CSRS Civil Service 

Retirement 

System 

Retirement 

Facts 

7 

Computing 

Retirement 

Benefits 

Under the 

Civil Service 

Retirement 

System 

RI 83-7 

The September 1996 edition is still usable Revised October 1997

United States 

Office of 

Personnel 

Management 

Retirement and 

Insurance 

Service 
Additional retirement information and all publications of the U.S. Office of Personnel Management 

listed in this pamphlet are available on the Internet. 

OPM Website -- http://www.opm.gov/asd 
Table of Contents 

Page 

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

Computing Retirement Benefits .....................1
 

How Are Annuities Computed Under
 

the General Formula?.............................2
 

Annuity Reductions....................................5
 

Deductions From Gross Monthly
 

Annuity..............................................9
 

Commencing Date .....................................9
 

Additional Information ..............................10
 

i 
Introduction 

This pamphlet is for Federal employees who are 

covered by the Civil Service Retirement System 

(CSRS) who want information about how nondisability annuities are computed under the general formula. If you are a law enforcement officer 

or firefighter, you should also read Retirement 

Facts #14, “Law Enforcement and Firefighter 

Civil Service Retirement System Retirement” 

(RI 83-20). 

Computing Retirement Benefits 

The amount of the basic annuity payable upon 

your retirement under the Civil Service Retirement System (CSRS) is directly related to your 

length of service and your highest 3 years average 

salary. Once the basic annuity is computed, based 

on length of service and your earnings, it may be 

reduced for any service for which you did not 

make retirement contributions (“deposit service”). 

The basic annuity may also be reduced to provide 

survivor benefits for your spouse or former 

spouse after your death or because you are retiring before age 55. Service for which you have 

received a refund of retirement contributions 

(“redeposit service”) will be used to determine 

your eligibility for retirement but cannot be considered when computing your basic annuity, 

unless you have paid the entire redeposit due or 

are eligible for, and elect, the Alternative Form of 

Annuity (except, as we’ll explain, when the 

refund covered service that ended before October 

1, 1990). 

Several other Retirement Facts pamphlets provide 

general information on the reductions in your 

annuity for unpaid deposits or redeposits and the 

effect of early retirement on the amount of your 

annuity. In this pamphlet, we will outline the 

computation of the most frequent form of retirement— optional retirement of an employee who is 

at least 55 with at least 30 years of service. 

1 
How Are Annuities Computed Under 

the General Formula? 

Your annuity is a percentage of your “high 3” 

average salary. Your “high 3” average salary is 

based on the highest 3 years of base pay or salary 

you earned in any consecutive 3-year period (usually your last 3 years). Your “high 3” percentage 

is determined by a three-part formula based on 

your length of creditable service. You earn: 

1.50% per year for the first 5 years or 7.50% plus 

1.75% per year for the next 5 years or 8.75% = 

16.25% plus 

2.00% per year for service over 10 years. 

Thus, after 10 years of service you have earned 

16.25% of your “high three” and after 30 years 

you have earned 56.25% (16.25% + 2% x 20 = 

56.25%). By law, the percentage is limited to 

80% (reached after 41 years and 11 months of 

service); however, unused sick leave can be used 

in the formula to produce a greater result. Your 

unused sick leave is converted into months and 

days and added to your other service. Credit is 

given for whole months only (30 days). However, 

the time representing days of unused sick leave is 

not counted toward your “high 3” years average 

salary or for establishing eligibility for retirement. 

The sample illustration on pages 4 and 5 shows 

how you can compute the precise “high-3” average salary for a given period. 

For example, using the average salary of $20,000 

and assuming that you have worked for the Government for 331⁄2 years, are age 55, and have the 

equivalent of 6 months of unused sick leave, the 

computation (before any applicable reductions) 

would be: 

1.5% x 5 years = 7.50% 

1.75% x 5 years = 8.75% 

2.0% x 24* years = 48.00% 

(Total Basic annuity) 64.25% 

64.25% x 20,000 = $12,850 annual annuity 

*(includes 6 months of unused sick leave) 

2 
A quick way to estimate your basic annuity is to 

determine your total length of service (34 years) 

and subtract two (32 years). Multiply that by two 

(32x2=64) and use that as a percentage (64 

percent) of 90 percent of your final salary. If, for 

example, your final salary was $22,340 per year, 

then 90 percent of $22,340 would equal $20,106. 

Therefore, $20,106 x .64 = $12,867 for a basic 

annuity. This quick formula is not precise but will 

allow you to estimate your annuity. 

3 
“Calculating “High-3" Salary” 

Basic Salary in Effect From Basic 

Year 

July 1, 1990, through October 11, 1990 0 

October 12, 1990, through October 9, 1991 0 

October 10, 1991, through October 8, 1992 0 

October 9, 1992, through June 30, 1993 0 

3 

“High-3” years’ average salary = $60,001 

divided by 3 = $20,000 

4
 
Period Salary was 

in Effect* 

Annual 

Salary 

Gross Pay 

for this 

Period 

Months 

3 

11 

11 

8 

Days 

11 

28 

29 

22 

@ $17,541 

@ 18,779 

@ 20,203 

@ 22,340 

$ 4,921.23 

18,674.67 

20,146.88 

16,258.56 

33 90 $ 60,001.00 

36 months 

*For purposes of calculating average salary, 

1 month = 30 days, and 1 year = 360 days. 

Annuity Reductions 

Reduction for Deposit Service. In the example 

of a voluntary separation we’re using, the first 

reduction would be for any unpaid deposit service. 

Let’s say that the first year you worked for the 

Government was under a temporary appointment 

during which you were not eligible to pay into the 

CSRS. This would represent a period of deposit 

service. We will assume that the amount you 

would have paid in as a permanent employee, 

plus interest to the date of your retirement, equals 

$900. Your basic annuity will be reduced by 

one-tenth of that amount—$90. Therefore, your 

basic annuity of $12,850 would be reduced to 

$12,760 per year. For periods of deposit service 

performed on or after October 1, 1982, a deposit 

must be made (unless you are eligible for and 

elect an Alternative Form of Annuity) or the time 

cannot be used in computing your annuity. The 

time will be used to determine your eligibility to 

retire whether or not you make the deposit payment. 

5 

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� Reduction for Survivor Benefits. If you are 

married, your annuity will be reduced automatically to provide the maximum survivor annuity 

for your spouse, unless you and your spouse 

jointly agree to provide a lesser amount or none at 

all. Your spouse’s survivor annuity would be 55 

percent of your basic annuity or any lesser 

amount you and your spouse agree to. Your annuity would be reduced by 21⁄2 percent of the first 

$3,600 in basic annuity and 10 percent of the 

remainder of your basic annuity. In our example, 

we have used the entire basic annuity, already 

reduced to $12,760 per year for unpaid deposit 

service, in the following: 

Cost of Survivor Benefit 

2.5% of the 1st $3,600 elected = $90.00 

10.0% of remainder $9,160 elected = 916.00 

Total base $12,760 Total Cost = 1,006.00 

Survivor benefit 

(55% of $12,760 base) = $7,018 

Annuity reduced for survivor benefit 

$12,760 - 1,006 = $11,754 

Your basic annuity of $11,754 would be $979 

per month and provide a survivor annuity after 

your death of $584 per month. In computing 

the monthly annuity rate payable either to the 

retiring employee or the survivor annuitant, 

the annuity rate is rounded down to the next 

lower dollar, not to the nearest dollar. 

Note that in this example, the survivor benefit 

came out to 59.7% of the retiring employee’s 

annuity. This relationship will be maintained 

throughout the employee’s retirement since 

both the employee and survivor benefit are 

subject to the same cost of living adjustments. 

Reduction for Age. If you retire before 

reaching age 55 due to an involuntary separation, 

such as in a reduction-in-force situation, your 

basic annuity of $12,850 per year would be 

reduced by one-sixth of 1 percent for each full 

month (2% per year) you were under 55. 

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� Reduction for Alternative Annuity Election. 

Your basic annuity will be further reduced if you 

are eligible for, and elect, an Alternative Form 

of Annuity (AFA). Under this option, you receive 

an actuarially-reduced monthly benefit, plus a 

lump-sum payment equal to all of your contributions into the retirement fund. You may not elect 

the AFA unless you have a life-threatening medical condition. Also, you cannot choose the AFA 

if you are retiring under the disability provisions 

or if you have a former spouse who is entitled to 

court-ordered benefits based on your service. To 

determine the monthly amount of reduction in 

your annuity if you are eligible, and do elect this 

option, you divide the amount of contributions to 

your credit in the retirement fund by the appropriate “present value” factor for your age at the time 

of retirement. (See the table of present value factors on the next page.) They may be changed in 

the future to conform to changes in the economic 

assumptions on which they are based. For example, assuming you retire at age 55, and your 

retirement contributions are $40,000, your 

monthly annuity of $979 would be reduced by 

$189 ($40,000 divided by 212.16) to provide you 

an annuity of $790 per month if you elect the 

Alternative Form of Annuity. The survivor annuity of your spouse would not be affected by the 

election. 

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Present Value Factors 

Age at Age at 

Retirement Factor Retirement Factor 

40 294.4 66 156.0 

41 290.0 67 150.7 

42 285.5 68 145.4 

43 280.8 69 140.2 

44 276.2 70 134.7 

45 270.4 71 129.4 

46 264.7 72 124.0 

47 259.2 73 118.8 

48 253.5 74 113.6 

49 247.2 75 108.5 

50 240.4 76 103.5 

51 235.0 77 98.7 

52 229.8 78 93.9 

53 224.4 79 89.4 

54 218.6 80 84.9 

55 212.6 81 80.5 

56 207.5 82 76.3 

57 202.4 83 72.3 

58 197.0 84 68.4 

59 192.3 85 64.7 

60 188.3 86 61.2 

61 182.9 87 57.9 

62 177.0 88 54.7 

63 171.9 89 51.8 

64 166.5 90 48.9 

65 161.1 

Reduction Because of Unpaid Redeposit for 

Certain Refunded Service. If, when you retire, 

you owe a redeposit for a refund of retirement 

contributions covering a period of service that 

ended before October 1, 1990, you will not have 

to pay the redeposit in order to receive credit for 

the service (unless you retire for disability). 

Instead, full credit for the refunded service will 

be allowed in computing your annuity, but the 

annuity will be actuarially reduced based on your 

age and the amount of redeposit you owe at the 

time you retire. 

8 

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To calculate the monthly amount of the reduction, 

you divide the deposit you owe at the time of 

retirement, including interest, by the appropriate 

“present value” factor, using the table shown on 

the previous page. The procedure is the same as 

that used to compute the Alternative Form of 

Annuity reduction. Remember this alternative to 

payment of a redeposit does not apply to any 

refund you receive for service that ends on or 

after October 1, 1990. Of course, you may elect 

to pay the redeposit, plus interest, and avoid the 

actuarial reduction. 

Reduction Because of CSRS Offset. If you 

are a “CSRS Offset” employee (one of the relatively few employees covered by the Civil Service 

Retirement System (CSRS) and Social Security at 

the same time), your annuity will be reduced 

when you become eligible for Social Security benefits (usually at age 62). The amount of the reduction will be the amount of the Social Security 

benefit attributable to your service after 1983 that 

was covered by both retirement and Social Security. If you are not eligible for a Social Security 

benefit, there will be no reduction in your annuity. 

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Deductions From Gross Monthly 

Annuity 

The annuity of $790 per month in this example 

would be further reduced for any applicable 

health benefits and life insurance premiums and 

Federal and State income tax withholding. 

Commencing Date 

If you retire voluntarily during the first 3 days of 

the month, your annuity will commence the following day. Otherwise, your annuity begins on 

the first day of the month following the month in 

which you retire. This “first-of-the-month after” 

9 
provision does not apply to survivor annuities, 

disability annuities or discontinued service annuities. These annuities begin on the day after separation, death, or last day of pay, as appropriate. 

Additional Information 

You may obtain copies of the pamphlets listed 

below from your personnel office, from OPM’s 

Website (http://www.opm.gov/asd), or from 

OPM ONLINE (OPM’s electronic bulletin board) 

at (202) 606-4800. To access OPM ONLINE, 

your communications software should be set to 

the following: 

Baud: Up to 28,800
 

Parity: None
 

Data bits: 8
 

Stop bit: 1
 

The pamphlets in the Retirement Facts Series, 

which provide more detailed information about 

the Civil Service Retirement System (CSRS), are: 

	 Retirement Facts #1 - The Civil Service 

Retirement System (RI 83-1) 

	 Retirement Facts #2 - Military Service Credit 

Under CSRS (RI 83-2) 

	 Retirement Facts #3 - Deposits and Redeposits 

Under CSRS (RI 83-3) 

	 Retirement Facts #4 - Disability Retirement 

Under CSRS (RI 83-4) 

	 Retirement Facts #5 - Survivor Benefits Under 

CSRS (RI 83-5) 

	 Retirement Facts #6 - Early Retirement Under 

CSRS (RI 83-6) 

	 Retirement Facts #7 - Computing Retirement 

Benefits Under the Civil Service Retirement 

System (RI 83-7) 

	 Retirement Facts #8 - Credit for Unused Sick 

Leave Under CSRS (RI 83-8) 

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�	 Retirement Facts #9 - Refunds Under CSRS 

(RI 83-9) 

	 Retirement Facts #10 - Voluntary 

Contributions Under CSRS (RI 83-10) 

	 Retirement Facts #11 - Information for 

Separating CSRS Employees Who Are Not 

Eligible for an Immediate Annuity (RI 83-13) 

	 Retirement Facts #12 - Information About 

Reemployment for CSRS Annuitants (RI 

83-18) 

	 Retirement Facts #13 - CSRS Offset 

Retirement (RI 83-19) 

	 Retirement Facts #14 - Law Enforcement and 

Firefighter Civil Service Retirement System 

Retirement (RI 83-20) 

Pamphlets applicable to employees in both the 

Civil Service Retirement System and Federal 

Employees Retirement System are: 

	 Court-ordered Benefits for Former Spouses 

(RI 84-1) 

	 Work-Related Injuries and Fatalities -- What 

You and Your Family Need to Know About 

Your Benefits (RI 84-2) 

	 Life Events and Your Retirement and 

Insurance Benefits (For Employees) (RI 84-3) 

Thinking About Retirement? (RI 83-11) 

Publications for employees who are under the 

Federal Employees Retirement System (FERS) 

are: 

	 FERS Brochure (An Overview of Your 

Benefits) (RI 90-1) 

	 FERS Facts #1 - Information for Separating 

FERS Employees Who Are Not Eligible for an 

Immediate Annuity (RI 90-11) 

	 FERS Facts #2 - Information About 

Reemployment for FERS Annuitants (RI 

90-18) 

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For employees who are eligible to transfer to the 

FERS: 

	 FERS Transfer Handbook (A Guide to Making 

Your Decision) (RI 90-3) 

Pamphlets on the Federal Employees Health and 

Life Insurance Programs are: 

	 Federal Employees Health Benefits Guide 

(RI 70-1) 

	 Temporary Continuation of Coverage (TCC) 

Under the Federal Employees Health Benefits 

Program (RI 79-27) 

	 Federal Employees Group Life Insurance 

Booklet (RI 76-21) 

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Retirement & Insurance Service 

Serving over 10 million customers, Federal employees, 

annuitants and their families.