 


When You Can Receive Retirement Benefits ..... 15 


How Much You Will Receive After Retirement . . . 16


Cost-of-Living Adjustments (COLA's) .......... 17 


Cost to Participate. .......................... 17 


Thrift Savings Plan for CSRS. ................. 17 


Voluntary Contributions for CSRS.............. 17 


Important Conclusions About CSRS ............ 17 


CSRS Offset Benefits........................ 18 


Important Conclusions About CSRS Offset. ...... 18 


Special Transfer Rules: CSRS to


FERS ........................... 21 


Overview ................................. 21 


When You Can Receive Retirement Benefits ..... 21 


How Much You Will Receive After Retirement . . . 22


Cost-of-Living Adjustment (COLA's) ........... 22 


Disability Benefits .......................... 22 


How CSRS Offset Service Is Credited ........... 22 


Cost to Participate........................... 23 


Survivor Benefits ........................... 23 


Important Conclusions ....................... 23 


i 
Making Your Decision............. 25 


Choosing Based on When You Expect 

to Retire ................................ 26 


A Special Note for Career Couples Near


Retirement ............................... 27 


Far From Retirement Age. .................... 27 


In Between — Neither Close to Retirement nor


Far from It ............................... 28 


The Trade-offs ............................. 28 


FERS Flexibility ............................ 29 


Some Important Cautions..................... 29 


If You Are Unable to Meet Social Security


Eligibility Requirements .................... 30 


If You Are Unable to Contribute Enough to the


Thrift Savings Plan ........................ 30 


If You Should Die Soon After Choosing ......... 30 


Summary of Situations That Could Make 

Switching to FERS a Problem................ 31 


Disability Benefits Under CSRS and


FERS ........................... 33 


Introduction ............................... 33 


Eligibility ................................. 33 


Definition of Disability. ...................... 33 


How Much Disability Benefits Will Be .......... 33 


Continuing Eligibility for Disability Payments .... 34 


Conclusion ................................ 34 


Survivor Benefits Under CSRS and


FERS ........................... 35 


Introduction ............................... 35 


Recipients of Survivor Benefits ................ 35 


If You Die While Employed................... 35 


If You Die After You Retire. .................. 36 


If You Die After You Leave Federal Service, But


Before You Retire Under FERS .............. 36 


Transfer Considerations ...................... 37 


Conclusion ................................ 37 


Involuntary Retirement and


“Early-Out” Retirement ........... 39 


Introduction ............................... 39 


Special Transfer Rules ....................... 39 


Transfer Considerations for Involuntary Retirees


and Early Voluntary Retirees................. 39 


Brief Description of the Social Security


Program ........................ 41 


Introduction ............................... 41 


How the Program Is Financed ................. 41 


Qualifying for Benefits. ...................... 41 


Who Is Eligible for Benefits. .................. 41 


Benefits to Family Members .................. 41 


Amount of Social Security Benefits............. 43 


Taxation of Social Security Benefits ............ 43 


Social Security Earnings Test. ................. 43 


ii 
What Is the Social Security Earnings Test? ....... 43 


Who Is Affected? ........................... 43 


How the Social Security Earnings Test Works. .... 44 


Conclusion ................................ 44 


Windfall Elimination Provision ................ 44 


What the Windfall Elimination Provision Is ...... 44 


Who Is Affected ............................ 45 


How the Windfall Elimination Provision


Works................................... 45 


Conclusion ................................ 45 


How to Estimate the Reduction in Your Social


Security Benefit Resulting from the Windfall 

Elimination Provision ...................... 46 


Use of PEBES Benefit Estimates to Estimate


CSRS-Offset Reductions ................... 46 


Government Pension Offset ................... 47 


What the Government Pension Offset Is ......... 47 


Who Is Affected? ........................... 47 


What Is a Social Security Spouse or Survivor


Benefit?................................. 47 


How the Government Pension Offset Works ...... 47 


What Is the Effect of Transferring to FERS? ...... 47 


Conclusion ................................ 47 


Special Employee Groups .......... 49


Law Enforcement and Firefighting Personnel ..... 49 


Special Transfer Rules ....................... 49 


Transfer Considerations for Law Enforcement


and Firefighting Personnel................... 50 


Air Traffic Controllers ....................... 50 


Special Transfer Rules ....................... 50

Transfer Considerations for Controllers .......... 50 


Military Reserve Technicians.................. 51 


Thrift Savings Plan Considerations for


Special Groups............................ 51 


Service Credit Deposits and


Refunds ......................... 53 


Civilian Service ............................ 53 


Military Service ............................ 54 


Service in the National Guard. ................. 54 


Conclusion ................................ 55 


Glossary ........................ 57 


Acronyms ................................. 60 


EXAMPLES ..................... 61 


CSRS/FERS Special Transfer Rules . 69 


Comparison Table. .......................... 69 


iii 
Introduction


You have an opportunity few workers have — the 

chance to choose your retirement plan. You can keep the 

retirement coverage you now have, or you can choose to 

be covered by the Federal Employees Retirement System 

(FERS). This is a very important decision. Depending on 

what the future holds for you, your decision can make a 

difference to you in how early you can retire from the 

Federal government and how much retirement income 

you will have. 

FERS was created by Congress in 1986, and it became 

effective on January 1, 1987. Since that time, new 

Federal civilian employees who have retirement coverage 

are covered by FERS. 

However, when the Congress created FERS, one of the 

rules it established was that people who already had 

enough Federal civilian service to potentially be eligible 

for a benefit some day under the old Civil Service 

Retirement System (CSRS) would have a choice whether 

or not to be covered by FERS. Your agency has 

identified you, based on your current appointment and 

employment history, as someone who meets this 

criterion. As a result, you have a choice whether to keep 

the retirement coverage you now have or to transfer to 

FERS. 

Depending on your current appointment and employment 

history, you currently may have CSRS coverage, CSRS 

Offset coverage, or only Social Security coverage. CSRS 

Offset coverage normally applies to employees who are 

going to a job with retirement coverage after a break in 

both service and CSRS coverage of more than 1 year, and 

who also had at least 5 years of civilian service as of the 

break in service. 

If you have a term or indefinite appointment, you are not 

eligible for CSRS coverage, but you can elect FERS 

coverage. 

This handbook is written primarily for employees who 

have a choice between CSRS or CSRS Offset coverage 

and FERS coverage. The Standard Form 50 (or 

equivalent personnel form) that shows your current 

appointment will say whether you currently have CSRS 

coverage, CSRS Offset coverage, or only Social Security 

1 

coverage. If you have any questions about what your 

current retirement status is or should be, contact your 

servicing personnel office. Be sure that they have 

accurate records of all your Federal service. Even a few 

days can make a difference. 

If you are already covered under FERS, you do not need 

to read this handbook. The U.S. Office of Personnel 

Management (OPM) booklet called The Federal 

Employees Retirement System, (RI 90-1) describes your 

benefits. If you are a Member of Congress or a 

congressional staff person, you should see your servicing 

personnel office. 

The information in this handbook is based on the law in 

effect as of the printing date. 

Your Chance to Choose 

You have a personal election opportunity for 6 months 

from the date of your reemployment or your conversion 

to an appointment that offers FERS coverage. If you 

choose FERS, you can't change your mind later, so you 

want to choose the plan that fits best with your future 

plans. 

Both CSRS/CSRS Offset and FERS are good retirement 

plans. Each plan has advantages and disadvantages. 

Neither plan is best for all Federal employees. That's why 

you are being given a choice. 

In general, CSRS may be better if you think that you will 

retire from the Federal Government after a long career — 

20 or 30 years and before age 62. But what if you're not 

sure what the future holds? Maybe you're not planning to 

spend the remainder of your career with the Federal 

Government, or you may want to retire before you have 

20 or 30 years of Federal service. In either case, FERS 

may be the retirement plan you want. 

Simplifying Your Decision 

If you are like many people, your initial reaction may be 

that this will be a complicated decision. For some people 

who have complex situations, it may be. 
However, for most people, it becomes a fairly simple 

decision when they think about the choices in terms of 

their own situations. You need to consider factors such as 

your work history, when you want to retire, and whether 

or not you plan to stay in Federal service until then. To 

help you organize your thoughts about what is important 

to you, we have included a checklist at the end of this 

section. It contains a list of factors that are important to 

many people in making their decisions. Some of them 

will be important to you, too. 

The same transfer considerations apply, whether you are 

working full time or on a part-time basis. If you are 

married, we encourage you to discuss your choice with 

your spouse. 

This handbook takes you through important 

considerations and shows you why they’re different in 

CSRS/CSRS Offset and FERS. Many people reach a 

decision without reading very much of this handbook, but 

we encourage you to at least review the first 23 pages 

because there are some special circumstances that may 

change your mind. You should look at the table of 

contents to identify topics that may be of interest to you. 

When you finish reading, you should be prepared to 

make a choice based on the plan overviews, comparisons 

and examples. In most cases, you shouldn’t have to do 

any calculations to decide which retirement plan is better 

for you. 

Making Your Own Decision 

Remember, the decision whether to choose FERS is 

yours to make. This handbook contains the information 

you need to consider, but it won’t tell you what to do. 

You must decide based on what you know about 

yourself, your past, and your expectations for the future. 

You shouldn’t decide based on what someone else did. 

There may be one key factor in that person’s situation 

that would make his or her choice inappropriate for you. 

We have tried to keep this handbook as simple as 

possible, but if you have questions, your agency should 

have personnel who can help answer your questions. So, 

if there is a part of the handbook that’s important to your 

situation and that you don’t understand, you should ask 

for help. However, while your agency should help answer 

your questions about the handbook, they will not tell you 

what to do. 

Finally, remember that you are choosing between two 

very different retirement systems. The handbook stresses 

the differences. If you try to understand the differences 

between the systems in terms of what’s important to you, 

your choice will be easier. If you try to master exactly 

how each system works, your decision will take more 

time and effort on your part. Of course, this handbook in 

no way replaces the many pages of regulations that 

govern benefits under CSRS, FERS basic benefits, the 

Thrift Savings Plan, and Social Security, but it should 

contain all of the information you need to make your 

decision. 

What Happens If I Do Nothing? 

If you do nothing, your current coverage (CSRS, CSRS 

Offset, or Social Security) will stay the same. Most 

people will not have another chance to choose FERS 

coverage unless they leave Federal service for more than 

3 days. 

How This Handbook is Organized 

This handbook begins with a review of the important 

features of CSRS and FERS, so you can understand how 

each plan works. 

Next there's a section called “Making Your Decision” 

that explains how to determine which plan better meets 

your needs. It also discusses some important cautions to 

consider when making your decision. 

The next section provides a brief description of the 

Social Security Program. 

Another section contains examples using several 

hypothetical employees that portray typical employee 

situations. Looking at them may help you make your 

decision. 

This handbook also has an appendix that contains a 

handy reference chart for comparing the basic elements 

of CSRS and FERS as well as the special rules for 

employees who transfer. 

As you go through the handbook, you'll see a table of 

contents for each section. This should make it easy for 

you to find the information you need. 

Also, you'll come across some words that are printed in 

bold type. These words are important to know. They're 

explained in the text, and are also included in the 

Glossary Section in the back of the book. 

2 
What Things Do You Need To Make 

Your Choice? 

For many employees, this handbook will give you 

enough information to decide which retirement plan you 

like better. You will need only a pen to fill out the 

retirement plan election form. 

If you have already earned some Social Security credits, 

but are not sure how many, you may want to request this 

information from the Social Security Administration. 

You can request a statement online on Social Security’s 

Web site at http://www.ssa.gov, or you can use form 

SSA-7004, Request for Earnings and Benefit Estimate 

Statement to request a statement. You can download the 

form from Social Security's Web site at 

http://www.ssa.gov, or your personnel office may have 

the form. You also can request it by calling 

1-800-SSA-1213. 

Some employees may want to do calculations before 

deciding. For you, there is a computer program which 

allows employees to enter data about work history and 

future career expectations to compare CSRS and FERS 

benefits. To use this program, you may want to have your 

Social Security earnings history and the amount of your 

Thrift Savings Plan balance available. 

This program is a projection into the future that requires 

making assumptions that may or may not turn out to be 

accurate, so you should not use the numbers it produces 

as estimates of the future benefits. Instead, the results 

allow employees to evaluate the relative benefits of the 

two retirement systems as they apply to the data 

provided. 

The program is available for downloading on OPM’s 

Internet site at 

http://www.opm.gov/retire/pre/botdg/index.asp. It also 

should be available through your agency. 

Finally, you need some time to read at least the beginning 

of this handbook. Choosing your retirement coverage is 

an important decision, so set aside some time to read the 

parts of this handbook that are important to you, and to 

fill out your retirement plan election form. 

Making Your Election 

Whether you switch to FERS or decide to keep the 

retirement coverage you have, you should complete an 

election form, SF 3109, Election of Coverage, and return 

it to your servicing personnel office. An election to 

transfer to FERS is effective at the beginning of the next 

pay period after your agency receives the completed 

form. An election to transfer to FERS is irrevocable once 

it has become effective. If you transfer to FERS, you then 

have a personal 30-day period to enroll in the Thrift 

Savings Plan or to change your enrollment. 

Your spouse does not need to consent to a decision to 

change retirement plans. However, if 1) you have a 

former spouse who is entitled, by court order, to a portion 

of your CSRS annuity or CSRS survivor benefits, 2) the 

court order is on file at OPM, 3) the former spouse has 

not remarried before reaching age 55, and 4) the former 

spouse is still living, you cannot transfer to FERS 

without that former spouse's consent. Your former 

spouse needs to complete SF 3110, Former Spouse’s 

Consent to FERS Election in order for you to be able to 

transfer. 

OPM can waive this requirement only in very limited 

circumstances. If you don't know whether OPM has a 

qualifying court order on file, or want to request a waiver 

of the consent requirement, ask your servicing personnel 

office for Standard Form 3111, Request for Waiver, 

Extension, or Search. 

Finally you may want to file a new designation of 

beneficiary form, SF 3102, Designation of Beneficiary, 

Federal Employees’s Retirement System, since CSRS 

designations are cancelled upon a transfer to FERS. 

All of these forms are available from OPM’s Web site at 

http://www.opm.gov/forms/index.asp. 

Points to Consider 

The following is a list of points that experience has 

shown are important to many people in making a 

decision to keep their existing retirement coverage or 

switch to FERS. If you review the list and check off the 

points that are important to you, it should help organize 

your thoughts before you start reading about the features 

of the retirement plans. There are some blank lines so 

you can add additional points that aren’t on the list. 

Remember, we are all different, so what is important to 

someone else may not be important to you. 

3 
� I plan to retire from my Federal job in the not too � After I retire, I plan to work somewhere else or 

distant future. have my own business.

� I want to keep my options open because I expect � I don’t expect to have my own Social Security 

(or want) to leave my Federal job before I am benefit, but want to be able to receive one based

eligible to retire. on my spouse’s (or former spouse’s) work.

� I want to be eligible to retire earlier than I can � My health is a concern to me. 

under CSRS rules.

� I want to provide maximum survivor benefits to 

� I am participating in the Thrift Savings Plan and my spouse.

want to get matching contributions.

� I am a long-service employee who is at or near 

� I can save at least 3% of my pay in the Thrift maximum CSRS benefits, so I would like a way 

Savings Plan. to continue to increase my retirement benefit. 

� I don’t expect to be able to save very much extra � I already have a substantial number of years

money for my retirement for a long time. under CSRS Offset coverage and don’t want to 

lose the CSRS benefit I already have. 

� I don’t have any (or very many) Social Security 

credits and don’t expect to work long enough to � I would like a tax break on my savings.

earn a benefit.

� I am concerned about having as much of my 

� I would like to earn a Social Security benefit. retirement income protected from inflation as is 

possible. 

� I would like to increase the Social Security 

benefit I already have earned.	 � I want more control over planning for my 

retirement and the amount of my retirement 

� I would like the portability that Social Security income. 

gives in case I change jobs.

� ________________________________________	 � ________________________________________ 

� ________________________________________	 � ________________________________________ 

� ________________________________________	 � ________________________________________ 

� ________________________________________	 � ________________________________________ 

4 
CSRS and FERS: How Do They Work?


This section of the handbook will help you understand how both retirement plans work. It reviews the key features of 

FERS, then it describes CSRS. Here’s what will be covered for each plan: 

� An overview, 

� When you can receive retirement benefits, 

� How much you will receive, 

� How your benefits can increase after retirement, 

� How much it costs you now, 

� Savings options that are available, and 

� Some important conclusions. 

This section describes how the plans work for the majority of Federal employees. Other topics, such as information 

on special employee groups (law enforcement officers, firefighters, air traffic controllers, and military reserve 

technicians), are covered in a later section of the handbook. Early retirement, disability and death benefits are 

covered in a later section of the handbook. Early retirement, disability and death benefits are covered in more 

detail in the section titled “Making Your Decision.” 

5 
Federal Employees Retirement System (FERS)


Overview 

FERS is a retirement plan that provides benefits from 

three different sources: a Basic Benefit Plan, Social 

Security, and the Thrift Savings Plan. Two of the three 

parts of FERS (Social Security and the Thrift Savings 

Plan) are portable should you leave the Federal 

Government before retirement. FERS gives you more 

control over the retirement benefits you receive. 

The Basic Benefit and Social Security parts of FERS 

require you to make contributions each pay period. The 

cost of the Basic Benefit and Social Security are withheld 

from your pay as payroll deductions. The Government 

makes contributions too. Then, after you retire, you 

receive benefit checks each month for the rest of your 

life. This is what is called an annuity. The Thrift Savings 

Plan part of FERS is an account that is automatically set 

up for you. Each pay period your employing agency 

deposits into your account an amount equal to 1% of the 

basic pay you earn for the pay period. You can also make 

your own contributions to your TSP account and your 

agency will contribute even more. 

Although FERS is a single retirement plan, the three 

benefit sources have different rules. The Basic Benefit 

and Social Security portions will be discussed together 

first. The Thrift Savings Plan will be explained separately 

beginning on page 11. 

Information about Social Security appears throughout 

this section on FERS. A brief overview of the Social 

Security program prepared by the Social Security 

Administration begins on page 41. 

There also are some special rules for employees who 

transfer from CSRS/CSRS Offset to FERS. Be sure to 

read about them in the section that begins on page 21. 

When You Can Receive Retirement 

Benefits 

Basic Benefit Plan 

If You Stay Until Retirement Age 

With FERS, you can retire with a Basic Benefit as soon 

as you reach the Minimum Retirement Age (MRA) and 

have just 10 years of service. The MRA is the first year 

in which you can receive benefits. It varies according to 

the year you were born. For anyone born before 1948, the 

MRA is age 55. It increases gradually to age 56 for those 

born before 1965 and goes up to 57 for those born in 

1970 and after. 

The following chart will help you determine what your 

MRA is. 

Minimum Retirement Age 

If you were born... Your MRA is... 

Before 1948 55 

In 1948 55 and 2 months 

In 1949 55 and 4 months 

In 1950 55 and 6 months 

In 1951 55 and 8 months 

In 1952 55 and 10 months 

In 1953 -1964 56 

In 1965 56 and 2 months 

In 1966 56 and 4 months 

In 1967 56 and 6 months 

In 1968 56 and 8 months 

In 1969 56 and 10 months 

In 1970 and after 57 

Under FERS, you can retire when your age and years of 

Federal service match any of the retirement combinations 

shown below. These are all immediate annuity benefits 

that also allow you to keep your Federal Employees 

Health Benefits (FEHB) and Federal Employees' Group 

Life Insurance (FEGLI) coverages as a retiree if you 

7 
have been enrolled for enough time (usually the 5 years 

immediately preceding your retirement) before you retire. 

Retiring Under FERS 

If you leave with this 

much service 

You get Basic Benefits at 

this age 

At least 5 years 62 years 

At least 10 years 

Your Minimum 

Retirement Age, with 

reduced annuity 

At least 20 years 60 years* 

At least 30 years 

Your Minimum 

Retirement Age* 

*With these combinations, your Basic Benefit 

includes the Special Retirement Supplement if 

you have at least 1 full calendar year of FERS 

coverage. See page 9 for more information 

about the supplement. 

Postponing Your Benefits 

If you retire at... 

•	 your Minimum Retirement Age with at least 10, 

but less than 30 years of service or 

•	 age 60 with at least 10, but less than 20 years of 

service 

you can wait until age 62 for full benefits and get a 

postponed annuity. You can begin receiving reduced 

benefits any time before age 62. Your monthly benefits 

will be reduced 5/12 of 1% for each month (up to 5% per 

year) you are younger than age 62 when you start 

receiving benefits. For example, if you retire at age 56 

with 10 years of service, you are 6 years away from age 

62. Your retirement benefit checks will be reduced by 

30%. 

If You Leave Before Retirement Age 

One real advantage to FERS is that you do not have to 

stay with the Federal Government until retirement to 

receive good value from your retirement plan. This value 

comes from the fact you get an Agency Automatic 

Contribution to your Thrift Savings Plan (TSP) account 

equal to 1% of your salary. Plus, if you contribute to the 

TSP, you can get up to 4% more. In addition, you will 

probably earn more Social Security credits wherever you 

work next. If you leave the Government long before 

retirement, with little service, FERS will always be best. 

Let's say that you leave before you have the right 

combination of age and service to retire. Once you reach 

the age shown in the chart on the previous page, you may 

elect to begin receiving benefits. If you don't have 30 

years of service, you may also choose to put off receiving 

benefits until as late as age 62. This will allow you to 

receive a bigger benefit by avoiding part or all of the 5% 

per year reduction, and you can collect on your Social 

Security and your TSP benefits. 

If you don't want to wait until retirement age, you can 

withdraw all of the money you have contributed toward 

the FERS Basic Benefit Plan. It will be paid to you with 

a market rate of interest; that is, the same rate of interest 

earned by the U.S. Treasury securities purchased by the 

Retirement Fund (the account that contains all employee 

and employer contributions to CSRS and FERS). 

However, you give up your right to your Basic Benefit 

after retirement. If you take your money out, you cannot 

put it back in if you return to work with the Federal 

Government later. It's usually better to leave your money 

in FERS so that you can receive monthly benefits when 

you retire. This is because you pay very little compared 

to the benefits you will eventually receive from the Basic 

Benefit. 

Social Security 

For almost all American workers, Social Security is the 

basic retirement plan to which other benefits are added. 

To qualify for Social Security retirement benefits, you 

must have paid Social Security taxes for at least 10 years 

(or 40 credits or “quarters”) over the course of your 

lifetime. (This 40-credit rule applies if you were born 

after 1928. If you were born before 1929, you need fewer 

credits to qualify). The Social Security credits you earn 

as a Federal employee are added to those you have 

earned in other employment throughout your career. 

You can receive unreduced Social Security benefits if 

you wait until age 65. Starting in the year 2000, this age 

will gradually increase to 67. Or, you can retire at age 62 

and receive reduced benefits. Your monthly Social 

Security checks will be reduced about 20% from the full 

benefit amount you'd receive if you waited until age 65. 

(This gradually increases to a 30% reduction for those 

born in 1960 or later.) Leaving the Federal Government 

before you retire has no effect on the Social Security 

benefits you receive later. All of your FERS Social 

8 
Security credits (years of covered employment) still 

count. You may continue to add more Social Security 

credits as long as you work under Social Security. You 

can still receive reduced Social Security benefits at age 

62 or full benefits at age 65 (or later as the Social 

Security retirement age goes up to 67). 

How Much You Will Receive After 

Retirement 

Basic Benefit Plan 

The amount of your FERS Basic Benefit annuity — the 

monthly checks you receive after retirement — depends 

on two things: your pay and your length of service. 

As in most other retirement plans, an annuity formula is 

used to determine your benefits. The Government 

averages your highest 3 consecutive years of basic pay in 

your Federal career. This “high-3" average pay, together 

with your length of service, are used in the annuity 

formula. Your length of service is the total number of 

years and months you were covered under FERS. 

Here is how the annuity formula is calculated: 

FERS Annuity Formula 

One Percent of your high-3 average pay for every year 

of service. 

(Exception: If you are age 62 or older and have at least 

20 years of service when you retire, you will receive 

1.1% of your high-3 pay for every year of service.) 

According to this formula, if you retire at age 55 with 30 

years of service, you will be eligible for an annual 

annuity that is 30% of your high-3 pay. If you retire at 

age 62 with 30 years of service, you would get 33% of 

your high-3 pay. 

In addition, if you have at least 1 calendar year (January 

1 to December 31) of FERS service, you will be eligible 

for the Special Retirement Supplement. The Special 

Retirement Supplement (also known as the FERS 

Annuity Supplement) is a special benefit for those who 

have at least 1 full calendar year of FERS coverage, and 

who retire 

(1)	 after 30 years of service at their MRA, 

(2)	 after 20 years of service at age 60, or 

(3)	 under the discontinued service or early voluntary 

retirement provisions. (These employees do 

not begin to receive the Special Retirement 

Supplement until they reach the MRA.) 

The Supplement represents the amount you would 

receive from the Social Security Administration for your 

FERS service as if you were 62 on the day you retire. 

This benefit substitutes for the Social Security part of 

your total FERS benefit until age 62, when most people 

become eligible for Social Security. Like Social Security 

benefits, the Supplement is subject to an earnings test, 

which means your benefits are reduced if your income 

from earnings or self-employment is higher than an 

allowable amount. 

If you take advantage of the FERS early retirement 

option (retiring at your MRA after leaving the 

Government), your annuity will be calculated according 

to the FERS annuity formula shown at the beginning of 

this section. Then, if you have less than 30 years of 

service, it will be reduced 5% for each year you are away 

from age 62 when you retire or elect to receive benefits. 

If you are 60 with 20 years of service, there's no 

reduction. 

Remember, the Basic Benefit is just one of the three 

sources of benefits you'll receive. You may also get 

Social Security and Thrift Savings Plan benefits. 

Social Security 

It's difficult to predict exactly how much you will receive 

from Social Security. 

A number of factors can affect your Social Security 

benefits, such as your complete pay history, whether or 

not you plan to work after retirement, and whether your 

spouse has been covered by Social Security. 

Social Security benefits are determined by a three-part 

formula that is applied to your lifetime earnings under 

Social Security. Those who postpone receiving Social 

Security benefits until the full retirement age get higher 

benefits from the system. 

Whether you start receiving Social Security benefits at 

age 62 or at the full retirement age, you should be aware 

that continuing to work may result in what is called an 

earnings offset under the Social Security Earnings Test. 

If you work at any job after you start receiving Social 

Security payments, your benefits will be reduced if you 

earn over the allowable amount. If you are under your 

full retirement age, for every $2.00 you earn over the 

9 
amount, you'll give up $1.00 in Social Security benefits. 

The same rules apply to the Special Retirement 

Supplement. (See Special Notes on the Social Security 

Earnings Test on page 43 for more information on this 

topic.) 

More information about Social Security is presented on 

page 41 and in the Overview section. 

Cost-of-Living Adjustments (COLA’s) 

Basic Benefit Plan 

Cost-of-living adjustments, or COLA's under the FERS 

Basic Benefit Plan begin when you reach age 62. 

FERS cost-of-living adjustments match the rate of 

inflation when the increase in the Consumer Price Index 

(CPI) is up to 2%. (The CPI is a monthly survey that 

measures changes in consumer prices.) If the increase in 

the CPI is between 2 and 3%, the cost-of-living 

adjustments will be 2%. If the CPI increases 3% or more, 

the cost-of-living adjustments will be the rate of increase 

in the CPI minus 1%. This means that FERS 

cost-of-living adjustments are sometimes less than the 

rate of inflation. 

For example, if the increase in the CPI is 2%, FERS basic 

benefit payments will increase by 2%. If the increase in 

the CPI is 5%, FERS retirement checks will increase by 

4%. 

The Special Retirement Supplement paid through age 62 

is not increased by cost-of-living adjustments. 

Social Security 

Social Security gives cost-of-living adjustments that 

match the rate of inflation. 

Cost to Participate 

Basic Benefit Plan 

FERS Basic Benefits, including the Special Retirement 

Supplement, are financed by very small contributions 

from you and much larger contributions from the 

Government. Your contributions are automatically 

deducted from your paychecks. The Basic Benefit 

deduction is .80% of the total basic pay (basic pay, not 

10 

including such things as overtime, bonuses, etc.) you 

earn in a pay period. However, in contrast, your agency 

pays 11.5% of your pay each pay period for your Basic 

Benefit. 

If you leave the Federal Government before retirement, 

you can take out all of your Basic Benefit Plan 

contributions, and you will receive market rate interest, 

but you lose any right to a future Basic Benefit based on 

that service. This means that the service covered by the 

refund will not count toward eligibility to retire if you 

become a Federal employee again. However, taking a 

refund does not affect creditability of the service for 

non-retirement purposes such as reduction in force credit 

or leave. 

Social Security 

Your contributions to Social Security are actually a tax. 

This means that there are no refunds — even if you never 

gain enough years of Social Security credit to qualify for 

benefits. 

Social Security taxes are a percentage of your pay, 

including overtime and bonuses. They are limited to 

earnings below the maximum taxable wage base, which 

in 2008 is $102,000. This amount increases each year 

based on the annual average increase in earnings of the 

American work force as a whole. (You do not pay Social 

Security taxes on any earnings above the maximum 

taxable wage base. However, these excess earnings are 

not used in calculating your Social Security benefits, 

either.) The Social Security tax rate, not counting 

Medicare, is 6.2% of salary up to the maximum taxable 

wage base. Your agency also pays the same amount. 

Total Cost to Participate 

The total cost to you of the FERS Basic Benefit 

contribution and Social Security is 7%. This 7% is made 

up of .80% of pay for the Basic Benefit and 6.2% for 

Social Security. However, FERS will cost you less than 

7% if you earn more than the $102,000 maximum taxable 

wage base because the Social Security tax stops when 

your earnings reach this amount. You only pay .80% of 

pay for the Basic Benefit until January 1 of the next year, 

when you start paying Social Security taxes for a new 

year. For example, suppose that Jill’s pay reaches 

$102,000 on November 15. From November 16 thru 

December 31, she pays only .80% of basic pay for her 

FERS basic benefit. On January 1, Social Security taxes 

start again for the new year. 
Thrift Savings Plan for FERS 

The Thrift Savings Plan is an important part of the total 

FERS retirement package. It gives you a way to save 

extra money for the future and to get a tax break today. 

When you join FERS, your agency sets up a Thrift 

Savings Plan account in your name. Every pay period, 

your agency automatically puts in an amount equal to 1% 

of your basic pay. This money is called your Agency 

Automatic (1%) Contribution. It is not a deduction from 

your basic pay. It is an amount your agency contributes 

for you based on your basic pay per pay period. 

In addition, you can contribute up to 10% of your basic 

pay per pay period to your Thrift Savings Plan account. If 

you contribute to your Thrift Savings Plan account, you 

will also receive Agency Matching Contributions as 

follows: 

•The first 3% you save each pay period will be 

matched dollar for dollar, and 

•The next 2% you save each pay period will be 

matched 50 cents on the dollar. 

Your own contributions and your Agency Matching 

Contributions as well as the earnings attributed to these 

contributions belong to you right away. There is no 

waiting (vesting) period. You are vested in the Agency 

Automatic (1%) Contributions and attributable earnings 

after you have completed 3 years of Federal (generally, 

civilian) service (2 years for some noncareer 

participants). 

The following chart shows how your agency matches 

your contributions: 

Percent of Basic Pay Contributed to Your 

Account (FERS Participants Only) 

If you Put In Then Your Agency Puts In: 

And the 

Total 

Contribution 

Is: 

0% 1% 0% 1% 

1% 1% 1% 3% 

2% 1% 2% 5% 

3% 1% 3% 7% 

4% 1% 3.5% 8.5% 

5% 1% 4% 10% 

6-10% 1% 4% 

5% 

Plus the 

percentage you 

contribute 

The money in your Thrift Savings Plan account can be 

invested in any of the six investment funds: the 

Government Securities Investment (G) Fund, the 

Common Stock Index Investment (C) Fund, the Fixed 

Income Investment (F) Fund, the International Stock 

Index Investment (I) Fund, the Lifecycle (L) Fund, and 

the Small Capitalization Stock Index Investment (S) Fund. 

The C, F, S, and I Funds are riskier than the G Fund. To 

find out past performances of each Fund go to 

www.tsp.gov. 

Twice each year there is a Thrift Savings Plan open 

season. During the open season, you can start, stop, 

increase or decrease, and change the investment of your 

Thrift Savings Plan contributions. The investment 

election you make during the open season affects only 

your future contributions. You may move any portion of 

your existing account balance among the three funds by 

requesting an interfund transfer in any month you 

choose, without an annual limit. 

You can stop contributing to the Thrift Savings Plan at 

any time. However, if you stop contributing outside an 

open season, you must wait until the second open season 

after you stop before you can contribute again. If you 

stop contributing during an open season, you may resume 

contributions during the next open season. 

You get a tax break for saving in the Thrift Savings Plan 

because your Thrift Savings Plan contribution comes out 

of your basic pay before Federal and many State and 

local income taxes are figured. There is, however, an 

Internal Revenue Service annual limit on tax-deferred 

contributions. For 2008, the limit is $15,500; this limit is 

11 
indexed to cost-of-living adjustments referred to in the 

Tax Code and may change from year to year. You won't 

owe taxes on your contributions and attributable earnings 

until you withdraw your TSP account. You can withdraw 

your account when you separate or retire from Federal 

service. If you transfer all or any portion of your Thrift 

Savings Plan account balance to an Individual Retirement 

Arrangement or other eligible retirement plan, you do not 

pay taxes on the funds transferred when they are 

transferred. You will, however, be subject to applicable 

taxes when you withdraw your funds from the Individual 

Retirement Arrangement or other eligible retirement 

plan. 

You may withdraw money from your Thrift account 

while you are working for the Government if you are age 

591⁄2 or older or document financial hardship. You will be 

liable for taxes on the amount withdrawn and, if you are 

under age 591⁄2, for the 10% early withdrawal penalty. 

You also can borrow from it. There are two types of TSP 

loans: general purpose and residential. You must have at 

least $1,000 in your own contributions and associated 

earnings to be eligible for a loan. 

The Thrift Savings Plan is managed by the Federal 

Retirement Thrift Investment Board, an independent 

Government agency. The Board manages the G Fund and 

contracts with a professional asset manager to manage 

the C, F, L, I and S Funds. This book describes the 

elements of the Thrift Savings Plan that are most 

important in making a transfer decision. To find out 

more about the Thrift Savings Plan, ask your employing 

agency for the most recent booklet prepared and issued 

by the Board. You should read the Board's detailed 

information on each of the Investment Funds and review 

each Fund's performance before making any investment 

decision. The Board also issues a Fact Sheet each month 

containing the monthly returns for the Thrift funds. This 

is available from your agency. TSP publications, forms, 

and rates of return are also available from the TSP Web 

site http://www.tsp.gov. 

Important Conclusions About FERS 

FERS is flexible for a work force that is more likely to 

work for several different employers over the course of a 

career. It allows for the fact that many employees may 

not retire from the Federal government. FERS builds on 

the Social Security credits that employees already have or 

may earn in the future from non-Federal work. Also, the 

Thrift Savings Plan keeps its value after an employee 

leaves Federal service. 

There are some important advantages to FERS: 

•Portability - FERS lets you take most of your 

retirement benefits with you when you leave 

Federal service and add to them in your future 

jobs. Instead of decreasing in total value, most of 

your benefits will continue to grow. You'll 

probably earn more Social Security credits 

wherever you work next. Also, your contributions 

and attributable earnings, Agency Matching 

Contributions and attributable earnings, and if 

vested, the Agency Automatic (1%) Contributions 

and attributable earnings, in your Thrift Savings 

Plan account can be transferred to an Individual 

Retirement Arrangement or other eligible 

retirement plan. You may also leave your Thrift 

Savings Plan account balance in the Plan where it 

will continue to accumulate earnings based on 

your investment decisions. The part of FERS that 

does decrease in value, the Basic Benefit, only 

requires a small contribution from you. If you 

withdraw your Basic Benefit contributions, you 

receive interest on that money. 

•Flexibility - You have more control over the 

amount of your retirement benefits. For example, 

you decide how much to contribute to the Thrift 

Savings Plan and where money is invested. If you 

contribute, the first 5% of your contributions are 

matched by agency contributions. 

•Minimum Service Requirement - You can 

receive a reduced benefit after only 10 years of 

service once you reach your Minimum 

Retirement Age, whether or not you reach that 

age while a Government employee. You do not 

have to wait until age 62. 

•Early Annuity Eligibility - If you leave the 

Federal Government before retirement and with at 

least 30 years of service, FERS lets you begin to 

receive full retirement benefits as soon as you 

reach the Minimum Retirement Age or with 20 

years of service when you are at least 60 years 

old. You do not have to wait until age 62. 

12 
FERS has some disadvantages too: 

•To get the most out of FERS, you have to pay 

more than the 7% that the Basic Benefit and 

Social Security require. You also need to take 

advantage of the Thrift Savings Plan, especially if 

you are an upper income employee, for whom 

Social Security will make up a smaller percentage 

of retirement income. 

•If you continue to work after you start receiving 

the FERS Special Retirement Supplement or 

Social Security, you could lose some benefit 

dollars if your earnings are more than the allowed 

amount. 

•The cost-of-living adjustment that FERS provides 

(CPI minus 1%) does not completely make up for 

inflation if the increase in the Consumer Price 

Index is more than 2%. Also, cost-of-living 

adjustments do not start until you are age 62, even 

if you retire sooner. 

FERS is a good retirement plan, especially for employees 

who are not sure whether they will stay with the Federal 

Government until they retire. FERS gives employees 

more control over the amount of their retirement benefits. 

It also allows you more flexibility in deciding when to 

retire. 

If you do stay with the Federal Government until 

retirement, you will also receive good benefits based on 

your FERS coverage. FERS comes out ahead of CSRS if 

you retire late because the annuity value of your Social 

Security benefit and Thrift Savings Plan go up quickly if 

you continue to work past age 62. The Windfall 

Elimination Provision penalty reduces (see page 44) as 

you go from 20 to 30 years of service under FERS. The 

reduced cost-of-living adjustments have less effect if you 

retire later. 

13 
Civil Service Retirement System (CSRS)


Overview 

The Civil Service Retirement System (CSRS) has 

traditionally been a single benefit retirement plan. 

Employees have had one payroll deduction for the plan 

and, after retirement, have received one check from 

CSRS each month for the rest of their lives. 

CSRS employees may also contribute to the Thrift 

Savings Plan in order to receive additional retirement 

income. If you stay with CSRS, you can contribute up to 

5% of your basic pay each pay period and receive a tax 

break today. (CSRS, including CSRS Offset employees, 

receive no agency contributions to their Thrift accounts.) 

If you have CSRS Offset coverage, you should read both 

this section, which gives the basic CSRS rules, as well as

the following section beginning on page 21. It tells you 

what is different under the offset rules. If you are a law 

enforcement officer, firefighter, air traffic controller, or 

military reserve technician, you also need to read the 

Special Employee Groups section that begins on page 49. 

When You Can Receive Retirement 

Benefits 

If You Stay Until Retirement Age 

With CSRS, you can retire with full benefits as soon as 

your age and years of Federal service match one of the 

retirement combinations shown below: 

Retiring Under CSRS 

•At least age 55 with 30 years of service or more. 

•At least age 60 with 20 years of service or more. 

•At least age 62 with 5 years of service or more. 

Except in limited circumstances, CSRS does not allow 

you to retire voluntarily before you have the required age 

and service combination and take a reduced benefit (a 

reduced annuity) like FERS and many other modern 

plans do. 

If You Leave Before Retirement Age 

The chart above shows when you can retire and begin 

receiving CSRS benefits as an immediate annuity. If you 

leave Federal service before you are eligible to retire, 

you must wait until age 62 to receive monthly benefits, 

no matter how many years of service you have. 

For example, let's say you simply stop working for the 

Federal Government at age 53 with 30 years of service. 

You're not 55 yet, so you don't qualify for retirement. 

Your monthly checks from CSRS won't start until you 

turn 62. Your monthly benefit amount is based on your 

pay when you leave. With inflation, those dollars don't 

buy as much by the time you receive them at age 62. You 

can't continue your health or life insurance as a retiree, 

either. 

If you don't want to wait until age 62 to get benefits, you 

can withdraw all of the money you've contributed when 

you leave. However, in most cases, your money will be 

returned to you without any interest, and, you will not get 

monthly checks from CSRS, even at age 62. 

15 
How Much You Will Receive After 

Retirement 

The amount of your annuity — the monthly checks you 

receive after retirement — depends on two things: your pay 

and your length of service. In computing your annuity, the 

Government uses your three highest consecutive years of 

basic pay and your length of service (the number of years 

and months you worked for the Federal Government 

and your creditable military service). If you retire and 

receive a benefit right away, you will also get credit for 

any unused sick leave. 

Here is how the CSRS annuity formula is calculated: 

CSRS Annuity Formula 

Year of Service What You Receive 

First 5 years of service 1.5 percent of your high-3 average pay 

for each year, or 7.50 percent of your 

high-3. 

Second 5 years of service Plus 

1.75 percent of your high-3 average pay 

for each year, or 8.75 percent more for 

a total of 16.25 percent. 

For all years of service over 10 Plus 

2 percent of your high-3 average pay 

for each year. 

10 or more years (20 total years) 20 percent more, for a total of about 36 

percent of your high-3. 

15 more years (25 total years) 30 percent more, for a total benefit of 

about 46 percent of your high-3. 

20 more years (30 total years) 40 percent more, for a total benefit of 

about 56 percent of your high-3. 

The maximum benefit you can receive from CSRS is 

80% of your high-3 pay plus credit for your sick leave. 

This limit generally affects only those who have more 

than 41 years of service when they retire. 

According to the formula above, if you retire at age 55 

with 30 years of service, you will be eligible for an 

annual annuity that is about 56% of your high-3 pay. 

You will receive your full monthly annuity even if you 

have other retirement income or start a second 

non-Federal career when you retire. There is no reduction 

in your annuity because of other employment. 

This is a very generous annuity formula compared to 

those used by many other retirement plans. As you can 

see, it rewards long service, because you receive more 

money for the years of service that come late in your 

career. It's not quite as generous if you have less than 10 

years of service. 

16 
Cost-of-Living Adjustments (COLA’s) 

Inflation is a fact of life, but the actual rate of increase 

varies from year to year. To help retirement benefits keep 

pace with inflation, CSRS gives all those who retire 

annual cost-of-living adjustments or COLA's. 

Your retirement benefits are eligible to be increased by a 

cost-of-living adjustment in the year after you retire, and 

every year after that. The increases you receive each year 

actually match the rate of inflation, as measured by the 

Consumer Price Index (CPI). 

For example, if the increase in the Consumer Price Index 

is 2%, CSRS retirement checks will increase by 2%. If 

the increase in the Consumer Price Index is 5%, the 

cost-of-living adjustments will also be 5%. 

Cost-of-living adjustments help make sure that your 

retirement dollars keep the same buying power year after 

year. CSRS is better than many other retirement plans 

because it provides complete protection against inflation. 

Cost to Participate 

CSRS retirement benefits are financed by contributions 

from you and much larger contributions from the 

Government. Your contributions are automatically 

deducted from your paychecks. Your deduction in 2008 

is 7% of the total basic pay you earn in a pay period. 

Your agency pays 7% of your basic pay each pay period. 

The balance of the cost of CSRS benefits are paid from 

the U.S. Treasury. 

Thrift Savings Plan for CSRS 

CSRS employees may participate in the Thrift Savings 

Plan. The Plan gives you a way to save extra money for 

the future and gives you a tax break today. The Plan 

allows you to contribute up to $15,500 for 2008 of your 

basic pay on a before tax basis to your Thrift Savings 

Plan account. You may also make over-50 catch-up 

contributions to your TSP account. Catch-up 

contributions have their own annual limit, which is 

$5,000 for 2008. CSRS employees do not receive Agency 

Matching or Automatic (1%) Contributions. 

The Thrift Savings Plan investment options, withdrawal 

and tax information are the same for both CSRS and 

FERS employees. See page 11 for this information. 

Voluntary Contributions for CSRS 

CSRS employees also may make voluntary contributions. 

Total contributions may not exceed 10% of the total pay 

an employee has received to date. At retirement, each 

$100 in voluntary contributions (including interest 

earned) will provide an additional annuity of $7 a year, 

plus 20 cents for each full year you are over age 55 at the 

time you retire. You may also choose to share the annuity 

by electing a survivor annuity. Voluntary contributions 

paid out as additional annuity are not increased by 

cost-of-living adjustments. Voluntary contributions can 

also be paid out as a lump sum refund at any time before 

retirement. 

Voluntary contributions earn a variable interest rate 

determined by the Treasury Department each calendar 

year, based on the average yield of new investments 

purchased by the CSRS Fund during the previous fiscal 

year. The interest rate payable for 2008 is 4.75%. Interest 

accrues to the date of the refund calculation, separation, 

or transfer to a position not subject to CSRS or FERS, 

whichever is earliest. Employees who transfer to FERS 

may retain a voluntary contributions account, but may 

not add to it after transferring. 

Interest on voluntary contributions is not taxed until the 

tax year in which it is paid out. At that time, interest may 

be rolled over to an Individual Retirement Account to 

further defer taxes. However, in contrast with Thrift 

Savings Plan contributions, voluntary contributions are 

not pre-tax dollars that permit you to reduce your taxable 

income. For further information on voluntary 

contributions, ask your servicing personnel office for the 

pamphlet “Voluntary Contributions Under the Civil 

Service Retirement System,” (RI 83-10), or get it from 

OPM’s Web site at 

http://www.opm.gov/retire/pre/botdg/index.asp. 

Voluntary contributions are administered by the U.S. 

Office of Personnel Management. This program is not 

part of the Thrift Savings Plan. 

Important Conclusions About CSRS 

CSRS was designed for a workforce that was likely to 

retire from the Federal Government after many years of 

service. For that reason, it provides excellent benefits to 

employees who put in many years of service, especially 

if they retire before age 60. Employees who join the 

Federal Government late in their careers and can't retire 

before age 60 are less well off. CSRS does not provide 

17 
good benefits to employees who leave the Federal 

Government before they are eligible to retire. 

There are some important advantages to CSRS: 

•You can retire as early as age 55 with 30 years of 

service and begin receiving full benefits. Even if 

you start a second career somewhere else, your 

benefits aren't affected. 

•Once you begin receiving monthly checks, you 

also receive annual cost-of-living adjustments that 

match the increases in the Consumer Price Index. 

So, your retirement dollars keep the same buying 

power. 

•The annuity formula is very generous when 

compared to many other retirement plans. It 

especially rewards employees who spend many 

years in Federal service. 

•If you work until retirement, you get retirement 

credit for your unused sick leave. 

There are also some disadvantages to CSRS that apply if 

you leave the Federal Government before you're eligible 

to retire: 

•The earliest you can begin receiving monthly 

retirement checks is at age 62. It doesn't matter 

how many years of Federal service you have. 

While you're waiting to become eligible for your 

benefit, the buying power of your retirement 

dollars goes down because of inflation. You don't 

receive cost-of-living adjustments until your 

benefits begin. Also, the monthly checks you 

receive will be smaller than if you had stayed in 

Federal service. Your annuity is calculated 

according to the pay and service you had when 

you left Federal service. 

•Unless you are a CSRS Offset person, under 

CSRS, you do not have Social Security coverage. 

This means that if you leave the Federal 

Government before retirement, you have not been 

earning credits under Social Security. If you get a 

new job in the private sector, you and your family 

may not have any benefit if you become disabled 

or die until you have worked long enough to have 

earned these benefits. 

In general, the Civil Service Retirement System is a good 

retirement plan for employees who know that they will 

stay with the Federal Government until they are eligible 

to retire and who retire young. It is not very well-suited 

to employees who may not spend their entire careers in 

Federal service, particularly if they leave before 

retirement. 

CSRS Offset Benefits 

If you have CSRS Offset coverage, the regular CSRS 

rules described in the preceding section about when you 

can receive retirement benefits, how the benefit is 

computed, and cost-of-living adjustments apply to you. 

Also, the rules for participating in the Thrift Savings Plan 

are the same for both CSRS and CSRS Offset employees. 

What is different for CSRS Offset employees is the fact 

that you are paying Social Security taxes and earning a 

Social Security benefit at the same time that you are 

paying CSRS deductions and earning a CSRS annuity. 

However, instead of paying 6.2% of pay for Social 

Security plus 7% for CSRS, the Social Security tax is 

subtracted from, or offset, from the 7% for CSRS. The 

amount you pay for CSRS is .80% of your basic pay. If 

your total pay in a year exceeds the maximum amount 

that is subject to Social Security taxes ($102,000 in 

2008), the Social Security deduction stops and your 

CSRS deduction increases to 7% of your basic pay. Thus, 

you pay the same 7% cost for retirement as a CSRS 

employee, but the amount is divided between CSRS and 

Social Security. 

When you retire, your annuity is computed under the 

same rules that apply to all CSRS employees. However, 

when you become eligible for Social Security benefits 

(normally at age 62), your CSRS benefit is reduced, or 

offset, by the value of your CSRS Offset service in your 

Social Security benefit. If you want to estimate the 

amount of the offset from your future annuity, see 

page 47 for instructions. 

If you do not become eligible for any Social Security 

benefit, there is no offset. 

Important Conclusions About CSRS 

Offset 

You receive the value of the CSRS benefit formula and 

cost-of-living adjustments, but pay a smaller amount for 

this benefit. You also enjoy the flexibility of having 

Social Security coverage that continues to build if you 

leave the Federal government to work elsewhere. 

18 
If you leave the Federal government before retirement, to FERS service. Since FERS pays a lower percentage of 

the same drawbacks that apply to CSRS employees who your “high 3" average salary, this could make a 

leave early also apply to you. However, you have paid far significant difference in the amount of your Federal 

less for your benefit and your Social Security benefit is retirement benefits. See Special Transfer Rules on 

portable. page 21. 

WARNING: If you are considering electing FERS you 

must keep in mind that any CSRS Offset service (service 

under both CSRS and Social Security) will then change 

19 
Special Transfer Rules: CSRS to FERS


Overview 

For most people, transferring to FERS means you may 

take advantage of the features of both CSRS and FERS. 

You keep the benefits you have already earned and build 

on them. All of your CSRS service is creditable toward 

eligibility for death and disability benefits, as well as 

retirement, so you and your family do not risk any gaps 

in protection if you transfer to FERS. 

However, if you have very many years of CSRS Offset 

coverage, you need to think carefully about transferring 

to FERS. This is because all of your Offset service will 

be credited under the less generous FERS rules. In 

addition, if you have less than 5 years of creditable 

civilian non-Offset CSRS service, all of your CSRS 

service will be switched over to FERS. 

When you Receive Retirement Benefits 

If you transfer, your past CSRS service and all future 

FERS service will be added together to determine when 

you can retire. Instead of the CSRS retirement rules, you 

will follow the more flexible FERS rules that appear 

below: 

Retiring With Full Benefits 

•At least the Minimum Retirement Age (see page 

7) with 30 years or more of combined service 

•At least age 60 with 20 years or more of


combined service


•At least age 62 with 5 years or more of combined 

service 

Retiring with Reduced Benefits 

•At least the Minimum Retirement Age (see page 

8) with 10 years or more of combined service

Example: If you have 18 years of CSRS service when 

you transfer and you work 2 more years, your total 

service is 20 years. According to the preceding chart, you 

can retire with full benefits at age 60, or with reduced 

benefits at age 55-57 (depending on your Minimum 

Retirement Age). 

One advantage that FERS offers is the opportunity to 

retire early — at the Minimum Retirement Age with as 

little as 10 years of service, and transferees don't have to 

work under FERS for any minimum amount of time. If 

you retire early, you will receive reduced combined 

CSRS and FERS benefits. The reduction will be 5% for 

each year you are away from age 62 when you retire. 

However, there is no reduction if you are 60 when you 

retire and you have at least 20 years of service. You also 

can keep your Federal health and life insurance coverage 

as a retiree if you met participation requirements as an 

employee. 

Example: If you transfer to FERS and then leave the 

Federal Government at age 55 with 20 years of service, 

you'll receive combined FERS and CSRS benefits that 

are 35% lower than the full benefit you would have 

received if you waited until age 62. You will, however, 

receive full cost-of-living adjustments on the CSRS part 

of your benefit. For many people, receiving benefits 

earlier and for a longer period of time will make the 

reduction worthwhile. 

FERS rules will also apply if you leave the Federal 

Government before you have the right combination of 

age and service to retire. You'll keep your service credit 

and, once you reach the necessary age, will start 

receiving benefits. This is an important advantage to 

transferring to FERS. If you stay with CSRS and leave 

before retirement, you will not receive any benefits until 

age 62. 

21 
How Much You Will Receive After 

Retirement 

The retirement benefits you actually receive normally 

will come from both CSRS and FERS. The higher CSRS 

annuity formula will be used for the years of non-Offset 

service you put in under CSRS. You can get credit for 

your unused sick leave (the amount you have when you 

transfer or retire, whichever is less) if you work until 

your MRA. 

The lower FERS Basic Benefit (and the Special 

Retirement Supplement) formula will apply only to the 

years you spent under FERS and CSRS Offset, so you're 

probably not giving up all the CSRS benefits you've 

already earned. You are trading a higher CSRS benefit 

after you transfer for increased flexibility with FERS. 

The high-3 pay that determines your benefits at 

retirement will be the highest 3 years in your entire 

Federal career, under CSRS or FERS. Your Social 

Security benefits will be based on all of the Social 

Security credits you've earned in your lifetime. 

Cost-of-Living Adjustment (COLA’s) 

Once you start receiving retirement benefits, the CSRS 

part of your benefit will receive cost-of-living 

adjustments (COLA's) right away, even if you are 

receiving your CSRS benefit before you could have 

under CSRS rules. The FERS part of the benefit won't be 

eligible for a cost-of-living adjustment until you reach 

age 62. The FERS cost-of-living adjustment will usually 

be 1% less than the rate of inflation. 

Disability Benefits 

If you transfer to FERS and become disabled, your 

disability benefit will be determined totally under FERS 

rules. The Social Security disability portion of your 

benefit generally can't begin until you are fully insured 

and have paid Social Security taxes for 5 out of the last 

10 years before you become disabled. For more 

information on disability benefits, see page 33. 

How CSRS Offset Service Is Credited 

If you are covered by CSRS Offset provisions, and you 

transfer to FERS, your Offset service becomes subject to 

the less generous FERS rules. In addition, you will have 

missed out on the opportunity to get government 

contributions to your Thrift account for that service. 

You must have at least 5 years of non-Offset service to 

be eligible for an annuity with a component computed 

under CSRS rules — in other words you must have at 

least 5 years of civilian service other than your Offset 

service. (Count all service, even it you didn't pay CSRS 

deductions or you received a refund.) 

If you have less than 5 years of civilian service other than 

CSRS Offset at the time you transfer to FERS, all of that 

CSRS service will become FERS service. You can 

request a refund of the extra money you paid for CSRS 

and receive it plus interest. Employees whose CSRS 

service will become FERS service may also receive a 

partial refund of any military deposits they may have 

paid under CSRS rules. 

Example 1: Susan had 6 years of CSRS-covered 

employment when she resigned and got a refund of her 

deductions in 1985. When she was reemployed in June 

1998, she was covered under the CSRS Offset 

provisions. She transferred to FERS in November 1998. 

When Susan retires, the 6 years of CSRS service will be 

computed under CSRS rules. However, since Offset 

service is treated under FERS rules once you transfer to 

FERS, her service from June through November becomes 

FERS service. 

Example 2: In contrast, Bob's employment history shows 

that he had 4 years of CSRS-covered employment, a 

break, 2 years of CSRS Offset service, and another break 

in 1986. When he returned to Federal employment, he 

was covered under CSRS Offset provisions until he 

transferred to FERS. Since Bob had less than 5 years of 

non-Offset service, all of his service is now subject to 

FERS rules. Bob is also entitled to a refund of the extra 

money he paid for CSRS since he didn't previously 

receive a refund for his first 4 years of service. 

Bob thinks he has made a good decision because he is far 

from retirement, and he isn’t sure he will stay with the 

Government. In addition, since he is already contributing 

5% of pay to the Thrift Plan, switching to FERS gets him 

the full 5% Government contribution. 

22 
Example 3: Ed had 15 years of CSRS service, a 3-year 

break, and now has 12 years of CSRS Offset service. He 

chooses to stay in CSRS Offset because he does not want 

to lose CSRS credit for his Offset service. If he were to 

transfer to FERS, his Offset service would become 

subject to FERS rules. This means that, instead of getting 

24% of his high-3 for this period of service under CSRS 

rules, he would only get 12% under FERS rules. 

WARNING: Since all Offset service becomes subject to 

FERS when an employee transfers to FERS, it is 

particularly important that CSRS Offset employees give 

careful consideration to their first transfer opportunity. 

Even though your employment history may result in your 

having another opportunity to elect FERS at a later date, 

the more Offset service you have, the more you can lose 

by having waited to transfer to FERS. In addition, you 

will have missed out on the opportunity to get a 

government match on your Thrift Account for that 

service. 

Cost to Participate 

For most employees, the cost to participate is essentially 

the same under CSRS, CSRS Offset, and FERS, 7% of 

your basic pay. However, if you are a high salaried 

employee, earning more than the $102,000 maximum 

2008 taxable wage base, FERS will cost less than 7% 

because the 6.2% for Social Security drops out at 

$102,000 leaving only the .80% for the FERS basic 

benefit. This is different from CSRS Offset, which is 7% 

even when Social Security taxes drop out. If FERS salary 

exceeds the maximum taxable wage base, contributions 

in 2008 stay at .80%; thus take-home pay goes up. 

However, if CSRS Offset salary exceeds maximum 

taxable wage base, when Social Security deductions stop, 

retirement contributions go up to 7%—thus take-home 

pay is unchanged. 

Survivor Benefits 

If you transfer to FERS, all your CSRS service counts 

toward eligibility of your survivor for benefits. The 

benefits for your survivor will be determined entirely 

under FERS rules. These rules include: (1)a5or 10% 

reduction in your benefits to provide survivor benefits for 

your spouse; (2) a spousal benefit defined as either 25 or 

50% of your benefit; (3) cost of living increases 

generally equal to the Consumer Price Index increases 

minus 1%; and (4) a 10-year service requirement before 

any monthly annuity is payable to your spouse. 

Important Conclusions 

CSRS usually provides better benefits to those who retire 

from the Federal service before age 62. Switching to 

FERS lets you take advantage of the features of both 

retirement systems: flexibility and early retirement from 

FERS and a generous annuity formula and full 

cost-of-living adjustments from CSRS for your service 

before you transfer. Switching gives you the ability to get 

government contributions to your Thrift account and 

have the portability that Social Security coverage gives if 

you leave the Federal government and go to another job. 

The next section of the handbook, called “Making Your 

Decision”, will point out some important retirement plan 

considerations that can make one of the plans a better 

choice for you. 

23 
Making Your Decision


This decision about your retirement plan normally comes when you have just begun a new job and wouldn't otherwise have 

thought about all of this. You may be uncomfortable trying to consider a lot of details about a retirement plan now, 

especially if retirement is far away for you. 

Rather than sorting through every detail of how the two plans are structured, perhaps it would be easier to think about what 

your future career plans are. Consider whether or not you think you'll stay with the Federal government for the rest of your 

career, and, if you are married, what your spouse's career plans are. 

This section will help you consider some important factors about yourself and your work history that may make either CSRS 

or FERS clearly a better choice for you. 

The factors are separated into groups according to your current age, how far from retirement you are now, and special 

situations. You may want to read all four groups, but: 

•If you expect to retire within 10 years, the section “Close to Retirement Age” will be most important to you. 

•If you expect to work another 20 or more years before retirement, concentrate on the section “Far From Retirement 

Age”. 

•If you are in between the two categories just mentioned, you want to carefully consider the factors discussed in the 

section “In Between — Neither Close to Retirement nor Far From It”. 

•If you may retire because of special situations such as disability or as a result of an involuntary separation or early 

out, read those sections. 

After reading this chapter, you should know which plan you want to choose. 

25 
Choosing Based on When you Expect to 

Retire 

Close to Retirement Age 

If you are within 10 years of retiring from the Federal 

government, things are probably pretty clear for you. 

You may have already earned most of your retirement 

benefit under CSRS. You will take that benefit, including 

the full CSRS cost-of-living adjustment (COLA), with 

you if you transfer to FERS. You already know a lot 

about your life and your career: things like your marital 

status, your spouse's work history, your non-Federal 

work history. You may also have some idea about what 

you want to do after you retire from the Government: 

turn your hobby into a business, start a second career, or 

concentrate on your golf game. 

The fact that you know much more about yourself and 

your career now than you did 10 or 15 years ago, makes 

the choice much clearer. 

CSRS Is Probably Better For You If: 

•You expect to retire from the Federal government 

at age 55 with 30 years of service. 

The CSRS retirement benefit, with its generous 

annuity formula and full cost-of-living adjustment 

(COLA), is generally better than the FERS 

retirement benefit under these circumstances. 

CSRS pays COLA's immediately after you retire, 

regardless of age. FERS doesn't pay a COLA 

until age 62. Then it's generally 1% less than the 

Consumer Price Index inflation rate. 

If you transfer to FERS, you get COLA's under 

CSRS rules for any portion of your annuity that is 

computed under CSRS rules and adjustments 

based on FERS rules for the part of your annuity 

that is computed under FERS rules. For example, 

if you transfer to FERS after 25 years of CSRS 

service, work 5 years, and retire at 55, you will 

receive full COLA's immediately under CSRS 

rules for your CSRS service. However, you will 

receive no COLA for your 5 years of FERS 

service until age 62, and when you begin 

receiving a COLA, it generally will be 1% less 

than the increase in cost of living. 

•Earning additional Social Security credits isn't 

important to you. It may not be important because 

you already have enough Social Security credits 

to qualify for a benefit, or because you plan to get 

enough credits by working after you “retire” from 

the Government, or because you have few or no 

Social Security credits already and no expectation 

of ever receiving a Social Security benefit from 

this service. 

However, if you have CSRS Offset coverage, you 

will earn Social Security credits whether you 

transfer to FERS or not.

•You have a substantial number of years of CSRS 

Offset coverage. You probably don’t want these 

years of service treated under FERS rules at 1% 

of your high-3 instead of 2% under CSRS. 

FERS Is Probably Better For You If: 

•You are uncertain whether you will stay with the 

Federal government until you are eligible to 

retire. 

Switching to FERS allows you to be earning 

Social Security coverage that continues to build if 

you leave Government for other employment. 

•Your work history includes substantial (that is, 5 

or more) years of Social Security coverage, but 

not the full 10 years (or 40 credits) of coverage 

generally required for Social Security benefits, 

and you're within 5 years of retiring under CSRS. 

Joining FERS can allow you to get a return on the 

Social Security taxes you paid in the past. If you 

don't “lock up” your Social Security benefit by 

earning your 40 quarters either under FERS or 

elsewhere, you can lose whatever money you've 

paid in Social Security taxes. 

•Your work history includes many years of 

substantial Social Security coverage, but not the 

30 years required to avoid the windfall 

elimination provision. 

Joining FERS can allow you to reduce the impact 

of the windfall elimination provision or avoid it 

entirely. 

26 
•You want to retire before age 60, but you won't 

have 30 years of service.

FERS is more flexible than CSRS. It allows you 

to take a reduced benefit as early as age 55 with 

as few as 10 years of service and there's no 

minimum period of FERS service required. If you 

join FERS, you can take advantage of this 

flexibility and begin to receive your retirement 

benefits, including the CSRS benefit that was 

transferred to FERS, earlier than you can under 

CSRS.

Your entire benefit, including the part earned 

under CSRS, will be reduced at the rate of 5% a 

year for each year you elect to receive benefits 

before age 62. Once you begin to receive it, the 

value of the CSRS portion of your benefit will be 

maintained because it will receive a full 

cost-of-living adjustment. The portion of the 

benefit computed under FERS rules will not 

receive a cost-of-living adjustment until you are 

age 62. Then the cost-of-living adjustment will be 

1% less than the inflation rate whenever inflation 

is 3% or more a year. 

•You will have 30 years of service before your 

minimum retirement age (MRA) and you want to 

leave Federal service early. FERS gives you the 

flexibility to leave then. Later, at your MRA, you 

can start getting benefits. 

•You plan to work to a fairly late retirement age. 

FERS can provide more valuable benefits to those 

who plan to work until later ages, that is, age 65 

or beyond. You will continue to receive 

Government contributions to your TSP account 

and until you withdraw it, earnings will continue 

to compound. 

In addition, you continue adding to your basic 

benefit. Under CSRS, your annuity is limited to 

80% of your high-3, (about 42 years of service). 

FERS does not have this cap.

A Special Note for Career Couples Near 

Retirement 

The considerations outlined above apply to married 

couples as well as single individuals. But there is a 

special circumstance that may apply to married couples 

where both individuals had a career and only one 

member of the couple (“the Federal spouse”) worked for 

the Government. Often the Federal spouse has little or no 

Social Security credit. In this case, he/she would 

normally qualify for a spousal benefit based on the 

non-Federal spouse's earned Social Security benefit. But 

the Social Security law contains a Public Pension Offset 

to reduce or eliminate Social Security spousal benefits 

for most Federal retirees (those receiving recurring 

retirement payments). 

The Social Security law requires that, if the Federal 

spouse gets CSRS benefits after separating from a 

position not subject to Social Security, any Social 

Security spousal benefits otherwise payable to him/her 

will be offset by two-thirds of the CSRS benefit. In most 

cases, this eliminates the spousal benefits. This provision 

does not apply to people who were required by law to 

have Social Security coverage. Consequently, it does not 

apply to people who have CSRS Offset coverage. 

If you have only CSRS coverage, the Public Pension 

Offset will not apply if you transfer and complete 5 years 

of service in FERS before retiring. You can still qualify 

for full Social Security spousal benefits even if you also 

receive a pension from employment not subject to Social 

Security (for example, CSRS service). 

Remember that the spousal benefit is only paid if it is 

higher than the employee's own earned Social Security 

benefit. The Federal spouse who joins FERS earns Social 

Security credits. These will be added to any credits 

previously earned. Once enough quarters have been 

earned, the Federal spouse's own earned Social Security 

benefit will often be higher than the spousal benefit. 

Also, if you are concerned about the survivor benefits 

that your retirement plan will provide, you should keep 

in mind that the FERS survivor rules will apply to all of 

your benefit — even the CSRS part. This formula is less 

generous than the one used under CSRS. 

Far From Retirement Age 

It's difficult to predict the future, and especially difficult 

to guess what might happen over the next 15 to 20 years 

or so. Most people who are about 20 years away from 

retiring don't know with any certainty whether or not 

they will actually retire from the Federal Government. If 

you are one of these people, FERS is probably the plan 

for you. Here's why: 

27 
•The Social Security and Thrift Savings Plan parts 

of FERS are both portable. If you leave Federal 

service, your new job will continue adding to your 

Social Security account. As for your Thrift 

Savings Plan account, you can transfer your funds 

(your contributions, Agency Matching 

contributions, and, if vested, the Agency 

Automatic (1%) Contributions) to an Individual 

Retirement Arrangement (IRA) or other eligible 

retirement plan. You can also leave your account 

balance in the Plan. While you may not continue 

to contribute after you leave Government service, 

your Thrift Savings Plan account balance will 

continue to accumulate earnings based on your 

investment decisions. 

•While the value of the FERS Basic Benefit will 

decrease if you leave the Federal Government 

short of retirement, it will not decrease as much as 

the value of the CSRS benefit will. This is 

because FERS gives you the flexibility to choose 

to receive a reduced benefit as soon as you reach 

the Minimum Retirement Age (age 55-57) with 

only 10 years of Government service. CSRS 

makes you wait until age 62. 

Under both plans, the basic annuity benefits 

become fixed when you leave Government. 

Getting the benefit earlier under FERS may be 

important if inflation is reducing the value of the 

fixed benefit. Also, the FERS basic benefit costs 

you less (.80% of pay versus 7% under CSRS), so 

less of your money is at risk. 

Should you decide you want your money back, 

FERS will pay market rate interest on your 

contributions toward the Basic Benefit. CSRS 

pays no interest in most cases. However, you can 

pay back a CSRS refund and regain your service 

credit if you return to Federal service. FERS 

refunds cannot be repaid. 

If you have CSRS Offset coverage, you will get 

the value of the CSRS annuity computation 

formula and cost-of-living adjustment rules if you 

stay until retirement. However, if you don't stay 

until retirement, the more flexible FERS rules 

about when you can get your annuity may be 

important. In addition, under FERS you can take 

advantage of the government match for your TSP 

account and the opportunity to put more of your 

pay into the account. 

28 

In conclusion, the flexibility and portability FERS offers 

is important in cases where the future is unclear or 

uncertain. This flexibility and portability come at the 

price of slightly lower benefits for the same investment 

on your part if you do stay in the Federal service until 

retirement. Only with Thrift Savings Plan participation 

are the benefits comparable. Investing a higher 

percentage of your pay in the Thrift Savings Plan could 

result in your benefits exceeding those that you would 

have earned under CSRS. 

So, if you feel sure that you will retire from the Federal 

Government in 20 years and be under age 62, you may 

want to stay with CSRS. There is one exception: 

low-salaried employees who are able to work long 

enough (30 years) under Social Security to avoid the

Windfall Elimination Provision (see page 44) will benefit 

from the fact that the Social Security benefit formula 

favors people with low career earnings. If you are 

low-salaried and expect to retire from the Government, 

you should consider FERS with its Social Security 

coverage, if you can avoid the Windfall Elimination 

Provision. 

So, if you're not sure about the next 15 to 20 years, FERS 

may be a better choice for you. 

In Between -- Neither Close to 

Retirement nor Far From It 

If you're about 15 years away from retiring, you may or 

may not be sure of your future work plans. If you're sure 

about your plans and know whether or not they include 

retiring from Federal service, you're probably ready to 

decide based on what you've read so far. You know 

FERS portability and flexibility are real pluses if your 

career includes both Federal and non-Federal service, and 

especially if you don't plan to retire from a Federal 

position. You also know that CSRS can provide better 

benefits if you can retire from the Federal Government 

before age 62. 

If you haven't made your decision based on what you've 

read so far, keep reading. Maybe this discussion will help 

clarify things for you. 

The Trade-offs 

With CSRS, you have a plan that offers superior 

retirement benefits, if you're able to take advantage of 

them. With FERS, you get more flexibility and 

portability, but you may have to give up a little in the 
way of benefits, or pay more in contributions while 

you're working, if you want to reach the same benefit 

level. 

The Thrift Savings Plan under FERS is very attractive if 

you're in mid-career and can contribute to your Thrift 

account. If you can contribute 5% of your basic pay each 

pay period, the Agency Matching Contributions plus the 

Agency Automatic (1%) Contributions you receive will 

add to your account an amount equal to another 5% of 

your basic pay for that pay period. This, coupled with the 

effect of compounding, may provide a significant source 

of retirement income. In fact, this kind of Thrift Savings 

Plan account balance, when added to your FERS Basic 

Benefit and Social Security payments, can easily produce 

a FERS benefit that exceeds the CSRS benefit. 

If you switch to FERS and can make contributions to 

your Thrift Savings Plan account, you will gain the 

portability of the Social Security and Thrift Savings Plan 

portions of FERS. And you will gain the flexibility to 

choose to receive benefits earlier with fewer years of 

service. You will minimize your investment in CSRS, 

which offers no portability. 

So, switching to FERS involves some trade-offs. For the 

advantages of lower risks and equal or better benefits, 

you have to make greater contributions. In fact, you may 

need to contribute more of your pay each pay period than 

you would under CSRS because some FERS employees 

(especially those with higher incomes) must contribute 

more in order to receive equivalent retirement benefits to 

those received by CSRS employees. 

If you have little or no previous employment that counts 

as years of “substantial coverage” under Social Security 

you should think about whether you will earn enough of a 

benefit under Social Security to avoid or minimize the 

impact of the Windfall Elimination Provision. 

On the other hand, if transferring will give you 

substantial Social Security coverage by retirement, FERS 

offers an opportunity to provide a Social Security benefit 

for your spouse. 

If you are married and your spouse will not be eligible 

for his/her own Social Security benefit or for a retirement 

benefit other than Social Security, FERS benefits can 

come close to CSRS benefits even if you can't contribute 

5% of pay to the Thrift Savings Plan. This is because 

your spouse can receive a Social Security spousal benefit. 

This makes FERS more attractive. But, you may still 

need to make contributions to the Thrift Savings Plan if 

you want your total benefit to equal what you could have 

earned under CSRS. Again, there's a trade-off involved. 

FERS generally costs you more if you want to match the 

CSRS benefit level, but FERS is more portable and more 

flexible. 

If you now have CSRS Offset coverage, you have the 

benefits of the good CSRS benefit formula and 

cost-of-living adjustments, as well as the advantage of 

Social Security coverage. However, there is an offset of 

your CSRS benefit by the amount of Social Security 

attributed to your CSRS Offset Service at 62. This is an 

excellent package if you retire from the Federal 

government. However, if you do not expect to retire from 

the government, the more flexible FERS rules about 

when you can receive your benefits may be better for 

you. In addition, you can take advantage of the Thrift 

Savings Plan Government match and Agency 1% 

Automatic Contribution and the ability to contribute 

more to your account. 

FERS Flexibility 

FERS allows you to begin getting benefits at an earlier 

age with fewer years of service. This can be an important 

advantage, depending on your future plans. 

Keep in mind that FERS lets you start getting both the 

benefit you earned under the CSRS formula plus the 

annuity you earn under FERS with as few as 10 years of 

service when you reach the Minimum Retirement Age 

(55-57, depending on when you were born). Your benefit 

will be reduced 5% a year for each year you choose to 

receive benefits before you are age 62. Under CSRS, 

though, you can't receive any benefits until age 62 if you 

leave the Federal Government without retiring. 

This kind of flexibility is important if you think you may 

leave the Federal service before retiring. It's also 

important if you would have to work until age 60 or 62 

under CSRS rules, but would rather leave earlier. 

Some Important Cautions 

There are some factors that can make FERS clearly a 

better choice for you. There are other factors that can 

mean switching to FERS is not the best thing for you to 

do. Although you can't predict the future, use what you 

know now to make the best decision you can. This 

section contains some information you should consider 

before you make your final decision. 

29 
If You Are Unable to Meet Social 

Security Eligibility Requirements 

In general, switching to FERS can be a mistake if you are 

not able to earn the 10 years or 40 credits of Social 

Security coverage that will allow you to receive a Social 

Security benefit. Here's what could happen: 

Example: Say you're close to retiring and you switch to 

FERS. You've never worked in the private sector, so 

you've earned no Social Security credits. Six years after 

switching, you decide to retire. 

You will make a mistake by not thinking ahead about 

how much longer you wanted to work when you switch 

to FERS. You cannot receive a Social Security benefit 

unless you've earned the required years of coverage. In 

most cases, 10 years are required. So, you've lost one of 

the three parts of your FERS benefit. 

Also, if you do not qualify for a benefit, the percentage of 

salary that you pay in for Social Security taxes is simply 

lost. 

CSRS, then, normally is a better choice if you will not be 

able to earn enough years of Social Security coverage to 

qualify for that portion of your FERS benefit. In addition, 

even if you will qualify for a Social Security benefit, you 

need to look at the impact on you of the Windfall 

Elimination Provision. 

Exceptions: There are several cases where switching to 

FERS and not being able to “lock up” your Social 

Security benefit are not a problem. One is that you're not 

interested in earning a Social Security benefit because 

you want to avoid having your spousal Social Security 

benefit reduced by the Public Pension Offset. Page 47 

gives you more information on this topic. 

In addition, if your reason for transferring to FERS is to 

take advantage of its more flexible rules about when you 

can receive your benefits, then eligibility for Social 

Security benefits may not be a concern to you. For 

example, if you work in an agency that is downsizing, 

FERS more flexible rules may be very important to you. 

If You Are Unable to Contribute 

Enough to the Thrift Savings Plan 

The Thrift Savings Plan portion of FERS can provide a 

valuable benefit if you're able to contribute to it. If you're 

not, switching to FERS can be a mistake. Here's what 

could happen if you don't carefully consider how much 

you are able to save, or if you don't decide correctly. 

Example: Suppose you transfer because you think the 

growth potential of your Thrift Savings Plan account can 

allow you to retire from the Federal Government with a 

larger benefit under FERS than under CSRS. 

You're counting on your agency contributing an amount 

equal to 5% of your basic pay each pay period. To get 

that rate of agency contribution, you know you have to 

contribute at least 5% of your basic pay each pay period. 

After you transfer, you find that you miscalculated your 

ability to save and your budget will not let you make any 

contribution to the Thrift Savings Plan. All you're able to 

get is your agency's contribution equal to 1% of your 

basic pay each pay period. 

If you are not able to begin contributing to your TSP 

account soon after you transfer to FERS, your benefit 

will probably be significantly less than the benefit you 

could have received by retiring under CSRS. If you are 

concerned about whether you can participate adequately 

in the Thrift Savings Plan, you may want to review your 

financial situation carefully to see what level of savings 

you can expect to be able to make. 

If You Should Die Soon After Choosing 

It is not likely you will base your choice of retirement 

plan on the possibility that you may die soon after 

choosing. However, if you are married, you should be 

aware that you must have 10 years of service before your 

spouse can receive a survivor annuity under FERS. 

You must have also earned the minimum number of 

Social Security credits required before your survivors can 

receive Social Security benefits if you die. The number 

of credits required depends on when you were born and 

how old you are when you die. The least number of 

credits required is 6 credits or quarters or 18 months. 

Whether you are under CSRS or FERS, all Thrift 

Savings Plan contributions, including the Agency 

Automatic (1%) and Matching Contributions, will be 

paid to your beneficiary (or beneficiaries). 

Survivor benefits are discussed further on page 35 and in 

the Social Security section starting on page 41. 

30 
Summary of Situations That Could 

Make Switching to FERS a Problem 

You've now seen some factors that could make 

transferring to FERS a problem for you. They are: 

•Switching to FERS and then being unable to earn 

the 40 credits needed to qualify for Social 

Security benefits;

•Switching and then being unable to contribute as 

you had planned to your Thrift Savings Plan 

account; 

•Dying before you've earned adequate Social 

Security coverage for your family to receive 

FERS and Social Security survivor benefits. 

If you believe any of these factors are likely to apply in 

your case, you may decide to minimize your risk by 

staying in CSRS. 

31 
Disability Benefits Under CSRS and FERS


Introduction 

CSRS and FERS both provide disability benefits. The 

benefits offered by the two plans are alike in some ways 

and different in others. Depending on your personal 

situation, the benefits offered by one plan or the other 

may be better for you. 

Unless you have a serious chronic illness or a 

life-threatening medical condition, you will probably 

base your choice between CSRS and FERS more on what 

you want your retirement benefit to be than on the 

disability benefits offered. You should be aware of the 

differences between the plans, though, in case one or the 

other clearly meets your needs better. Note that, if you 

transfer to FERS, all of your disability benefits will be 

paid according to FERS rules. 

This section explains the key features of the disability 

benefits given by both plans. It also points out some areas 

to think about in deciding which plan is better for you. 

Eligibility 

CSRS requires you to have at least 5 years of creditable 

civilian service before you can qualify for disability 

benefits. FERS requires 18 months of civilian service. 

Those who apply for disability benefits under CSRS 

Offset or FERS must also apply for Social Security 

disability benefits or show that they are not eligible for 

them. 

There are separate eligibility requirements that you must 

meet in order to qualify for a Social Security disability 

benefit. You must meet Social Security eligibility 

requirements and have earned a specified number of 

Social Security credits before becoming disabled. 

Definition of Disability 

CSRS and FERS both use the same definition of 

disability. In order to be declared disabled under either 

plan, you must be unable to do your job, and must not 

turn down a suitable vacancy within your agency that is 

within your commuting area and at the same grade or pay 

level as your current position. 

The definition used to determine your eligibility for 

Social Security disability payments is more strict than 

under CSRS and FERS. It requires you to be unable to 

perform any job, rather than just your current job. So 

even if you have the required number of Social Security 

credits, you may qualify for FERS or CSRS disability 

payments, but not qualify for Social Security disability 

payments. 

How Much Disability Benefits Will Be 

CSRS 

Under CSRS, your disability benefit will generally be 

equal to your projected benefit at age 60 or 40 percent of 

your high-3 average salary, whichever is less. If you have 

more than 22 years of service when you become 

disabled, you will receive your accrued benefit, which 

will amount to more than 40% of pay. Cost-of-living 

adjustments will be added annually at the full rate of 

inflation. See Retirement Facts 4, Disability Retirement 

Under the Civil Service Retirement System (RI 83-4) 

available from your personnel office and on the Internet 

at http://www.opm.gov/retire/pubs/pamphlets/index.asp. 

CSRS Offset 

Under CSRS Offset, your basic annuity is computed 

under CSRS rules described in the preceding paragraph. 

In addition, if you qualify for Social Security benefits, 

OPM must reduce your annuity by the value of your 

Offset service in your Social Security disability benefit. 

The calculation is the same as was described earlier for a 

regular retirement. 

33 
FERS 

FERS uses a different benefit formula that takes into 

account any Social Security disability benefits you may 

be eligible for. 

During your first year of disability, FERS will pay you 

60% of your high-3 average salary minus 100% of an 

approximation of any Social Security benefit you qualify 

for. No COLA’s will be paid during this year. 

(Note that Social Security disability payments and the 

reduction in your FERS benefit will not begin until 5 

months after you qualify for Social Security disability. 

You will receive full FERS benefits during this period.) 

During your second and any future years until age 62, 

your basic FERS benefit will amount to 40% of your 

high-3 salary. If you are entitled to Social Security 

disability benefits, your FERS annuity will be reduced by 

60% of the approximate amount of your Social Security 

benefit. COLA’s match the inflation rate if it is 2% or 

less. If the inflation rate is more than 3%, the COLA will 

be 1% less than the inflation rate. 

The total FERS and Social Security benefit you receive 

will be equal to at least 40% of your high-3 salary plus 

40% of your Social Security disability benefits. You may 

also get your Thrift Savings Plan account when you 

become disabled. 

Your basic FERS disability benefit will be recomputed at 

age 62. At that time, you will receive your accrued FERS 

retirement benefit. In this case your accrued FERS 

benefit would be based on years of service that include 

the time you were receiving disability benefits. Also, the 

average salary used would be based on what you were 

earning at the time you became disabled, increased by all 

cost-of-living adjustments under FERS during that 

period. 

CSRS and FERS 

Under the Social Security law, your Social Security 

disability check must be reduced if the combined amount 

of your employees' compensation payment and/or public 

disability benefit is more than 80% of what is called your 

“average current earnings.” Public disability benefits 

come from employment not subject to Social Security 

taxes, such as CSRS. Since FERS includes Social 

Security, this type of reduction is less likely under FERS. 

Continuing Eligibility for Disability 

Payments 

Under both CSRS and FERS, if you retire on disability 

and then decide to work again, your disability benefits 

may be affected. If your total income from work is more 

than 80% of the current salary of the position you retired 

from, your disability benefits will end. They may also 

end if you go back to work for the Federal Government. 

Also, at times you may be required to prove that you still 

meet the CSRS and FERS definition of disability. 

Conclusion 

In general, the combined FERS and Social Security 

disability benefit (if you qualify for the Social Security 

benefit) will be larger than the CSRS benefit. However, it 

is more difficult to qualify for the Social Security 

disability benefit and you must be covered for the 

number of years required by Social Security. Even if you 

do not qualify for Social Security, the FERS benefit is 

likely to be larger. Depending on your recent coverage 

under Social Security, you may have to work under 

FERS for 5 years before Social Security disability 

protection is available. 

Note also that, when your FERS benefits are recomputed 

at age 62, you may stand to lose a significant portion of 

your benefit. Remember when you transfer to FERS, you 

take your CSRS credit with you. If your combined CSRS 

and FERS benefits (under regular rules) are more than 

the benefit produced by the FERS disability rules, you 

will receive the combined benefit. This means that the 

possibility of becoming disabled may be less of a 

concern for CSRS employees with substantial CSRS 

service because of the larger accrued benefit that 

transfers to FERS based on that service. However, if 

disability benefits are a serious concern for you, you 

should ask your agency to do estimates of benefits under 

both CSRS and FERS before you make a transfer 

decision. 

34 
Survivor Benefits Under CSRS and FERS


Introduction 

CSRS and FERS both provide survivor benefits, but the 

benefits offered by the two plans differ greatly. 

Depending on your personal situation, the benefits 

offered by one plan may be better for you than the other 

plan's benefits. 

Recipients of Survivor Benefits 

Under CSRS, FERS, and Social Security, survivor 

benefits can be paid under various conditions to current 

and former spouses and children. Social Security benefits 

can also be paid to dependent elderly parents. Surviving 

spouses must meet certain age and length of marriage 

requirements in order to qualify for benefits. You can 

also elect benefits for a spouse you marry after retirement 

under both FERS and CSRS. The rules for who is eligible 

for spousal benefits are the same for FERS Basic 

Benefits and CSRS. Under both CSRS and FERS, 

children’s benefits are payable to each unmarried child: 

•up to age 18; 

•up to age 22 if a full-time student; and 

•at any age if the child became disabled before age 

18. 

Also, under both CSRS and FERS, your Thrift Savings 

Plan account will be available to your designated 

survivor. If you want more information about CSRS and 

FERS survivor benefits (including court ordered benefits 

for a former spouse), several pamphlets on OPM’s Web 

site have more information. Go to 

http://www.opm.gov/retire/pubs/pamphlets/index.asp. 

If You Die While Employed 

CSRS 

CSRS will pay benefits to the eligible survivors of an 

employee who had at least 18 months of creditable 

civilian service. 

Under CSRS, if you die while you are a Federal 

employee, your eligible spouse will receive 55% of your 

accrued benefit. If a larger benefit would result, your 

spouse would receive the smaller of the following 

computations: 55% of 40% of your high-3 annual salary 

or 55% of what your annuity would have been if you had 

worked until age 60. 

Your eligible children will receive an annuity that is 

based on how many children you have and whether or 

not your spouse is still living. This is true under CSRS 

whether you die as an employee or retiree. 

If you are a CSRS Offset employee and your spouse or 

children are eligible for survivor benefits based on your 

service, OPM must reduce the benefit that is paid to your 

surviving spouse and children. This reduction is 

computed in the same way as the reduction in a 

retirement annuity. See page 47 for an example of how 

the reduction is done.

FERS 

FERS also pays benefits to the eligible survivors of an 

employee who had at least 18 months of creditable 

civilian service. Your CSRS service counts to meet this 

requirement. 

Under FERS, if you die while you are a Federal 

employee, and have more than 18 months of creditable 

civilian service but less than 10 years of total service, 

your eligible spouse will receive a two-part FERS 

benefit. It includes a lump-sum payment that is adjusted 

each year for inflation ($28,093.53 for 2008), plus the 

greater of half of your high-3 average pay or half of your 

annual rate of pay at death. Social Security and other 

survivor benefit payments will not affect this lump-sum 

benefit. 

35 
In addition, if you had 10 years of service, your eligible 

spouse will also receive an annuity equal to one-half of 

your accrued Basic Benefit. 

FERS childrens’ benefits also depend on whether your 

spouse is still living and how many children are eligible 

for benefits. In addition, children’s benefits are reduced 

dollar for dollar by Social Security children’s benefits 

that may be payable. 

Social Security also provides survivor benefits to the 

eligible survivors of an employee who met the minimum 

Social Security eligibility requirements. The number of 

Social Security credits needed to qualify depends on 

when the employee was born and how old he/she was at 

the time of death. The minimum number of credits 

required is 18 months. 

Under CSRS and FERS these benefits are available 

without additional cost to you, that is, at the regular 

deduction rate for CSRS and FERS benefits. 

If You Die After You Retire 

CSRS 

If you are a CSRS retiree when you die, your eligible 

spouse will be paid 55% of the amount you were 

receiving as your annuity or a lesser amount that you and 

your spouse agreed on when you retired. 

As a married retiree, your annuity will be reduced in 

order to provide for this survivor benefit unless you and 

your spouse waive this benefit. The amount of the 

reduction is 2.5% of the first $3,600 of your annual 

benefit, plus 10% of the amount over $3,600. For most 

career retirees, this amounts to a 7% to 8% reduction. 

Note that the 55% benefit is based on the amount of your 

annuity before this reduction is taken. You may also 

choose, if your spouse agrees, a smaller survivor benefit. 

If you want more information about survivor benefits, see 

the pamphlet Retirement Facts 5, Survivor Benefits 

Under the Civil Service Retirement System, RI 83-5, 

available at your personnel office or on the Internet at 

http://www.opm.gov/retire/pubs/pamphlets/index.asp. 

If you are a CSRS Offset retiree, OPM must reduce the 

survivor annuity if your widow(er) or children are 

entitled, or would be entitled upon proper application, to 

Social Security benefits as your widow(er) or children. 

This reduction is done in the same manner as the 

reduction in a retiree’s annuity. 

FERS 

If you are a FERS retiree when you die, your eligible 

spouse will be paid 50% of the amount of your annuity, 

plus a Special Retirement Supplement if your spouse is 

younger than age 60 and not yet eligible for Social 

Security benefits. 

As a married retiree under FERS, your annuity will be 

reduced in order to provide for this survivor benefit 

unless you and your spouse waive the reduction. Under 

FERS, the reduction is larger than under CSRS. It is a 

full 10% of your entire annual benefit amount. Again, the 

50% benefit is based on the amount of your annuity 

before this reduction is taken. You and your spouse also 

can choose a smaller survivor benefit of 25% of your 

annuity, with a 5% reduction in your benefit. However, 

under FERS you cannot choose other benefit levels as 

you can under CSRS. 

Children’s benefits are the same for both retirees and 

employees. 

If You Die After You Leave Federal 

Service, but Before You Retire Under 

FERS 

If you have at least 10 years of service and die after you 

leave Federal service but before you begin to receive 

your annuity, a survivor benefit is payable to your spouse 

under FERS. The amount of the benefit payable to the 

surviving spouse is one-half of your accrued basic 

retirement benefit. The benefit will begin at the time you 

would have reached age 62, or sooner if your survivor 

elects a reduced benefit. For your spouse to be eligible, 

you must not take a refund of your contributions. No 

similar benefit exists in CSRS. Social Security benefits 

are also payable to survivors of employees who meet the 

Social Security requirements. These benefits are based on 

the Social Security benefit for which the employee was 

eligible. Benefits vary based on the age and situation of 

the survivor. 

36
Transfer Considerations 

If you transfer, the FERS survivor rules will apply to all 

of your benefit—even the CSRS part. This includes: 

(1) the 10% or 5% reduction to provide survivor 

benefits after you retire; 

(2) the 50% or 25% benefit levels (this was up to 

55% under CSRS); and

(3) Cost of living increases generally equal to 

consumer price index increase less 1%; and 

(4) the 18 month FERS service requirement for 

lump sum death-in-service benefits. 

Conclusion 

The survivor benefits under FERS and CSRS differ 

substantially. Your individual circumstances will 

determine which system is better for you. Also, you need 

to remember that FERS rules apply to all of your 

survivor benefits. 

As a general rule, surviving spouses who will receive a 

substantial spousal Social Security benefit will be better 

protected by FERS. Surviving spouses who are employed 

and/or earn a Social Security benefit on their own will 

receive greater benefits from CSRS. 

37
Involuntary Retirement and “Early-Out” Retirement


Introduction 

Earlier parts of this handbook discussed forms of 

voluntary retirement (retiring under CSRS with full 

benefits, retiring under FERS with full or reduced 

benefits) and leaving the Federal service before 

retirement age. This section discusses what your benefits 

will be under CSRS and FERS if you must retire 

involuntarily because of a reduction in force, 

reorganization, transfer of function, or similar 

circumstance, or you choose to retire early under a 

voluntary “early out” opportunity. (These provisions do 

not apply if you are separated because of misconduct or 

delinquency or if you refuse a reasonable offer of another 

position.) 

CSRS 

Under CSRS if you retire involuntarily, you are eligible 

for an immediate annuity at any age with 25 years or 

more of service, or age 50 with 20 years of service or 

more. Your benefit will be reduced 2% for each year that 

you retire under age 55. This is a permanent reduction 

that will be applied to your entire annuity, including your 

payments after you reach age 55. The same rules apply 

for early voluntary retirements. 

FERS 

Under FERS, if you retire involuntarily, you are also 

eligible for an immediate annuity at any age with 25 or 

more years of service, or at age 50 with 20 years of 

service or more. The difference between CSRS and 

FERS in this case, however, is that your FERS annuity is 

not reduced if you retire before age 55. However, you 

would not begin to receive the Special Retirement 

Supplement until you reach your Minimum Retirement 

Age (55-57). This benefit continues until age 62. The 

same rules apply for early voluntary retirements. 

Special Transfer Rules 

If you transfer to FERS and retire involuntarily, you are 

eligible for an immediate annuity at any age with 25 or 

more years of service or at age 50 with 20 or more years 

of service. Your retirement benefit will be calculated 

using the CSRS formula for your years of service under 

CSRS, and the FERS formula for the years after you 

transfer. Any CSRS Offset service will be converted to 

FERS. The CSRS portion of your benefit will be 

permanently reduced by 2% for each year that you are 

below age 55 when you retire. No reduction will be 

applied to the FERS portion of your benefit but you will 

not begin to receive a Special Retirement Supplement 

until your Minimum Retirement Age. The same rules 

apply for early voluntary retirements. 

Transfer Considerations for 

Involuntary Retirees and Early 

Voluntary Retirees 

Whether or not you may be involuntarily retired should 

not be a key factor in determining which retirement plan 

you choose. You should be aware of the differences 

between CSRS and FERS, however. 

If you meet the age and service requirements and retire 

early, your CSRS benefit will be reduced if you are under 

age 55; your FERS benefit will not. However, the CSRS 

retirement benefit is larger than the FERS benefit to 

begin with. Even with the reduction, the CSRS benefit is 

likely to be larger than the FERS benefit. This is 

especially true if you retire below your Minimum 

Retirement Age under FERS, because your Special 

Retirement Supplement will not be paid until you reach 

your Minimum Retirement Age (MRA). FERS COLA’s 

do not begin until age 62, but CSRS COLA’s start 

immediately. 

If you think you may leave Government service 

involuntarily and you will not meet the age and service 

requirements for early voluntary or involuntary 

retirement, FERS is probably the better choice, as it is in 

general for those who do not plan to retire from the 

Federal service. This is especially true if transferring to 

FERS could give you eligibility for an MRA + 10 

retirement, which could allow you to keep your Federal 

health and life insurance as a retiree. 

39
Brief Description of the Social Security Program


Introduction 

Social Security is a national system of old-age, survivors 

and disability insurance (OASDI) cash benefits. The 

program's basic plan is a simple one: During working 

years, employees, their employers, and self-employed 

persons pay Social Security taxes; when their earnings 

stop or are reduced due to retirement, severe disability, or 

the death of an employee, monthly cash benefits are paid 

to replace part of the earnings the employee and the 

family have lost. 

How the Program is Financed 

The primary sources of financing are the Social Security 

taxes paid by employees and their employers and by the 

self-employed. Employers and employees each contribute 

7.65% of the employee's wages, which includes 1.45% 

for Medicare hospital insurance (HI). The maximum 

amount of earnings taxed for Social Security purposes 

($102,000 in 2008) is subject to automatic adjustment 

under a formula related to the increase in wages. 

Qualifying for Benefits 

To become eligible for old-age, survivors, and disability 

insurance benefits, an employee must have credit for a 

required amount of work that is covered by Social 

Security. Social Security work credits are measured in 

quarters of coverage. In 2008, a credit is earned for each 

$1,050 in covered annual earnings up to a total of four 

credits ($4,200) for the year. 

The minimum requirement is 6 credits for death and 

disability benefits and the maximum is 40 credits of 

coverage. An employee who has accumulated the 

required number of credits is considered to be fully 

insured and eligible for most types of benefits. 

An additional insured status test must be met by 

employees in order to qualify for disability insurance 

benefits. Employees who become disabled after age 31 

must have worked under Social Security at least 5 of the 

last 10 years preceding the onset of disability. 

Employees between ages 24 and 31 must have worked at 

least half of the quarters from age 21 and before 

disablement, and employees under age 24 may qualify 

for benefits with a minimum of 11⁄2 years (18 months) of 

work in the 3 years prior to becoming disabled. 

Who Is Eligible for Benefits 

Fully insured employees are eligible for benefits as early 

as age 62, but benefits are permanently reduced for each 

month of entitlement prior to the full-benefit retirement 

age, currently age 65. The age at which unreduced 

benefits are payable will be increased gradually from age 

65 to 67 over a 21-year period beginning with individuals 

who reach age 62 in the year 2000. (The age of eligibility 

for Medicare is not affected by these changes.) 

Employees who are fully insured and who become 

disabled, are eligible for unreduced benefits, regardless 

of age. Under the Social Security law, a person is 

considered disabled if he/she is unable to engage in any 

substantial gainful activity due to a physical or mental 

impairment that lasts for at least 12 months or is 

expected to result in death. The term “substantial gainful 

activity” refers to the performance of significant 

productive physical or mental duties, generally for pay or 

profit. 

Benefits to Family Members 

Auxiliary benefits may be payable to members of the 

employee's family (as listed below) whenever the 

indicated requirements for entitlement are met. As 

explained later in this section, there is a limit on the 

amount of family benefits payable on an employee's 

record. (References to age 65 are used because that is the 

current retirement age at which unreduced benefits can 

be paid.) 

Note: While the following benefits are expressed as a 

percentage of an employee's benefits, their payment does 

not reduce the employee's benefit. For example, the 

spousal benefit [in (1) below] can be paid in addition to 

the employee's Social Security benefit. 

41
•Spouse (of employee receiving retirement or 

disability benefits): 

1. Married to the employee for at least 1 year, or, 

if less than 1 year, is the parent of the 

employee's child, and meets one of the 

following age requirements: 

a. Any age, with entitled child under age 16 

or disabled in care (payment rate is 50% of 

employee's full benefit). 

b. Age 65 (50% of employee's full benefit). 

c. Age 62-64 (50% of employee's full benefit, 

permanently reduced for each month of 

entitlement prior to age 65). 

2. Divorced spouse, married to the employee at 

least 10 years, and meets one of the following 

age requirements: 

a. Age 65 (50% of employee's full benefit). 

b. Age 62-64 (50% of employee's full benefit, 

permanently reduced for each month of 

entitlement prior to age 65). 

•Child (of employee receiving retirement or 

disability benefits): 

1. Under age 18 and unmarried (50% of 

employee's full benefit). 

2. Attending elementary or secondary school 

full-time at age 18 and through the end of the 

school term in which age 19 is attained (50% 

of employee's benefit). 

3. Disabled child, age 18 or over, who was 

disabled before age 22 (50% of employee's full 

benefit). 

Monthly cash benefits are also payable, as follows, to the 

survivors of a deceased employee: 

•Widow/Widower (of deceased employee):

1. Married to the employee at least 9 months (3 

months in the case of accidental death), or 

married to the employee and is the parent of 

the employee's child, and meets one of the 

following age requirements: 

a. Any age with entitled child in care (75% 

of employee's full benefit), 

b. Age 65 (100% of employee's full benefit), 

c. Age 60-64 (permanently reduced benefit), 

d. Age 50-59 and disabled (permanently 

reduced benefit). 

2. Surviving divorced spouse, married to the 

employee at least 10 years, age 60 or over 

(permanently reduced benefit if entitled prior to 

age 65), 

3. Disabled surviving divorced spouse, married 

at least 10 years, age 50-59 (permanently 

reduced benefit). 

•Child (of deceased employee): 

1. Under age 18 and unmarried (75% of 

employee's full benefit). 

2. Attending elementary or secondary school 

full-time at age 18 and through end of school 

term in which age 19 is attained (75% of 

employee's full benefit). 

3. Disabled child, age 18 or over, who was 

disabled before age 22 (75% of employee's full 

benefit). 

•Dependent Parent Age 62 or Older (of deceased 

employee): 

1. One surviving parent (821⁄2% of the employee's 

full benefit). 

2. Two surviving parents (75% of employee's full 

benefit payable to each parent). 

Lump-Sum Death Payment—A one-time payment of 

$255 is payable, upon the death of an employee, to a 

spouse with whom the employee was living at the time of 

death or to a spouse or child who is eligible for monthly 

survivor benefits in the month of the employee's death. 

42
Amount of Social Security Benefits 

An employee's primary insurance amount (PIA) is the 

monthly benefit amount payable at disability or at the 

full-benefit retirement age. All other monthly benefit 

amounts are derived from the PIA. 

•The employee's PIA is derived by applying a 

three-step benefit formula to the employee's 

lifetime average earnings in employment covered 

by Social Security. Before averaging the earnings, 

the yearly earnings are adjusted to reflect wage 

levels prevailing shortly before retirement, 

disability, or death. (These are known as adjusted 

career earnings.) 

•For employees who receive an annuity based on 

CSRS service (including those who transfer to 

FERS from CSRS) a modified benefit formula 

may be used in computing the Social Security 

retirement or disability benefit. (See Windfall 

Elimination provision on page 45.)

As previously noted, benefits taken before the full benefit 

retirement age are permanently reduced. For example, 

retirement benefits for employees entitled at age 62 are 

currently reduced by 20% and benefits for spouses 

entitled at age 62 are reduced by 25%. As the full-benefit 

retirement age increases in the future, reduced benefits 

will continue to be available at age 62 for employees and 

spouses (age 60 for surviving spouses), but the reduction 

factors will be revised so that there is a further reduction. 

The maximum reduction will increase gradually to 30% 

for employees entitled at age 62 and to 35% for spouses 

entitled at age 62. There is no increase in the maximum 

reduction in the case of widows and widowers entitled at 

age 60 (28.5%). 

Family benefits payable on an employee's Social Security 

record are limited to a maximum set by law. The 

maximum family benefit is generally related to the 

employee's PIA. The maximum monthly benefit that can 

be paid to a family (including the employee) ranges from 

150% to 188% of the employee's PIA in retirement and 

survivor cases. In disability cases, it ranges from 100% of 

the PIA to 150% of the PIA. Generally, the maximum 

family benefit amount applies whenever there is more 

than one auxiliary or survivor beneficiary entitled on the 

employee's record. 

Under the “dual-entitlement” provision, a person who 

qualifies for benefits based on the earnings of more than 

one employee (for example, a benefit as an employee and 

a benefit as a spouse of another employee) cannot receive 

both benefits in full. The amount of the spouse's or 

surviving spouse's benefit is offset dollar for dollar 

against the person's own employee's benefit so that the 

spouse receives the larger of the two benefits. 

Similar to the dual entitlement provision discussed 

above, under the Government Pension Offset Provision, 

the amount of a person's Social Security benefit as a 

spouse or surviving spouse will be reduced by two-thirds 

of the amount of the Government pension (for example, a 

CSRS annuity) the person receives based on his/her own 

work that was not covered by Social Security. (See 

further discussion of this provision on page 47.) If you 

transfer to FERS and are not covered under FERS for 5 

years before retirement, the Government Pension Offset 

will still apply to you. 

Social Security benefits are increased automatically each 

year whenever the cost of living, as measured by the 

Consumer Price Index rises. 

Taxation of Social Security Benefits 

Social Security benefits are subject to income tax if a 

beneficiary's total income exceeds specified limits. The 

limits generally are $25,000 for a single taxpayer; 

$32,000 for a married couple filing a joint tax return. If 

the appropriate limit is exceeded, up to 85% of the 

benefit is taxable. Revenues generated by this tax are 

deposited to the Social Security Trust Fund. 

Social Security Earnings Test 

This section applies to you if you plan to work after you 

begin receiving your FERS Special Retirement 

Supplement or your Social Security Benefit. 

What Is the Social Security Earnings 

Test? 

The Social Security Earnings Test is part of the Social 

Security law. It means that your Social Security benefits 

may be reduced if you work after retirement and earn 

more than the allowable amount. 

Who Is Affected? 

If you switch to FERS, this provision could affect parts 

of your benefit. 

43
Note that this provision also applies if you remain with 

CSRS or CSRS Offset and have enough Social Security 

credits to qualify for a benefit. Your CSRS benefit will 

not be affected in this case, but your Social Security 

benefit will be. 

Benefits you receive from the Thrift Savings Plan are not 

included as income for the Social Security Earnings Test. 

How the Social Security Earnings Test 

Works 

If you work after you start receiving Social Security 

benefits and are under age 70, the amount of money you 

earn by working can reduce your Social Security 

benefits. Earnings from savings, most investments, and 

insurance will not affect your Social Security benefit. 

Wages and earnings from self-employment can, however. 

Under the Social Security earnings test, Social Security 

counts wages for services rendered during the year on net 

earnings from self-employment minus any net loss from 

self-employment. 

Whether or not your Social Security benefit is reduced 

depends on how much you earn when you work. In 2008, 

the annual exempt amount of earnings is $13,560 if 

you're under 65, and $36,120 if you're age 65-69. You 

can earn up to these amounts without affecting your 

Social Security income. If you earn more than these 

amounts, however, your Social Security benefit will be 

reduced. If you are under age 65, it will be reduced by $1 

for every $2 above the limit that you earn by work. For 

people age 65 and over, $1 in benefits is withheld for 

each $3 in earnings above the limit. If you are age 70 or 

above, your Social Security benefits will not be reduced 

because of your earnings. 

The amount you can earn each year before your benefit is 

affected increases yearly. How much it increases is based 

on how much average wage levels increase in the United 

States as a whole. 

Similar rules, including the $13,560 limit, apply to the 

Special Retirement Supplement provided to those who 

retire under FERS before age 62. 

Conclusion 

If you are eligible for the FERS Special Retirement 

Supplement (that is, you retire at your MRA with 30 or 

more years of service, at age 60 with 20 or more years of 

service, or other rules that allow receipt of the 

Supplement), the earnings test may reduce the amount of 

your Supplement. If you plan to work past age 62, you 

can delay your application for Social Security benefits in 

order to receive higher benefits. In any case, you should 

remember that the earnings test only applies when you 

have substantial earned income during your “retirement” 

years. 

Windfall Elimination Provision 

The rules concerning the Windfall Elimination Provision 

(WEP) may be a transfer consideration if: 

•You are under CSRS (not CSRS Offset); and 

•You will reach age 62 after 1985 and are eligible 

for a Social Security benefit; and 

•You will have had “substantial” earnings under 

Social Security for less than 30 years; and 

•You are first eligible to retire under CSRS after 

December 31, 1985. 

Benefits you receive from the Thrift Savings Plan will 

not reduce your Social Security Benefits under the WEP. 

If you already have Social Security coverage as a CSRS 

Offset employee, the WEP is not a transfer consideration, 

but you may want to read this section to find out if your 

future Social Security benefits will be reduced by the 

WEP. 

What the Windfall Elimination 

Provision Is 

Social Security law includes a provision that reduces 

Social Security benefits for those who have less than 30 

years of “substantial coverage” under Social Security and 

who have earned a retirement benefit from employment 

not covered by Social Security; for example, CSRS 

service. (In 2008, the amount of substantial coverage is 

$18,975. In contrast, the amount needed to earn four 

credits of coverage in 2008 is $4,200.) If it applies to 

you, your benefits will be figured at a different formula 

from the one used for those with longer covered service. 

44
Who Is Affected 

If you have fewer than 30 years of substantial Social 

Security coverage and become eligible for a Social 

Security benefit, this provision will affect you if you are 

also eligible for a retirement benefit that includes service 

performed under CSRS rules. Note: The provision will 

apply to you even if you have past CSRS (non-Offset) 

service that will become subject to FERS rules when you 

transfer. See the example on page 46. 

If you do not earn at least 10 years (or 40 credits) of 

Social Security coverage, you will not be eligible for a 

Social Security benefit (unless you were born before 

1929, in which case fewer quarters of coverage are 

required). This provision would, of course, not apply to 

you if you are not eligible for Social Security benefits. 

Likewise, it does not apply to you if you already have 30 

years of substantial Social Security coverage. If you are 

uncertain how many years of substantial Social Security 

coverage you have and this issue is a consideration in 

deciding to transfer to FERS, request your earnings 

history from the Social Security Administration. 

How the Windfall Elimination Provision 

Works 

The WEP was designed to eliminate the “windfall” that 

could result if you were to receive a CSRS annuity based 

on many years of employment not covered by Social 

Security and also receive a full Social Security benefit 

because you did have a few years of covered 

employment. If you're subject to the WEP, your earned 

Social Security benefits will be figured using a modified 

benefit formula. 

The modified formula is not used in computing survivor 

benefits upon your death or the Special Retirement 

Supplement. It is used in computing Social Security 

retirement as well as disability benefits if you become 

disabled. 

The regular Social Security benefit formula uses three 

levels of earnings. Each level of earnings is multiplied by 

a different percentage. The first level of earnings is 

multiplied by 90%. The second by 32%, and the third by 

15%. Those amounts are added together to determine a 

person's basic benefit rate. 

Under the modified benefit formula, the first level of 

earnings is not multiplied by 90%, but by a smaller 

percentage, depending on the number of years of 

substantial Social Security coverage you have. The 

modified formula reduces your Social Security Benefit to 

the greatest extent if you have less than 21 years of 

substantial Social Security coverage. In that case the first 

level of earnings is multiplied by 40% instead of 90%. 

For each year of coverage over 20 years the percentage 

increases by 5% increments (e.g., 45% for 21 years, 50% 

for 22 years, etc.). However, in no case will the reduction 

in your Social Security benefit because of the WEP be 

greater than one-half of the portion of your pension from 

employment not subject to Social Security taxes; for 

example, your CSRS annuity. 

That aspect of the WEP will only help if the amount of 

your CSRS benefit is relatively low. If you could earn 

between 21 and 30 years of substantial Social Security 

coverage, you should consider whether or not you could 

earn the required years by transferring to FERS. If you 

can, it will reduce or cancel out the effect of this 

provision. For example: Two employees with the same 

date of birth retire at age 65. Both have worked for the 

same employer for their entire working career and have 

identical wages posted to their earnings records. 

However, one also worked for the Federal government 

and is receiving a CSRS pension of $800 per month, 

based on that non-covered work. When Social Security 

benefits are computed, the worker entitled only to Social 

Security will receive a benefit of $567 per month. The 

second worker is subject to the WEP modified formula 

and will receive a benefit of $354 per month. 

These benefit amounts are computed using the different 

percentages as follows: 

The average indexed monthly earnings for each 

worker is $1000. 

1st worker 2nd worker 

426 x .90 = 383.40 426 x .40 = 170.40 

574 x .32 = 183.60 574 x .32 = 183.60 

Total 567.00 Total 354.00 

Conclusion 

If you become eligible for a Social Security benefit, you 

may be subject to the WEP whether you choose to stay 

with CSRS or transfer to FERS. This is because, either 

way, you may not be able to acquire 30 years of 

substantial Social Security coverage. 

If you earn 21 or more years of substantial Social 

Security coverage, though, you can lessen the effects of 

this provision. Depending on your age, your previous 

45
Social Security coverage, and the number of years you 

plan to work, transferring to FERS could allow you to 

earn some or all of the additional Social Security 

coverage you need to avoid the WEP. This could be 

especially valuable for lower paid employees. 

Social Security generally provides a higher proportion of 

benefits to lower income employees than it does to those 

who are higher paid. The reduction that results from the 

WEP, however, tends to cancel out this effect. Lower 

salaried employees who are subject to the WEP will find 

FERS a less attractive alternative than those who are not. 

If you are low salaried, staying with CSRS is usually a 

better choice if you are sure you will retire from the 

Federal Government and will not be able to earn enough 

Social Security substantial earnings years to avoid the 

Windfall reduction by transferring to FERS. 

How to Estimate the Reduction in Your 

Social Security Benefit Resulting from 

the Windfall Elimination Provision 

Upon request by a worker (using form SSA-7004), the 

Social Security Administration (SSA) will send a 

Personalized Earnings and Benefit Estimate Statement 

(PEBES) that will list the worker's earnings in 

employment covered by Social Security and provide a 

Social Security retirement benefit estimate assuming 

retirement at alternative ages — 62, 65 and 70. The 

benefit estimate is based on the person's own estimate of 

his or her future annual earnings in employment covered 

by Social Security. 

For additional information on the Windfall Elimination 

Provision you may visit Social Security’s web site at 

www.socialsecurity.gov/pubs/10045.html. 

You can request a PEBES online from Social Security’s 

Web site at http://www.ssa.gov. 

You also can obtain the PEBES request form (SSA-7004) 

at this Web address, from your personnel office, or by 

calling 1-800-772-1213. 

Use of PEBES Benefit Estimates to 

Estimate CSRS-Offset Reductions 

If you are a CSRS-Offset employee considering whether 

to join FERS, you may want to know how much your 

CSRS annuity will be reduced under the CSRS-Offset 

calculation. Generally, this reduction is the smaller of: 

(1) The difference between (a) the Social Security 

benefit including future Federal CSRS-Offset 

employment and (b) the Social Security benefit 

excluding future CSRS-Offset employment; and

(2)1/40 of the Social Security benefit (including 

future Federal employment), multiplied by the 

number of years of future CSRS-Offset 

employment. 

You can estimate these reductions by first requesting two 

Personalized Earnings and Benefit Estimate Statements 

(PEBES) from the Social Security Administration (see 

How to Estimate the Reduction in Your Social Security 

Benefit Resulting From the Windfall Elimination 

Provision in the previous section). On one PEBES 

request form, you should indicate the annual Federal pay 

you estimate that you would have (in today's dollars) 

until age 62; on the other PEBES request form, you 

should show no future earnings under Social Security. 

When you receive the two statements from SSA, adjust 

each benefit estimate for the windfall elimination 

provision (WEP) as explained in the previous section 

(page 45). 

After adjusting for the WEP, the difference between the 

two Social Security benefit estimates at age 62 can be 

used as an estimate of (1), above—assuming that you 

continue to work under CSRS-Offset until age 62. If you 

plan to work until age 65, use the age-65 benefit 

estimates on the PEBES output. 

The reduction under (2), above, can be estimated by 

taking 1/40 of the estimated Social Security benefit 

including future CSRS-Offset employment (as adjusted 

for the WEP) and then multiplying by the number of 

years of future CSRS-Offset employment. 

46
Government Pension Offset 

This section applies to you if: 

•You are covered by CSRS (or you transfer to 

FERS, but do not serve 5 years under FERS); and 

•Based on your work history you are eligible for 

no Social Security benefit or only a small Social 

Security benefit; and 

•Based on your spouse's (or former spouse's) work 

history, he or she is eligible for a full Social 

Security benefit. 

This section does not apply to you if you are covered by 

CSRS Offset provisions. People who are mandatorily 

covered under Social Security are exempt from the 

Government Pension Offset. 

What the Government Pension Offset Is 

Under the Government Pension Offset, the amount of the 

benefit a person receives from Social Security as a 

spouse, former spouse, or surviving spouse will be 

reduced if that person also receives a pension based on 

his/her own work in Federal, State, or local government 

that was not covered by Social Security. 

Who Is Affected? 

Federal employees who remain with CSRS are subject to 

the Government Pension Offset. In addition, CSRS 

employees who transfer to FERS must serve 5 years in 

FERS before becoming exempt from the offset. 

The Government Pension Offset does not affect any 

benefits you receive from your Thrift Savings Plan 

account. 

What Is a Social Security Spouse or 

Survivor Benefit? 

In some cases, Social Security law provides for what is 

known as a spouse or survivor benefit. If your spouse has 

earned a Social Security benefit and you have earned 

little or no benefit, you can receive an additional Social 

Security benefit based on your spouse's Social Security 

benefit. If you begin taking this benefit at age 65, it will 

amount to one-half (50%) of the amount your spouse 

receives. If you start receiving this benefit at age 62, it 

will amount to a little over one-third (37.5%) of the 

amount your spouse receives. 

Example: Your spouse receives a monthly check from 

Social Security in the amount of $1,200. If you begin 

receiving Social Security benefits as a dependent of your 

spouse at age 65, you will receive a monthly check from 

Social Security in the amount of $600. If you begin 

receiving your spousal benefit at age 62, you will receive 

a monthly check from Social Security in the amount of 

$450. 

How the Government Pension Offset 

Works 

If you retire from the Federal service under CSRS and 

are also eligible for Social Security benefits as a spouse, 

former spouse, or survivor, your Social Security benefit 

will be reduced. It is reduced because you are receiving a 

pension from the Federal Government based on earnings 

that are not covered by Social Security. For every $3 you 

receive from your CSRS annuity, your Social Security 

spousal benefit will be reduced by $2. 

Example: Using the above example where you were 

eligible for a $600 Social Security spousal benefit, 

suppose you were also receiving a CSRS benefit that 

amounted to $1,200 a month. The Government Pension 

Offset would be two-thirds of your monthly $1,200 

CSRS benefit, or $800. Since the offset amount is larger 

than your $600 Social Security benefit, your Social 

Security benefit would be eliminated. 

What Is the Effect of Transferring to 

FERS? 

Employees who transfer and work at least 5 years under 

FERS before retiring are exempt from the Government 

Pension Offset. 

Conclusion 

This factor will probably not be significant for anyone 

who earns his/her own Social Security benefit based in 

whole or in part on FERS service. This is because earned 

Social Security benefits are usually larger than spousal 

benefits, and Social Security will not pay both at the 

same time. Even those who are thinking of transferring to 

FERS because of this factor should also consider the fact 

that non-Social Security survivor benefits under the 

Basic Benefit Plan are slightly lower and more costly 

under FERS (see page 35). 

47 
Special Employee Groups


This section covers four types of employees: law 

enforcement officers, firefighters, air traffic controllers, 

military reserve technicians, and Customs and Border 

Protection Officers. 

Law Enforcement and Firefighting 

Personnel 

CSRS 

If you work in a position that your agency has determined 

to be a law enforcement or firefighting position, you are 

covered under special rules of the Civil Service 

Retirement System. You pay a higher retirement 

contribution rate (7.50% of pay) for more generous 

retirement benefits, and you have the ability to retire at 

age 50 after 20 years of law enforcement 

officer/firefighter covered service. The benefits you 

receive will be computed based on 2.5% of your high-3 

average pay for each of the first 20 years of law 

enforcement/firefighter service, and 2% per year of 

service (covered or not) thereafter. Once you have 20 

years of covered service, you are subject to mandatory 

retirement at age 55 if you are a firefighter and age 57 if 

you are a law enforcement officer. Other CSRS rules 

apply to you in the same manner as to any other 

employee. 

FERS 

Under FERS, there are also special benefits for law 

enforcement and firefighting personnel, but the rules are 

different. First, the FERS definition of a law enforcement 

or firefighting position includes a requirement that the 

positions be limited to “young and vigorous” personnel. 

Second, in order to qualify for the special benefits, you 

must have occupied a primary or first-line law 

enforcement or firefighting position for at least 3 years 

before moving to a secondary (that is an administrative or 

supervisory) position. Agency heads may determine that 

some supervisory positions are “primary” because they 

meet the “young and vigorous” requirement. The FERS 

definition and the 3-year requirement are generally more 

strict than the CSRS rules. 

The contribution rate for FERS special law enforcement 

and firefighting benefits is a half percent more of pay 

than for regular benefits. FERS also has different rules 

for when you can retire: at age 50 with 20 years of 

covered service, like CSRS, or at any age with 25 years 

of covered service. Under FERS, the special benefits 

formula is 1.7% of your high-3 average pay for each of 

the first 20 covered years of FERS service, and 1% of 

pay per year of service thereafter. The FERS 

cost-of-living adjustments will begin at retirement 

instead of at age 62, the age when most FERS retirees 

begin to receive cost-of-living adjustments. In addition, 

law enforcement and firefighting retirees will receive the 

FERS Special Retirement Supplement until age 62. The 

earnings test does not apply to the Special Retirement 

Supplement until you reach the Minimum Retirement 

Age. Once you have 20 years of covered service, you are 

subject to mandatory retirement at age 55. Other FERS 

provisions, including those for Social Security and the 

Thrift Savings Plan, are the same as for regular 

employees. 

Note: There are special rules that apply to Customs and 

Border Protection Officers. Contact the Benefits Officer 

at your agency for additional information. 

Special Transfer Rules 

In general, the same transfer rules apply to CSRS law 

enforcement and firefighting personnel who elect FERS 

as they do to regular employees. That is, you take with 

you your credit for your CSRS service, including your 

2.5% credits, and the full CSRS cost-of-living 

adjustments payable on those credits. (You must retire 

under the special provisions to get the 2.5% credits.) 

However, there are two points that you should keep in 

mind: 

•All of your covered (law enforcement/firefighting) service that was subject to the 7.50% 

deduction rate (or the CSRS Offset rate) counts 

toward the required 3 years of service in a 

primary position when you transfer to FERS, 

even if some of the service was in an 

administrative or supervisory position. If you now 

49
occupy a covered position but will not meet the 

3-year requirement at the time you transfer, you 

may want to check to see that you will accumulate 

enough additional service in a position that your 

agency head has designated as a primary law 

enforcement/firefighting position to meet the 

3-year requirement under FERS.

•Your law enforcement/firefighter service that was 

subject to the 7.5% deduction rate (or the CSRS 

Offset rate) will not count against the 20-year 

limitation for the more generous FERS benefit 

formula. 

Example: If you transfer to FERS after 13 years of 

CSRS law enforcement/firefighter service, you 

can still earn up to 20 years of additional service at 

the 1.7% rate under FERS. In effect, the period of 

time during which you can earn special benefits is 

extended by transferring to FERS. However, 

mandatory retirement age requirements are not 

affected by transferring. 

Transfer Considerations for Law 

Enforcement and Firefighting Personnel 

If you will perform, or have already completed 25 years 

of covered (law enforcement/firefighting) service before 

attaining age 50, the FERS provisions permitting 

retirement at any age after 25 years of service permit you 

to retire earlier under FERS than under CSRS. 

If you are close to meeting the 20-year limitation for the 

special benefit formula under CSRS but contemplate 

working beyond 20 years, you may wish to consider 

FERS as a means of extending your eligibility for the 

special benefit formula. The FERS 1.7% rate, plus Social 

Security and the Thrift Savings Plan, generally provide 

more basic value than the regular 2% per year CSRS 

formula you earn after 20 years of covered service under 

CSRS. 

Because the FERS definitions of law enforcement officer 

and firefighter differ from the CSRS definitions, you will 

not necessarily be covered by FERS special provisions if 

you transfer, even though your position now qualifies 

under CSRS provisions. Your agency head must 

determine which positions qualify. If there is any 

question as to whether your current position meets the 

FERS definition or whether you can meet the 3-year 

requirement for primary law enforcement/firefighting 

duties under FERS, you should consider staying with 

CSRS. 

Of course, as has been stated throughout this handbook, 

if you plan to leave Federal service short of retirement, 

FERS is almost always the better choice. This is 

especially important for those who leave before 

becoming eligible to retire under the law 

enforcement/firefighter provisions. They will be treated 

the same as any other employee under CSRS or FERS.

Air Traffic Controllers 

The definition of an Air Traffic Controller, or Controller 

is the same under CSRS and FERS. 

CSRS 

Under CSRS you can retire at age 50 after 20 years of 

service as a controller, or at any age after 25 years as a 

controller. While there is no special benefit formula, 

there is a guaranteed benefit after at least 20 years of 

controller service. The guarantee is 50% of your high-3 

average pay. If you retire after 25 years, it works out to 

earning 2% per year. If you retire after 27 years, the 

guarantee provides no more than the regular formula 

would have. Other than the guaranteed benefit and 

mandatory retirement, there are no special CSRS rules 

for controllers. 

FERS 

While FERS has the same rules as CSRS for when a 

controller can retire, FERS doesn't have a guaranteed 

benefit. Instead, FERS provides the same special benefits 

that are provided to law enforcement and firefighting 

personnel, discussed on the previous page. FERS also 

requires controllers to pay a 1/2% more for the special 

benefits, as must law enforcement and firefighting 

personnel. 

Special Transfer Rules 

There are no special rules for controllers who transfer to 

FERS. 

Transfer Considerations for Controllers 

When a controller transfers to FERS, the regular CSRS 

formula is used to calculate the CSRS credit that the 

controller will receive under FERS, and the guaranteed 

benefit is completely disregarded. In cases where a 

controller plans to retire before completing 27 years of 

service, this can have the effect of significantly reducing 

50
the value of the CSRS service performed before 

transferring. 

Example: A controller who has between 20 and 25 years 

of controller service has earned the CSRS guaranteed 

benefit of 50% of average pay. When that service is 

transferred to FERS, its value will be computed using the 

regular CSRS formula; 36% for 20 years and 46% for 25 

years. This results in a loss of 4 to 14% of average pay 

compared to the value of the service under CSRS. Unless 

the controller expects to perform many years of service, 

the special formula for controllers under FERS won't 

make up the difference. 

Of course, the CSRS guaranteed benefit is only available 

to employees who retire under the system. FERS is 

almost always a better system for those who expect to 

leave Federal service short of retirement. 

Military Reserve Technicians 

A military reserve technician, or National Guard 

technician is a civilian employee who is a member of the 

Army National Guard of the United States, the Army 

Reserve, the Naval Reserve, the Marine Corps Reserve, 

the Air Force Reserve, or the Coast Guard Reserve who 

is assigned to duties in one of these components and who 

is required to maintain a specific military grade in order 

to continue in his/her civilian employment. 

CSRS 

A technician is treated the same as any other employee 

under CSRS. A technician who is involuntarily separated 

(not for delinquency or misconduct) from his/her position 

can get a discontinued service annuity at any age with 25 

years of service, or at age 50 with 20 years of service. 

The annuity is reduced at a rate of 2% for each year the 

employee is under 55 years of age. 

A National Guard technician who is medically 

disqualified for military duty and who has 5 years of 

creditable civilian service may receive disability benefits 

without meeting the usual CSRS disability criteria. This 

special provision does not apply to military reserve 

technicians. 

FERS 

Under FERS, a technician who is separated from civilian 

service because he/she no longer qualifies as a member 

of a military reserve component may retire and receive 

an unreduced annuity at age 50 with 25 years of service. 

If military status is lost due to a disability, FERS 

disability benefits are payable after only 18 months of 

FERS service. Also, the Special Retirement Supplement 

is paid until age 62. It is not subject to the Social Security 

Earnings Test until the employee reaches the Minimum 

Retirement Age. However, technicians are not eligible 

for the 1.1% annuity formula under FERS, no matter how 

long they work or their age at retirement. 

Thrift Savings Plan Considerations for 

Special Groups 

If you retire under any of the special retirement 

provisions, you will be eligible to withdraw your Thrift 

Savings Plan account. You may receive your entire 

account as a single payment, receive your account in a 

series of monthly payments, or have the TSP purchase an 

annuity for you. If you elect a single payment or certain 

monthly payments, you may have TSP transfer all or any 

portion of the payment(s) to an Individual Retirement 

Arrangement (IRA) or other eligible retirement plan. 

Thrift Savings Plan payments are taxable as ordinary 

income for Federal income tax purposes for the year in 

which they are disbursed. In addition, if you retire before 

the year in which you reach age 55 and receive a direct 

single payment or monthly payments determined by 

dollar amount or number of months before you reach age 

591⁄2, the payment(s) will be subject to the Internal 

Revenue Service 10% early withdrawal penalty tax. If 

you transfer all or any portion of the payment(s) to an 

IRA or other eligible retirement plan, the amount 

transferred is not taxable income when it is transferred (it 

becomes taxable income when it is disbursed from the 

plan to which it was transferred) and, consequently, is 

not subject to early withdrawal penalty tax. If you receive 

a TSP annuity, or monthly payments computed by your 

life expectancy, the payments are not subject to the early 

withdrawal penalty. 

51
Service Credit Deposits and Refunds


Civilian Service 

CSRS 

Under CSRS, civilian service as a Federal or District of 

Columbia employee is generally creditable for 

retirement. Service while employed but in a nonpay 

status is creditable for up to 6 months per calendar year. 

If you are covered by CSRS, all past civilian service 

(including service for which no deductions were withheld 

and service for which a refund of deductions has been 

paid) is used to determine your eligibility for an annuity. 

If you received a refund, however, the service covered by 

the refund cannot be included in computing your length 

of service for your annuity, unless the refund is 

redeposited (repaid) after you become reemployed. 

Exception: Even if you do not pay a redeposit, refunded 

service that ended before October 1, 1990, will still be 

credited when you retire, subject to an actuarial reduction 

in your annuity. The reduction is based on the amount of 

the redeposit and your age at the time of retirement. This 

exception to the redeposit requirement does not apply if 

you retire for disability. 

Nondeduction service (service for which no deductions 

were taken) performed on and after October 1, 1982 is 

not creditable in computing your annuity unless a deposit 

is paid. Nondeduction service performed before October 

1, 1982, is not fully creditable in computing your annuity 

unless a deposit is paid. However, if you do not pay the 

deposit for pre-October 1, 1982 service, the yearly 

amount of your annuity will be reduced by 10 percent of 

the unpaid deposit. A CSRS employee may make 

deposits and redeposits at any time, but not after the U. S. 

Office of Personnel Management has completed 

processing the employee's annuity application. The 

redeposit payment is the amount of the refund, plus 

interest from the date of the refund. The amount of a 

deposit is usually 7% of the basic pay for the period, plus 

interest from the midpoint of the period. Interest on 

deposits for nondeduction service on and after October 1, 

1982, and on refunds based on applications received on 

and after October 1, 1982, is computed at the rate of 4% 

through 1947, 3% through 1984, and an annually variable 

rate beginning in 1985 (reflecting certain U.S. Treasury 

Department interest rates for the previous fiscal year). 

The variable interest rates since 1984 are as follows: 

1985 13% 

1986 11.125% 

1987 9% 

1988 8.374% 

1989 9.125% 

1990 8.75% 

1991 8.625% 

1992 8.125% 

1993 7.125% 

1994 6.25% 

1995 7.0% 

1996 6.875% 

1997 6.875% 

1998 6.75% 

1999 5.75% 

2000 6.375% 

2001 6.375% 

2002 5.5% 

2003 5.0% 

2004 3.875% 

2005 4.375% 

2006 4.125% 

2007 4.875% 

2008 4.75% 

Interest on deposits for nondeduction service before 

October 1, 1982, and refunds based on applications 

received before October 1, 1982, is computed at the rate 

of 4% through 1947, and 3% after 1947. 

FERS 

Under the rules for employees who transfer to FERS, 

civilian service covered by retirement deduction or 

deposits is creditable for all purposes. If you receive a 

refund of FERS deductions after the effective date of 

your transfer to FERS, you can never redeposit the FERS 

funds, and the period covered by the refund will not be 

creditable for the purposes of entitlement or computation 

of your annuity. If there is a CSRS component, and 

CSRS contributions were also returned, they follow 

CSRS redeposit rules. You can also request a refund of 

only your CSRS deductions upon separation. 

53
Nondeduction service cannot be credited unless it was 

performed before 1989 and a deposit is made. (An 

exception in the law allows certain nondeduction service 

performed after 1988 to be credited if it is creditable 

under the Foreign Service Pension System.) 

If you transfer to FERS, any service subject to CSRS 

Offset deductions after 1983 (and before the effective 

date of your transfer to FERS) becomes subject to FERS 

rules. But, if these deductions were refunded upon 

separation from service, they may usually be redeposited 

upon later reemployment subject to FERS. The treatment 

of other civilian service performed before the effective 

date of your transfer (that is, the civilian service not 

subject to CSRS Offset deductions) depends on how 

much service you have. For simplicity, this past service 

will be called non-offset service. Non-offset service 

includes nondeduction service performed before 

transferring to FERS (except that such nondeduction 

service performed after 1988 can be used only in a CSRS 

component), service for which a deposit or redeposit has 

been made at the full CSRS rate, and service for which 

deductions were taken at the full CSRS rate, whether 

refunded or not. 

Military Service 

CSRS 

Under CSRS, honorable active military service is 

generally creditable. However, most military retirees are 

barred from receiving credit toward a civilian annuity 

unless they waive their military retired pay. The military 

retired pay need not be waived if it is based on disability 

involving certain injuries incurred in wartime or if it is 

Chapter 67 (reservists') retired pay. If you are a military 

retiree, your retired pay center can tell you whether you 

fall under one of these exceptions. 

Beginning in 1957, military service became subject to 

Social Security, and treatment of military service under 

retirement depends on whether or not it was performed 

after December 31, 1956. A 1982 change in law also 

distinguished between pre-October 1, 1982 hires and 

those employees who first became subject to CSRS on or 

after that date. 

Employees first hired in positions subject to CSRS after 

September 30, 1982 can receive credit for military 

service after 1956 only if they make a deposit covering 

this service. Employees hired in positions subject to 

CSRS before October 1, 1982 can receive credit for 

military service after 1956 without making the deposit. 

However, credit for this service will be eliminated if the 

individual becomes eligible (or would become eligible 

upon proper application) for Social Security old-age 

benefits at age 62 unless a deposit for the service is made 

before retirement. 

The deposit is made directly to the employing office. The 

amount of the deposit is 7% of the military basic pay for 

the period, plus interest. CSRS Offset employees pay the 

same amount. Interest is computed at the rate of 3% 

through 1984 and an annually variable rate beginning in 

1985 (see table on page 53). Interest begins on October 1, 

1985, or 2 years after the employee is first hired in a 

position subject to CSRS; whichever is later. However, 

because the method of computing the deposit calls for 

adding interest only at the end of the year after it begins, 

no interest is charged if the deposit has been paid in full 

by September 30, 1986, or within 3 years after first 

becoming subject to CSRS, if later. 

Service in the National Guard 

Service in the National Guard, except when ordered to 

active duty in the service of the United States, is 

generally not creditable. However, you may receive 

credit for National Guard service, followed by Federal 

civilian reemployment that occurs after August 1, 1990, 

when all of the following conditions are met: 

•The service must interrupt civilian service 

creditable under CSRS (or FERS) and be 

followed by reemployment in accordance with the 

appropriate chapter of the laws concerning 

Veterans Benefits; and 

•It must be full-time (and not inactive duty), and 

performed by a member of the U.S. Army 

National Guard, or U.S. Air National Guard; and 

•It must be under a specified law and you must be 

entitled to pay from the U.S. (or have waived pay 

from the U.S.) for the service. The deposit for 

National Guard service that meets these criteria is 

limited to the amount that would have been 

deducted from your pay for retirement if you had 

remained in the civilian service. This means that 

CSRS Offset employees may pay a deposit of less 

than 7% for qualifying National Guard service. 

54
FERS 

Military service that would be creditable under CSRS is 

creditable under FERS, except that all military service 

after 1956 must be covered by a deposit to receive credit. 

Even if an employee covered by FERS was first hired 

before October 1, 1982, military service after 1956 

cannot be credited under FERS rules unless the required 

deposit is completed. The deposit must be made directly 

to the employing agency before retirement. 

The amount of the deposit is 3% of the military basic pay 

for the period, plus interest. The deposit rate for 

qualifying National Guard service is limited to the 

amount that would have been deducted from pay had the 

person remained in his/her civilian position. Interest is 

computed at the same rate as applicable to CSRS 

deposits. Interest for military service that will be credited 

under FERS rules begins 2 years after the effective date 

of an election to join FERS. As under CSRS, however, 

no interest will actually be charged if the deposit is 

completed before the end of the year after interest begins; 

that is, if the deposit is completed within 3 years of the 

effective date of the election to join FERS. 

Whether your past military service is credited under 

CSRS rules or FERS rules depends on how much 

non-offset civilian service you have as of the effective 

date of your transfer to FERS. Refer to the above FERS 

section under “Civilian Service” to determine whether 

your military service will be subject to FERS rules or 

CSRS rules. Any military service performed after your 

transfer and before retirement can be credited only under 

FERS rules. If you become subject to FERS rules but 

have already made a deposit under CSRS rules, a refund 

is payable. The refund will be equal to the difference 

between the 7% deposit and the 3% deposit. If you are 

eligible for this kind of refund, your employing agency 

can give you more information. 

Conclusion 

The varying rules for service credit deposits and refunds 

under CSRS and FERS are not significant factors in most 

transfer decisions. 

55
Glossary �

Adjusted Career Earnings—A figure based on an 

employee's earnings history that is used in calculating 

Social Security benefits amounts. A worker's actual 

earnings through out his/her work history are indexed to 

reflect the national wage levels in effect when he/she 

becomes eligible for Social Security benefits. 

Agency Automatic (1%) Contribution—An amount 

equal to 1% of a FERS employee's basic pay that his/her 

agency contributes to the employee's Thrift Savings Plan 

account each pay period. This contribution is made from 

agency funds; it is not a deduction from the employee's 

basic pay. It is made whether or not the employee 

contributes to the Thrift Savings Plan. 

Agency Matching Contributions—A FERS employee 

who contributes a percentage of his/her pay to the Thrift 

Savings Plan receives additional contributions from the 

Government. These Government contributions are known 

as Agency Matching Contributions. 

Annuitant—An individual who is receiving a CSRS, 

CSRS-Offset or FERS annuity. 

Annuity—The recurring monthly payments to a former 

employee who has retired. 

Annuity, Deferred—An annuity that begins more than 

1 month after separation from employment at some future 

point when retirement age is reached. (Also called 

deferred benefits.) 

Annuity, Immediate—An annuity that becomes payable 

within 1 month after separation from Federal 

employment. (Also called immediate benefits.) 

Annuity, Postponed—Delaying your FERS annuity 

benefit to sometime in the future after meeting your 

Minimum Retirement Age but before age 62. 

Annuity, Reduced—A retiree's basic annuity that is 

reduced because of retirement before a certain age (for 

reasons other than disability). Annuities are also reduced 

because of unpaid deposits or redeposits, or to provide a 

survivor annuity. (Also called reduced benefits.) 

Annuity, Survivor—The recurring monthly payments 

to a deceased employee's or retiree's survivor(s). 

Survivor annuities may be paid to surviving spouses, 

certain former spouses, and children. (Also called 

survivor benefits.) 

Average Indexed Monthly Earnings (AIME)—The 

adjusted earnings determined under the Social Security 

Act formula used to determine Social Security benefits. It 

is based on an individual's lifetime earnings subject to the 

Social Security System. 

Basic Benefit Plan—The first tier of FERS (Federal 

Employees Retirement System). The Basic Benefit Plan 

provides annuities and lump-sum payments based on 

years of service and pay. 

Basic Pay—An employee's pay subject to retirement 

deductions under CSRS or the FERS Basic Benefit Plan, 

generally excluding such compensation as bonuses, 

overtime pay, special allowances, etc. 

COLA, CSRS—CSRS cost-of-living adjustments 

(COLA's) provide an increase that is equal to the rate of 

inflation as measured by the Consumer Price Index 

(CPI). CSRS cost-of-living adjustments are provided to 

retirees at all ages. 

COLA, FERS—FERS cost-of-living adjustments 

(COLA's) provide an increase that is equal to the rate of 

inflation as measured by the Consumer Price Index (CPI) 

when the inflation rate is 2% or less. When the inflation 

rate is between 2% and 3%, the cost-of-living 

adjustments will be 2%. When the inflation rate is 3% or 

more, FERS cost-of-living adjustments are 1% less than 

the rate of inflation. FERS cost-of-living adjustments 

under the Basic Benefit Plan are not provided until a 

retiree reaches age 62, except for disability and survivor 

benefits, and employees retired under the special 

provisions for law enforcement officers, firefighter, air 

traffic controllers, and Customs and Border Protection 

Officers. 

57 
Common Stock Index Investment Fund (C Fund)�

One of the six Thrift Savings Plan investment funds. This 

fund allows participants to invest in common stocks and 

is invested in a fund that tracks the Standard and Poor's 

500 stock index. 

Consumer Price Index (CPI)—The measure of change 

in consumer prices as determined by a monthly survey of 

the U.S. Bureau of Labor Statistics. Among the 

Consumer Price Index components are the costs of 

housing, food, transportation, and electricity. Both CSRS 

and FERS benefits are adjusted for changes in the rate of 

inflation as measured by the Consumer Price Index. (See 

Cost-of-living adjustments entries.) 

Cost-of-Living Adjustment (COLA)—An adjustment 

of an annuity amount based on the rate of inflation as 

measured by the Consumer Price Index (CPI). It protects 

an annuity's buying power in times of inflation. 

Credits of Coverage �A measurement used to credit 

work covered by Social Security. In 2008, earnings 

totaling $1,050 generally equal one credit of coverage. 

No more than four credits may be earned in any one 

calendar year. The term “quarters” of coverage is also 

used. 

CSRS—The Civil Service Retirement System. 

CSRS Offset—Generally applies to an employee who 

was originally employed under CSRS, left the Federal 

service for more than a year, and returned after 1983 to 

be covered by both CSRS and Social Security. If you 

elect FERS, CSRS-Offset service changes to FERS 

service. 

Deductions—The amount withheld from the basic pay of 

an employee for the basic retirement benefit plan. 

Deposit—A sum of money paid into CSRS or FERS by 

an employee (or a survivor) to get credit for a period of 

Federal civilian service during which retirement 

deductions were not withheld from pay. 

Earnings Offset—A reduction in an employee's Social 

Security payments or Special Retirement Supplement 

made when he/she continues to work after benefits begin 

and earns over an allowable amount ($13,560 in 2008). 

For every $2 earned over this amount, the employee will 

give up $1 in benefits. This offset does not apply to 

special groups of employees until the Minimum 

Retirement Age is attained. 

Earnings Test—A method of connecting benefits to 

income so that as income increases, benefits decrease. 

Used in the earnings offset. 

FERS—The Federal Employees Retirement System. 

Federal Retirement Thrift Investment Board—An 

independent Federal agency established to administer the 

Thrift Savings Plan. 

Fixed Income Investment Fund (F Fund)—One of the 

six Thrift Savings Plan investment funds. This fund 

allows participants to invest in fixed income obligations 

and is invested in a fund designed to closely track the 

Lehman Brothers Aggregate bond index. 

Government Pension Offset—A part of the Social 

Security law that affects CSRS retirees who are also 

entitled to a Social Security spouse or survivor benefit. It 

is sometimes referred to as the “Public Pension Offset.” 

The Social Security benefit is reduced because the CSRS 

retiree is also receiving a pension from employment that 

was not covered by Social Security. If you elect FERS, 

you must be covered for 5 years to avoid Government 

Pension Offset. 

Government Securities Investment Fund (G Fund)�

One of the six Thrift Savings plan investment funds. This 

fund consists exclusively of investments in short-term 

nonmarketable U.S. Treasury securities specially issued 

to the TSP. 

High-3 Average Pay—The average of an employee's 3 

highest consecutive years of basic pay earned during 

creditable service. Used in benefit computations under 

both FERS and CSRS. 

International Stock Index Investment Fund (I 

Fund)�One of the six Thrift Savings Plan investment 

funds. The I Fund offers the opportunity to earn a 

potentially high investment return over the long term by 

investing in the stocks of companies in developed 

countries outside the United States. 

Lifecycle Fund (L Fund)�One of the six Thrift 

Savings Plan investment funds. The L Funds diversify 

participant accounts among the G, F, C, S, and I Funds, 

using professionally determined investment mixes 

(allocations) that are tailored to different time horizons. 

The L Funds are rebalanced to their target allocations 

each business day. The investment mix of each fund 

adjusts quarterly to more conservative investments as the 

fund’s time horizon shortens. 

58
Market Rate of Interest—The percentage of interest 

paid on certain FERS deposits and refunds. Based on the 

average interest earned by the Civil Service Retirement 

and Disability Fund in the previous year. In 2008, the 

interest rate is 4.75%. 

Maximum Taxable Wage Base—The maximum 

amount of an employee's wages subject to Social 

Security taxes. In 2008, the maximum taxable wage base 

is $102,000. An employee pays no Social Security taxes 

on any earnings above the base. However, the excess 

earnings are not used in calculating the Social Security 

benefit, either. The maximum taxable wage base 

increases yearly based on the average increase in 

earnings of the American workforce as a whole. 

Minimum Retirement Age (MRA)—The earliest age at 

which a FERS employee may retire voluntarily or elect to 

receive benefits if separated from Federal service after at 

least 10 years of service. The MRA varies according to 

the year in which the employee was born. For anyone 

born before 1948, the MRA is 55. It increases gradually 

to 57 for those born later. The benefits of an employee 

who has less than 30 years of service (or who is not age 

60 with 20 years of service) are reduced if he/she elects 

to receive them at the MRA. 

Non-CSRS Offset Service—Civilian service performed 

before the effective date of a transfer to FERS that was 

not subject to both CSRS and Social Security deductions. 

Non-CSRS Offset service includes nondeduction service 

performed before transferring to FERS, service for which 

a deposit or redeposit has been made at the full CSRS 

rate, and service for which deductions were taken at the 

full CSRS rate, whether refunded or not. 

OASDI or Social Security Tax—The part of the Social 

Security tax that goes to the old age, survivor, and 

disability insurance. Since 1990 the tax rate has been 

6.2% up to the maximum taxable wage base. The total 

Social Security tax also includes 1.45% for Medicare. 

Offset Plan—(See CSRS Offset.) 

OPM (U.S. Office of Personnel Management)—The 

Federal Government's central personnel agency. OPM 

administers the CSRS and the FERS Basic Benefit Plan. 

Primary Insurance Amount—A worker's basic Social 

Security benefit based on his/her adjusted career 

earnings. (See Adjusted Career Earnings.) 

59

Quarters of Coverage (“Quarters”)—A measurement 

used to credit work covered by Social Security. In 2008, 

earnings totaling $1,050 generally equal one quarter of 

coverage. No more than four quarters of coverage may be 

earned in any one calendar year. The term “credit” is also 

used to refer to quarters of coverage. 

Reasonable Offer�For discontinued service retirement 

(early, involuntary), a reasonable offer is a written offer 

of another position in the employing agency for which an 

individual is qualified, not lower than two grades below 

the individual’s current grade, at the same tenure and 

work schedule, and in the same commuting area. A 

different definition applies for disability retirement: A 

written offer of another position in the employing agency 

for which an individual is qualified, at the same grade as 

the individual’s current grade, at the same tenure and 

work schedule, and in the same commuting area. 

Redeposit—A sum of money paid into CSRS by an 

employee (or a survivor) to get credit for a period of 

Federal civilian service for which a refund of retirement 

contributions was received. (Not allowable for FERS 

service.) 

Refund—The amount of money a former Federal 

employee withdraws from his/her retirement account. 

Under FERS, refunds are paid with a market rate of 

interest. 

Retiree—A former Federal employee who is receiving 

recurring CSRS or FERS payments based on his/her 

service. 

Retirement, Deferred—Retirement under CSRS or 

FERS when the employee separates from service with at 

least 5 years of civilian service, but before meeting the 

requirements for an immediate annuity. A deferred 

retirement under CSRS begins on the employee's 62nd 

birthday. Under FERS, the deferred retirement can begin 

as early as the employee's MRA if the employee had at 

least 10 years of service. 

Retirement, Early, FERS—Retirement with at least 10 

but less than 30 years of service after reaching the MRA 

and receiving a reduced annuity. Not available under 

CSRS. Also called “MRA + 10" benefit. 

Retirement Fund—The Civil Service Retirement and 

Disability Fund. This is the account that contains the 

employee and employer contributions to CSRS and 

FERS. It includes additional payments, as well, and is 

invested in Federal Government securities. 
Retirement, Unreduced—Retirement under CSRS or 

FERS with full benefits after meeting appropriate age and 

length-of-service requirements: 62 with 5 years, 60 with 

20 years, 55 with 30 years under CSRS, or the MRA with 

30 years or involuntary and early out under FERS. (Also 

called unreduced benefits.) 

Retirement, Voluntary, or Optional—Retirement from 

Federal service under CSRS or FERS at the individual's 

option with an immediate annuity at any time following 

completion of the appropriate age and length-of-service 

requirements. 

Service, Nondeduction�Periods of civilian service for 

which no retirement deductions were withheld from pay 

for retirement purposes. 

Small Capitalization Stock Index Investment Fund 

(S Fund)�One of the six Thrift Savings Plan investment 

funds. The S Fund offers the opportunity to earn a 

potentially high investment return over the long term by 

investing in the stocks of small and medium-sized U.S. 

companies. 

Social Security—A social insurance program that covers 

most of the Nation's work force. It is often the basic 

retirement plan to which other benefits are added. It 

provides retirement, disability, survivor, and Medicare 

benefits. 

Social Security Credits—When an employee works in a 

position and pays Social Security taxes, he/she earns 

Social Security credits. Minimum numbers of credits are 

required in order to qualify for various Social Security 

benefits. (See Quarters of Coverage.) 

Special Retirement Supplement—An annuity 

supplement provided to some FERS employees who 

retire before age 62, because Social Security benefits 

cannot start before then. The supplement approximates 

the portion of a full career Social Security benefit earned 

while under FERS, and ends at age 62 when Social 

Security benefits first become available. The supplement 

is subject to an earnings test. 

Substantial Social Security Coverage or 

Earnings—Earnings above a certain amount that count 

toward reducing the effect of the Windfall Elimination 

Provision (WEP). The effect of the WEP starts to be 

reduced when 21 or more years of substantial Social 

Security coverage are earned. (In 2008, $18,975 in 

earnings subject to Social Security taxes are considered 

60 

to be “substantial.” In contrast, the amount needed to 

earn four credits for the year is $2,875.) (See Windfall 

Elimination Provision.) 

Survivor—A person who is entitled to a benefit based on 

the service of a deceased employee or annuitant. 

Thrift Savings Plan (TSP)—A retirement savings and 

investment plan established by Congress in the Federal 

Employees' Retirement System Act of 1986 to provide 

eligible Federal employees savings and tax benefits 

similar to those offered by many private corporations. It 

is a defined contribution plan administered by the Federal 

Retirement Thrift Investment Board. CSRS employees 

can also contribute but receive no agency contributions. 

Wage Base—(See Maximum Taxable Wage Base.) 

Windfall Elimination Provision (WEP)—This 

provision of the Social Security law reduces Social 

Security benefits for employees who have less than 30 

years of substantial coverage under Social Security and 

get a pension from employment not covered by Social 

Security (for example, a CSRS benefit). 

Acronyms 

AIME Average Indexed Monthly Earnings 

AIYE Average Indexed Yearly Earnings 

COLA Cost-of-Living Adjustment 

CPI Consumer Price Index 

CSRS Civil Service Retirement System 

FERS Federal Employees Retirement System 

GIC Guaranteed Investment Contract 

IRA Individual Retirement Arrangement 

MRA Minimum Retirement Age 

OASDI Old Age, Survivors, and Disability Insurance 

PIA Primary Insurance Amount 

TSP Thrift Savings Plan

WEP Windfall Elimination Provision
Examples

The following examples represent projected annual retirement benefits that several hypothetical employees might receive 

by remaining under CSRS or transferring to FERS. These examples were developed using the 1996 version of the FERS 

transfer model. The 1998 version should be available through your personnel office. It also is on the U.S. Office of 

Personnel Management’s Internet Web site (http://www.opm.gov/retire/pre/botdg/index.asp). In reviewing these examples, 

note that the benefits projections are based on certain assumptions about future salary increases, investment returns, and 

other factors that directly affect your final level of benefits. The economic scenario used in these examples is based on 

assumptions of 3.5% inflation, 7.5% investment return and 3.5% salary growth. These assumptions are quite conservative 

because they are projections made over a period that would represent much of an employee's career. However, actual 

experience may vary. For example, the compound return for the C Fund from 1988 through 1997 was 17.56%, and the 

compound annual inflation rate for the period was 4%. Thus, the TSP account of an employee who invested heavily in the 

C Fund during this period would have become a much more valuable part of his or her benefits package than the 

assumptions used in the examples would indicate.

All benefits are shown in 1996 dollars. Annual benefits have been rounded to the nearest hundred dollars and may not total 

exactly due to rounding. Because the examples involve projections into the future, the benefit amounts shown should not 

be taken as estimated benefits. Instead, the amounts should be taken as indicators of which plan may provide the better 

monetary benefits. You will also see, as you read through the examples, that several of our make-believe employees' 

decisions turned on other factors such as getting the portability of Social Security coverage or being able to retire earlier. 

The decrease in FERS and Thrift Savings Plan benefits that appears by age 75 reflects the fact that FERS benefits do not 

receive full cost-of-living adjustments and that the TSP option selected provides level payments that are not adjusted for 

inflation. The TSP does offer an option for an annuity that increases by a specific percentage each year. In that case, the 

annuity will start at a lower value but the value will not decline as rapidly as a fixed annuity. 

61 
Example 1. Bernice 

Bernice began her Federal career as a GS 2, Step 1. During the FERS open season in 1987, she chose to stay in CSRS. She 

recently had a 3-month break in service when the military base where she worked closed. 

Bernice is a GS 7, Step 10. She has more than 20 years of CSRS service, a Thrift Savings Plan balance of $5200, and 

essentially no Social Security-covered earnings. She currently is saving 5% of pay in the Thrift and plans to continue to do so 

whether she stays in CSRS or transfers. 

Bernice plans to retire from Federal service in 2012 when she is age 60. She will have 38.6 years of service. She expects to 

be a GS 9 at retirement. Bernice looks forward to having time for volunteer work when she retires. If Bernice transfers to 

FERS and retires at age 60, she will receive the annuity supplement until age 62 when Social Security benefits begin. Since 

Bernice does not have 30 years of substantial earnings under Social Security, her benefit will be computed under the lower 

Windfall Elimination Provision. The projection shows Bernice's total future benefits to be very similar under both retirement 

plans. 

Bernice expects that her husband will be transferred to a job in another State in the next year or so. Since she doesn't know 

how readily she will be able to get another Federal job in that location, she decides to transfer to FERS because it is a more 

flexible package. She can add to her Social Security benefit no matter whether she remains in Federal service or moves to the 

private sector. If she doesn't stay in Federal service, she can start receiving FERS benefits at her minimum retirement age, 

but under CSRS, she would have to wait until age 62. 

Future Employee 

Contribution Year: 2012 

Age: 60 

Annual Retirement Benefits

2014 

62 

2027 

75 

Staying in CSRS 

Pension 43,300 26,000 26,000 26,000 

Social Security 0 0 0 0 

Thrift Plan 30,900 4,100 3,800 2,500 

Bal. $52,500 

Total 74,200 30,100 29,800 28,400 

Joining FERS 

Pension - CSRS 0 13,700 13,700 13,700 

Pension - FERS 4,900 5,700 5,400 4,700 

Supple or Soc Sec 38,300 4,200 4,900 4,900 

Thrift Plan 30,900 7,500 7,000 4,500 

Bal. $95,400

Total 74,200 31,200 30,900 27,800 

62 
Example 2. Sam 

Sam began his civilian career as a GS 5, Step 1. He resigned after 10 years. After a break of more than 1 year, he 

returned to Federal service as a CSRS Offset employee. During his 6-month opportunity to transfer to FERS, Sam was 

very busy with work and family obligations, so he never even finished reading the transfer information his agency 

provided. After another 5 years of service, he now has had another break in service, so he has another opportunity to 

transfer to FERS. 

Sam currently is a GS 11, step 3. Based on his prior service, his Thrift balance is $7,500. He is contributing 5% and 

plans to continue at that percentage. He has 6 years of military service and has paid his military deposit. He had a total 

of 10 years of Social Security coverage before he came under the CSRS Offset coverage. Sam expects to retire as a GS 

12. 

Sam had planned to remain in Federal service until age 62. However, his brother is urging him to leave in 2002 when 

Sam will be age 58 so that they can go into business together. At that point, Sam would have 27 years of service - not 

enough for a benefit under CSRS, but more than enough for a FERS MRA+10 benefit. 

Sam's dilemma is whether to stick with his original plans to retire at age 62 under CSRS or to transfer to FERS so he 

can retire earlier and fulfill a longtime dream of going into business with his brother. 

Sam is really sorry that he did not pay attention to his earlier opportunity to transfer to FERS. Since CSRS Offset 

service comes under FERS rules upon transfer, if Sam transfers to FERS now, when he retires, his 5 years of Offset 

service will be worth 5% of his high-3 average salary rather than the 10% that it is worth under CSRS rules. In 

addition, he will have lost the opportunity for the agency 1% and matching TSP contributions during his Offset service. 

Future Employee 

Contribution Year: 2002 

Age: 58 

Annual Retirement Benefits

2006 

62 

2019 

75 

Staying in CSRS 

Pension 2,300 0 16,500 16,500 

Social Security 18,100 0 7,200 7,200 

Thrift Plan 14,600 0 2,400 1,500 

Bal. $25,900 

Total 35,000 0 26,100 25,200 

Joining FERS 

Pension - CSRS 0 9,000 9,000 9,000 

Pension - FERS 2,300 4,000 3,500 3,100 

Supple or Soc Sec 18,100 0 7,200 7,200 

Thrift Plan 14,600 3,200 2,700 1,800 

Bal. $42,400

Total 35,000 16,200 22,400 21,000 

63 
Example 3. Frank 

Frank began his Federal career as a GS 5, Step 1. During the FERS open season in 1987, he chose to stay in CSRS. He 

recently had a 6-month break in service when he was unable to transfer with his function when it moved to another 

location. Since his break in service was less than 365 days, he remains under CSRS coverage rather than coming under 

CSRS Offset. 

Frank is a GS 13, Step 3. He has 18 years of CSRS service. He also has 22 years of Social Security credits from his 

private sector employment. He recently began participating in the Thrift Savings Plan, with a current balance of $1000. 

Frank saves 3% of pay in the Thrift Plan but would consider increasing the savings to 5% if he changes to FERS to take 

advantage of the agency matching. 

Frank plans to retire from Federal Service in 2004 when he is age 62. He will have 24.3 years of Federal service. He 

expects to be a GS 13 at retirement. Frank plans on a life of leisure after retirement, traveling around the country. Since 

Frank has many years of Social Security credits from previous employment, transferring to FERS would allow him to add 

enough to his existing credits to avoid the reduction for the Windfall Elimination Provision. 

Future Employee 

Contribution Year: 

Age: 

Annual Retirement Benefits 

2004 2017 

62 75 

Staying in CSRS 

Pension 35,300 27,400 27,400 

Social Security 0 5,700 5,700 

Thrift Plan 15,100 1,700 1,100 

Bal. $18,200 

Total 50,400 34,900 34,300 

Joining FERS 

Pension - CSRS 0 17,500 17,500 

Pension - FERS 4,000 5,000 4,400 

Supple or Soc Sec 31,200 10,300 10,300 

Thrift Plan 25,200 5,500 3,500 

Bal. $57,800 

Total 60,400 38,300 35,700 

64
Example 4. Reba 

Reba began her Federal career as a GS 4, Step 1. She left Federal service after working for 5 years under CSRS to raise 

her family. During her absence from Federal service, she worked part-time in the private sector while her children were 

in school. She has 12.5 years of Social Security credits from this employment. 

Reba has returned to Federal service now that her children are grown. She is a GS 6, Step 4 and is under the CSRS Offset 

with an opportunity to transfer to FERS. She currently is saving 3% of pay in the Thrift Plan with a balance of $1000 and 

plans to continue to do so whether she stays in CSRS Offset or transfers to FERS. 

Reba plans to retire from Federal service in 2003 when she is age 62. She will have 12.6 years of service. She expects to 

be a GS 7 at retirement. Reba looks forward to having time for her grandchildren when she retires. If Reba transfers to 

FERS and retires at age 62, she will receive a benefit equal to 35% of her final salary, whereas CSRS would provide a 

benefit of 29%. This is because Social Security replaces a higher portion of the earnings of someone in the lower income 

level. 

Future Employee 

Contribution Year: 

Age: 

Annual Retirement Benefits

2003 2016

62 75 

Staying in CSRS 

Pension 1,600 4,800 4,800 

Social Security 12,700 3,800 3,800 

Thrift Plan 6,200 800 500 

Bal. $8,400 

Total 20,500 9,400 9,100 

Joining FERS 

Pension - CSRS 0 0 0 

Pension - FERS 1,600 3,400 3,000 

Supple or Soc Sec 12,700 5,400 5,400 

Thrift Plan 6,200 1,600 1,000 

Bal. $17,900 

Total 20,500 10,500 9,500 

65 
Example 5. Irene 

Irene began her Federal career as a GS 4, Step 1. She had a break in service at the time of the open season in 1987 to 

spend time with her newborn son. When she returned to Federal service in 1990, she was covered by CSRS Offset having 

had 15 years of prior CSRS service and a break in service of more than 365 days. She chose to remain under CSRS 

Offset. She recently had a 2-month break in service when her agency experienced a reduction in force. 

Irene is a GS 13, Step 6. She has nearly 23 years of service, of which more than 7 are under CSRS Offset. She currently 

is enrolling in the Thrift Savings Plan and will save 3% of pay if she stays in CSRS but would consider saving 5% if she 

transfers to FERS. 

Irene wants to retire as soon as she can to go back to school and finish her degree to start her own business. She expects 

to be a GS 14 at retirement. Since she was born in 1954, under FERS, the earliest she can retire with full benefits is age 

56. Under CSRS, she can retire at age 55 with projected benefits of $47,700. As an Offset person, she is accumulating 

Social Security credits to add to the 10 years Social Security coverage she currently has. If she were to transfer to FERS 

now, when she retires, her 7 plus years of Offset service will be worth 7% of her high-3 average salary rather than the 

14% that it is worth under CSRS rules because Offset service is treated as FERS service when an Offset person transfers 

to FERS. In addition, she will have lost the opportunity for the agency 1% and matching TSP contributions during her 

Offset service. 

Future Employee 

Contribution Year: 

Age: 

2010 

56 

Annual Retirement Benefits

2016 

62 

2029 

75 

Staying in CSRS 

Pension 15,900 48,500 43,000* 43,000 

Social Security 54,700 0 10,000 10,000 

Thrift Plan 30,300 3,200 2,600 1,600 

Bal. $39,700 

Total 100,800 51,600 55,500 54,600 

Joining FERS 

Pension - CSRS 0 15,700 15,700 15,700 

Pension - FERS 8,100 16,300 13,300 11,700 

Supple or Soc Sec 54,700 6,600 10,000 10,000 

Thrift Plan 50,400 10,500 8,600 5,500 

Bal. $132,300 

Total 113,100 49,100 47,500 42,900 

*CSRS benefit offset because of entitlement to Social Security benefits. 

66 
Example 6. Susie 

Susie began her Federal service as a GS 5, Step 1. During the FERS open season in 1987, she chose to stay in CSRS. She 

recently had a short break in service. 

Susie currently is a GS 11, Step 1. She has 24 years of CSRS service, a Thrift Savings Plan balance of $10,000, and only 5 

years of private sector employment covered by Social Security. She is saving 5% of pay in the Thrift Plan and plans to continue 

to do so whether she stays in CSRS or transfers to FERS. 

Susie plans to retire from Federal service in 2012 when she is age 60. She will have 38 years of service. She expects to be a 

GS 13 at retirement. 

The projections show Susie's total future benefits to be very similar under CSRS and FERS. However, her husband is a highly 

paid private sector employee who will be entitled to maximum Social Security benefits. Since Susie plans to work for more than 

5 years, she would be exempt from the Government Pension Offset if she transfers to FERS. Before she makes a decision about 

transferring, she should find out if the Social Security spousal benefit would be greater than her own benefit based on her 

employment. 

Future Employee 

Contribution Year: 2010 

Age: 60 

Annual Retirement Benefits 

2014 2027

62 75

Staying in CSRS 

Pension 60,400 44,000 44,000 44,000 

Social Security 0 0 0 0 

Thrift Plan 43,100 6,600 6,200 4,000 

Bal. $76,500 

Total 103,500 50,600 50,200 47,900 

Joining FERS 

Pension - CSRS 0 24,400 24,400 24,400 

Pension - FERS 6,900 9,800 9,100 8,000 

Supple or Soc Sec 53,300 4,400 6,200 6,200 

Thrift Plan 43,100 11,700 10,900 7,000 

Bal. $134,700 

Total 103,400 50,300 50,700 45,700 

67 
CSRS/FERS Special Transfer Rules 

Comparison Table 

This chart applies to most Federal workers. Those in Special Employee Groups (law enforcement officers, firefighters, air traffic controlland Customs and Border Protection Officers) should also read the section of this book that discusses these groups. 

Item CSRS FERS 

A. Basic Benefit 

1. Regular Annuity Guaranteed annuity based on service 

under a single plan. 

Guaranteed annuity based on service under the Basic Benefit Plan. 

Guarantservice utransfer civilian CSRS O

69
Item CSRS FERS 

2. When benefits can be received. 

a. Voluntary retirement benefits 

(unreduced) 

Available at the following age and service combinations: • Age 55 with at least 30 years of 

service 

• Age 60 with at least 20 years of 

service. 

• Age 62 with at least 5 years of 

service. 

Available at the following age/service combinations: • At least the Minimum Retirement Age 

(MRA)* with 30 years of service or more. 

• At least age 60 with 20 years of service 

or more. 

• At least age 62 with 5 years of service 

or more. 

*Minimum Retirement Age 

If you were born... Your MRA is... Before 1948 55 in 1948 55 and 2 months in 1949 55 and 4 months in 1950 55 and 6 months in 1951 55 and 8 months in 1952 55 and 10 months In 1953-1964 56 in 1965 56 and 2 months in 1966 56 and 4 months in 1967 56 and 6 months in 1968 56 and 8 months in 1969 56 and 10 months In 1970 and after 57 

Follow F

b. Immediate reduced voluntary 

retirement benefits 

None available. Available at the MRA with at least 10 

years of service. (Benefit is reduced 5 percent a year for each year payment begins before age 62. Receipt of benefits can be postponed until as late as age 62 to lessen or avoid the reduction.) 

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70 
Item CSRS FERS 

c. Immediate involuntary early 

retirement 

Available at the following age and service combinations provided separation is not for cause or misconduct: • Age 50 with at least 20 years of 

service. 

• Any age with at least 25 years of 

service. 

(Benefit reduced 2% a year for each year payment begins before age 55.) 

Unreduced benefits available at the following age/service combinations: • At age 50 with 20 years of service or 

more. 

• At any age with 25 years of service or 

more. 

(Special Retirement Supplement begins at MRA and continues until age 62.) 

Follow Funder FEearned u

d. Deferred retirement Available at age 62 to former employees 

with at least 5 years of civilian service who did not withdraw their retirement contributions after separation from service. If your death occurs after separation but prior to age 62, only a refund of deductions is paid. 

Unreduced benefit available at the following age/service combinations: • At age 62 to those who had at least 5 

years of civilian service and did not take a refund. 

• At age 60 with 20 years of service or 

more. 

• At MRA with 30 years of service or 

more. 

Reduced benefit (at 5% per year under age 62) available at MRA with 10 years of service or more. Receipt of benefits can be postponed until as late as age 62 to lessen or avoid the reduction in annuity. 

Follow F

71 
Item CSRS FERS 

3. Basic annuity formula 

a. Salary base Average of highest 3 consecutive years of 

salary. 

Average of highest 3 consecutive years of salary. 

Average salary. 

b. Benefit calculation formula 

(For CSRS Offset employees, the benefit is reduced at age 62 by the amount of their Social Security entitlement attributable to CSRS Offset service.) 

General formula equal to: [1] (11⁄2%) X (High-3) X (first 5 years 

service) + 

[2] (13⁄4%) X (High-3) X (second 5 

years service) + 

[3] (2%) X (High-3) X (all service over 

10 years). 

1.00% x (High-3) x all years of service if retiring before age 62 with less than 20 years of service. 1.10% x (High-3) x all years of service if retiring at age 62 or older with at least 20 years of service. 

Benefit formula• The C

workewho tcredit(exclu

• The F

workeOffse

Note: Tyears of benefits formula

4. Cost-of-Living adjustments 

(COLA’s) 

Paid annually to all annuitants beginning the year after retirement. CSRS COLA’s equal the rate of inflation as measured by the Consumer Price Index (CPI). 

Paid annually to retirees over 62 years of age, to those who have received disability payments for more than 1 year, and to those receiving survivor benefits The following chart describes FERS COLA’s: 

Increase Annual COLA 

in CPI Percentage 

Up to 2% Same as CPI 2% to 3% 2% 

3% or more CPI increase 

minus 1% 

The portunder CCOLA’sThe portunder FECOLA’s 

72 
Item CSRS FERS 

5. Special Retirement Supplement Not paid under CSRS. An approximation of the portion of a 

full-career Social Security benefit earned while under FERS. Paid to retirees receiving unreduced retirement benefits from Minimum Retirement Age until age 62. (Subject to Social Security Earnings Test.) 

Applies more caFERS (Jaccordin

6. Cost to participate In 2008, 7% of basic pay. CSRS Offset 

employees also pay 7%, divided between 6.2% to SSA and .80% to CSRS up to the SSA maximum taxable wage base, above tax base, entire 7% goes to CSRS. 

In 2008, .80% of basic pay. (The cost of the FERS Basic Benefit plus Social Security taxes generally equals 7%.) 

After traat FERS less than may reqbetween the CSR

7. Refund options May choose to withdraw contributions in 

lump sum when you leave. Will receive no annuity credit unless contribution redeposited after reemployment. Exception: full credit for refunded service will be given without redeposit, subject to an actuarial reduction in annuity, if refunded service ended before October 1, 1990. Contributions refunded without interest if you have 5 years or more of service. 

May choose to withdraw contributions in lump sum when you leave. Will receive no annuity. Refunded contributions may not be redeposited. Refunds receive market rate interest. 

May witCSRS aOffset srefunded FERS.) 

73 
Item CSRS FERS 

8. Disability benefits 

a. Definition of disability An employee must be unable to perform 

his/her duties and there must be no suitable vacancy in his/her own agency within the same commuting area and at the same grade or pay level as the current position. 

Same as for CSRS. Follow 

b. Eligibility requirements An employee must have 5 or more years 

of civilian service. CSRS Offset employee who applies for CSRS disability benefits must also apply for Social Security disability benefits or show that they are not eligible for them. 

An employee must have 18 months or more of civilian service. Those who apply for FERS disability benefits must also apply for Social Security disability benefits or show that they are not eligible for them. 

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74 
Item CSRS FERS 

c. Disability benefit formula Disability benefits are the higher of two 

computations: [1] the annuity computed using the 

employee’s years of service and High-3 under the general formula; or 

[2] the lesser of the following: 

a) 40% of the High-3; or b) annuity computed according 

to the general formula after increasing the length of service as if the employee had worked to age 60. 

If the employee has at least 21 years and 11 months of service, or is age 60 or older, the annuity is computed under [1]. For CSRS Offset employees, the benefit is reduced by the amount of Social Security disability entitlement attributable to CSRS Offset service. 

The formula used to determine FERS disability benefits differs depending on how many years an employee is disabled. During the first year of disability, FERS pays 60% of an employee’s high-3 (average pay if less than 3 years service) minus 100 % of any Social Security benefits received. No COLA’s are paid during this year. During the second and any additional years of disability until an employee reaches age 62, the employee will receive 40% of his/her high-3 average pay minus 60% of any Social Security benefits received. COLA’s are paid for these years, at the same rate as noted under FERS in Item 4 above. FERS disability benefits are recomputed at age 62. The employee then receives a nondisability FERS retirement benefit that includes credit for years in receipt of disability annuity. 

Follow FNote: FEless than includinthat was 

75 
Item CSRS FERS 

9. Survivor benefits 

a. Eligibility requirements Survivor benefits are payable to eligible 

survivors of an employee who was contributing to the CSRS on the date of death with at least 18 months of civilian service. 

Same as CSRS. Follow F

b. Who may receive survivor 

benefits. 

Under CSRS, survivor benefits can be paid under various conditions to current and former spouses and to children. Survivors must meet certain age and length of marriage requirements in order to qualify for benefits. 

Same as CSRS. In addition, under FERS, a survivor’s age can affect the amount of benefits he/she may receive. 

Follows 

c. Survivor benefit payments 

1.) Spouses of deceased 

employees 

An eligible spouse of an employee who dies while a Federal employee will receive 55% of the disability annuity that would have been payable if the employee had retired on the date of death. For CSRS Offset employees, the benefit is reduced by the amount of Social Security survivor benefit entitlement attributable to CSRS Offset service when the SSA benefit becomes payable. 

FERS pays the eligible spouse of an employee who dies while a Federal employee a lump sum payment of $15,000, adjusted for inflation, plus 50% of the employee’s final basic pay (or average pay, if higher). The $15,000 portion has increased to $28,093.53 with the 2008 COLA. In addition to the above lump sum, FERS pays the eligible spouse of an employee who has 10 years of service or more an annuity equal to 50 percent of the employee’s accrued Basic Benefit. 

Follow F

76 
Item CSRS FERS 

2.) Spouses of deceased 

annuitants 

An eligible spouse of a retiree will receive 55% of the retiree’s unreduced annuity amount (or a lesser amount if jointly elected by the retiree and spouse). 

FERS will pay the eligible spouse of a FERS retiree 50% of the retiree’s annuity amount (or 25% if that lesser amount was jointly elected by the retiree and spouse), plus a Special Retirement Supplement if the spouse is younger than age 60 and not yet eligible for Social Security benefits. 

Follow F

3.) Spouses of employees 

who die after leaving Federal service, but before deferred annuity payments begin 

A lump-sum death benefit consisting of the deceased’s unrefunded retirement contributions is payable unless the deceased designated another person as beneficiary. 

FERS will pay a benefit to the spouse of an employee who has 10 or more years of Federal service, leaves the Federal workforce, and dies before his/her annuity payments begins. The benefit is payable if the employee did not take a refund of his/her contributions. If the employee had not reached the MRA when separated, the survivor annuity will begin when the employee would have reached age 62 (age 60 if employee had 20-29 years of service; or employee’s MRA if he/she had 30 or more years of service). The annuity can begin sooner if the spouse elects a reduced benefit. If the employee had attained the MRA when separated (and had at least 10 years of service), the spouse receives 1⁄2 of employee’s accrued annuity beginning the day after death. 

Follow F

77 
Item CSRS FERS 

4.) Death benefits paid to 

children. 

CSRS pays an annuity to the eligible children of employees or retirees who die. The annuity varies depending on the number of children and whether or not there is a surviving spouse or former spouse who is a parent of the children. The benefits of children of CSRS Offset employees are offset for Social Security benefits in the same way that spousal benefits are offset. 

FERS pays the eligible children of employees or retirees who die an annuity that varies depending on the number of children and whether or not there is a surviving spouse or former spouse who is a parent of the children. The annuity is reduced by any Social Security benefits the children may be receiving. 

Follow F

a. Cost of survivor benefits 

for retired employees 

Unless waived by the retiree and the spouse, the annuity is reduced in order to provide a survivor benefit. The first $3,600 of the retiree’s annual benefit will be reduced by 2.5%. The remaining annuity benefit is reduced by 10%. For most career retirees, this amounts to a 7-8% reduction. Note: the 55% spouse’s benefit is based on the amount of the annuity before this reduction is made. 

Unless waived by the retiree and the spouse, the annuity is reduced to provide a survivor benefit. This reduction amounts to 10% (or 5% , if elected) of the annual benefit. Note: The 50% (or 25%) spouse’s benefit is based on the amount of the annuity before this reduction is made. 

Follow Fincludincovered 

b. Survivor benefits 

Cost-of-Living Adjustments (COLA’s) 

CSRS survivor benefits receive full CSRS COLA’s equal to the rate of inflation. 

FERS survivor benefits receive FERS COLA’s at any age. 

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78 
Item CSRS FERS 

B. Thrift Savings Plan 

1. Participation CSRS employees may use this plan at 

their option. 

FERS employees automatically have an amount equal to 1 percent of pay contributed to their Thrift Savings Plan account by the Federal Government. Additional contributions may be made at the option of the employee. If made, the Government increases its contributions, also. 

Follow F

2. Employee Contributions CSRS employees may contribute up to 

the IRS Deferral Limit which is $15,500 for 2008. 

FERS employees may contribute up to the IRS Deferral Limit which is $15,500 for 2008. 

Follow F

3. Government contributions None available. The Federal Government automatically 

contributes an amount equal to 1% of basic pay into each FERS employee’s Thrift Savings Plan account each pay period. If employee makes contributions, the Government also provides matching. 

The Government 

If you save will add Total 

0% 1% 1% 1% 2% 3% 2% 3% 5% 3% 4% 7% 4% 4.5% 8.5% 5% 5% 10% 

6-10% 5% (max) 11-15% 

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79 
Item CSRS FERS 

4. Catch-up Contributions The limit on catch-up contributions for 

2008 is $5,000. If you are at least age 50 (or will become age 50 during the calendar year) and if you have made or will make the maximum amount of employee contributions for the calendar year (e.g., $15,000 in 2008), you may also make catch-up contributions to your TSP account. 

Same as CSRS Follow F

5. Plan Options 

a. Investment choices Employees may invest any portion of 

their Thrift Savings account in any of the six investment Funds: • G Fund—Government Securities 

Investment Fund 

• C Fund—Common Stock Index 

Investment Fund 

• F Fund—Fixed Income Index 

Investment Fund 

• S Fund—Small Capitalization Stock 

Index Investment Fund 

• I Fund—International Stock Index 

Investment Fund 

• L Fund—Lifecycle Funds 

Same as CSRS. Follow F

b. Opportunities to change 

investment amounts and choices. 

CSRS employees can start, change, stop or resume Thrift Savings Plan contributions at any time. 

Same as CSRS. Follow F

80 
Item CSRS FERS 

C. Social Security Benefits

1. Applicability Not a part of the CSRS plan. For most

CSRS employees, applies only if theyhave enough covered service outside theFederal Government. CSRS Offsetemployees, are however, covered bySocial Security.

Employees covered by Social Security. After tr

accumuadded tearned

Item Social Security 

2. When benefits can be received

a. Eligibilityb. Unreduced Social Security retirement benefits.c. Reduced Social Security retirement benefits.

To qualify for Social Security benefits, an employee born after1928 must have paid Social Security taxes for at least 10 years(or 40 “credits”) of employment. Those born before 1929 needfewer years of coverage to qualify.

Available to eligible retirees at age 65. (Starting in the year2000, this age will gradually increase to 67.)Available to eligible retirees at age 62. (Benefit reduced 20%for those born before 1938. Reduction gradually increases to30% for those born in 1970 or later.)

Follow SocFollow SocFollow Soc

3. Social Security benefit formula. Social Security benefits are based on a three-part formula

applied to career earnings. Other factors, such as whether ornot an employee’s spouse is covered by Social Security, age atretirement, and earnings after retirement, also affect benefitamount. Windfall Elimination Provision may apply. (SeeSocial Security Section on page 41.)

Follow Soc

4. Cost-of-Living Adjustments (COLA’s) Social Security COLA’s equal the rate of inflation. Follow Soc

81
Item Social Security 

5. Cost to participate Social Security taxes are a percentage of salary up to the 

maximum taxable wage base. In 2008 this is $102,000. Social Security taxes are paid on earnings up to and including this amount, but not on earnings above this level. Benefits are not paid on earnings above this amount. The rate currently is 6.20 percent. (The FERS Basic Benefit contribution decreases as the Social Security tax rate increases. In general, contributions to these items will total 7% of pay in 2008.) 

Follow Soc

6. Disability benefits 

a. Eligibility requirements To qualify for Social Security disability payments, an 

employee must have earned enough Social Security credits (generally 40 “credits”), and have earned a specified number of quarters just before becoming disabled (generally 5 out of their last 10 working years). 

Follow Soc

b. Definition of disability To be eligible for Social Security disability benefits, an 

employee must be unable to perform any job. 

Follow Soc

c. Disability benefits calculation Social Security benefits are based on a three-part formula 

applied to earnings in the same way as the Social Security retirement formula. 

Follow Soc

82 
Item Social Security 

7. Survivor benefits 

a. Eligibility requirements Social Security provides survivor benefits to the eligible 

survivors of a worker who met the minimum Social Security eligibility requirements. The number of Social Security credits required depends on the employee’s year of birth and age at death. The minimum number of credits required is 18 months (or 6 “credits”). 

Follow Soc

b. Who may receive survivor benefits? Under Social Security, survivor benefits can be paid under 

various conditions to current and former spouses, children, and dependent elderly parents. Survivors must meet certain age and length of marriage requirements in order to qualify for benefits. Also under Social Security, a survivor’s age can affect the amount of benefits he/she may receive. 

Follow Soc

83 
Item Social Security 

c. Survivor benefit payments 

i. Benefits paid to a spouse of an employee who dies 

Social Security benefits payable to a surviving spouse who was married to the employee at least 9 months (3 months if death was accidental), or is the parent of the employee’s child, and meets one of the following age requirements: • Any age with entitled child in care (75% of employee’s full 

benefit), 

• Age 65 (100% of employee’s full benefit), • Age 60-64 (permanently reduced benefits), • Age 50-59 and disabled (permanently reduced benefits). 

Follow Soc

ii. Benefits paid to a former spouse of an employee 

who dies 

Social Security benefits are payable to the surviving former spouse (married to employee at least 10 years), as follows: • Age 60 or over (reduced benefits if entitled prior to age 65), • Age 50-59 and disabled (permanently reduced benefits). 

Follow Soc

iii. Benefits paid to children of an employee who 

dies 

Social Security pays survivor benefits to eligible children, as follows: • Under age 18 and unmarried (50% of employee’s full 

benefit), 

• Attending school full-time at age 18 or over, who was 

disabled before age 22 (50% of employee’s full benefit). 

Follow Soc

84 
United States Office of Personnel Management


1900 E Street, NW


Washington, DC 20415


www.opm.gov/forms