Retirement Systems: General Description

Chapter 3: Section 1

Retirement Systems: Basic Elements

Federal civilian employees automatically participate in one of the federal retirement systems. With few exceptions, the system an employee participates in is determined by the date of hire.

Federal Employees Retirement System—Employees first hired after December 31, 1983, are automatically covered under FERS and Social Security. 

Civil Service Retirement System—Generally, employees hired before 1984 are members of CSRS unless they elected coverage under FERS during one of the open seasons authorized for making such choices in 1987 and 1998 or they choose to join FERS after returning to federal employment from a break in service.

CSRS Offset—This applies to some employees who were originally hired before 1984 and covered by CSRS, but who left federal service and were rehired in 1984 or later. Upon rehire, they are eligible to re-enter CSRS if they have at least five years of eligible service credit under CSRS. However, if the break in federal employment was more than one year, the employee will be covered by Social Security and designated as CSRS Offset. (Note: The FERS system did not formally take effect until calendar year 1987. Those hired during 1984-1986 were placed in “CSRS interim” status. If they had fewer than five years of service as of January 1, 1987, they were put under FERS; if five or more, they were put under CSRS Offset.)

Returning employees eligible for re-entry into CSRS, either with or without Social Security coverage, may choose coverage under FERS instead; such an election must be made during the first six months after rehire. Employees returning without five years of creditable service under CSRS are automatically enrolled in FERS with their previous service credited under that program. Employees either automatically enrolled or who elect FERS are not subject to the offset.

At retirement, the civil service and Social Security benefits of a CSRS Offset employee are coordinated so that the total benefit is about the same as that of a regular CSRS retiree; the formula generally works slightly to an employee’s advantage and seldom to anyone’s disadvantage. 

See Section 4 of this chapter for how benefits are computed under each of the federal retirement systems.

Thrift Savings Plan—Federal employees covered either by FERS or CSRS/CSRS Offset can have deductions from their pay invested through the TSP, up to an annual dollar maximum. Newly hired employees have 3 percent of salary deductions made by default but may change them or opt out; employees hired before August 2010 who are not investing must opt in. FERS participants also have additional funds invested on their behalf by their employing agencies, varying by the employee’s own investment level. See Chapter 6, Section 1.

Retirement Systems: Basic Objectives and Design

Each of the government’s major retirement benefit programs is a “defined benefit” plan but they differ in terms of basic design and in the rights granted by their provisions. Stated another way, in the FERS, CSRS, CSRS Offset and Social Security programs, the law specifies what a retiree’s benefits will be and authorizes these payments from federal funds. Federal law directs that federal money be paid to individuals, under specified circumstances and in specified amounts that can be changed only by alterations in the law. 

The TSP, a “defined contribution” plan, also has rules that govern participation but the individual owns the account and the amount accumulated in it depends on how much is put in and the investment results, and the account owner chooses the form of the payout from among several options.

Following is a general overview of the retirement systems; see below in this chapter for full descriptions of eligibility, benefits computation and other policies. See Chapter 4, Section 3 for post-retirement policies including inflation adjustments, benefit elections and the impact of returning to work for the government. See Chapter 6 for a full description of the TSP.

CSRS—The Civil Service Retirement System is a comprehensive system of entitlements that provides covered federal workers with a full range of pension benefits. In addition to annuities for workers who meet age and service criteria for voluntary retirement (under either standard or early retirement offer combinations), annuities are paid to workers whose jobs are terminated after they have reached certain specified levels of age and/or service. Benefits also are provided to workers who become unable to perform in their positions because of a disabling condition, and to dependents of deceased workers and retirees who meet certain conditions. Benefits are adjusted annually for inflation.

Workers who leave federal employment before reaching an age and years of service combination for retirement eligibility retain rights to deferred benefits, beginning at age 62, if they have least five years of creditable service, were covered by CSRS for at least one year within the two-year period before separation, and do not withdraw their retirement contributions after separating. The computation of a CSRS annuity at age 62 is based on the amount of service and highest three consecutive years of average basic pay as of the date of separation. 

Workers who leave service before being eligible for an immediate annuity and withdraw their contributions to the retirement system lose their rights to future benefits unless they return to federal service and repay the amount they withdrew plus interest.

FERS—Most federal civilian workers first hired after 1983 are automatically covered by the Federal Employees Retirement System. FERS was created as a result of Congress’s decision to expand Social Security coverage to federal employment, beginning in 1984. FERS benefits generally are added to Social Security benefits, except for permanently and totally disabled workers, for whom the benefits are coordinated.

In designing FERS, Congress continued the practice of providing salary insurance for a full range of events that a worker might encounter during a normal career. Benefits are provided for normal retirement and for circumstances that might occur earlier, such as disability, involuntary retirement because of a reduction in force or an offer of early retirement, and benefits are provided for qualifying survivors in cases of the death of a worker or retiree. Also, in FERS, workers who leave before eligibility for immediate benefits can begin to draw benefits at earlier ages than can workers under CSRS. However, there is less inflation protection for a FERS benefit. FERS employees who leave before retirement eligibility are, like CSRS employees, eligible for deferred retirement if they meet certain conditions. They lose that eligibility if they withdraw their retirement contributions on separation, unless they later return to federal employment and repay that money with interest. Some rules differ between the two systems. 

CSRS Offset—Federal and postal employees separated from service for at least one year are automatically covered by Social Security if they resume federal or postal employment after 1983. However, those workers whose prior employment spanned at least five years of creditable service under CSRS have the right to re-enter that retirement system upon re-employment. To eliminate the overlap between CSRS and Social Security, Congress created a special category of coverage called CSRS Offset. The employee contribution is divided between Social Security and CSRS. The Social Security trust fund receives the same percentage amount as is contributed for everyone else covered by that program and the civil service retirement fund receives the rest. Total benefits are comparable to those received by employees under standard CSRS coverage, with the civil service portion offset by the benefit paid by Social Security.

Thrift Savings Plan—As part of the legislation establishing FERS, Congress created the Thrift Savings Plan, a tax-advantaged savings plan patterned after the 401(k) savings plans widely available in the private sector. Like 401(k) plans, the TSP program is designed to encourage workers to save toward their retirement needs. The TSP is a “defined contribution” plan whose amounts available for distribution to participants depends on the amounts they invested and the investment results. It provides no guarantees of investment earnings or eventual payouts.

Federal and postal employees covered by CSRS or FERS are allowed to participate in the TSP, although workers covered by FERS are eligible for an important additional benefit: agency contributions. FERS participants receive an automatic contribution to their accounts from their employing agencies of an amount equal to 1 percent of salary, and their agencies also will contribute additional amounts in the form of matching payments to an employee’s investments. An agency will match each dollar invested up to 3 percent of pay and will contribute 50¢ for each additional dollar up to a total of 5 percent of pay invested, making a maximum total government contribution, counting the automatic contribution, equal to 5 percent of salary. All employees may invest up to an annual dollar maximum, but there is no further government share for FERS participants above the 5 percent of salary level. Investors have a choice of stock, bond, and mixed funds, plus limited withdrawal and loan options while still employed. After separation, they have a choice of withdrawal options. 

Social Security—When the Social Security system was established in 1935, federal and postal employees were excluded, in part because the CSRS program already existed. This decision was effectively reversed for federal employees hired after 1983 with creation of the FERS program, which includes Social Security as a basic component. The creation of FERS also resulted in the creation of the CSRS Offset program, which also has a Social Security component.

Social Security, named in law as the Old-Age, Survivors, and Disability Insurance (OASDI) program, provides a floor of support in old age and ensures that individuals dependent on a worker’s wages will not be without income if the worker dies or becomes disabled. Dependents can receive benefits based either on their own work histories or on the work histories of the primary beneficiary, up to certain specified levels. Benefits are automatically available to workers at age 62, reduced from what they would be if the worker waits until “full” retirement age (currently 66; see Computation of Social Security Benefits in Section 9 of this chapter) to draw benefits. Benefit levels are set so that, on average, if workers live out an average life expectancy from the point of beginning benefits, they receive approximately the same lifetime benefits regardless of whether they begin drawing benefits at 62, at the age of full benefits for them, at some point in between, or afterward up to age 70. There is no further increase for delaying beyond age 70.

Social Security is neither a program of enforced savings nor is it a pension. It is a distributive system of taxes and entitlements. The program collects taxes from workers (and their employers) during their working careers and distributes that money to current beneficiaries. When a person becomes a beneficiary, the taxes being collected are used to fund the benefit payments made to them or their dependents or survivors.

Generally, Social Security is designed to ensure that workers with similar wages during their careers will receive similar benefits. However, benefits are enhanced for workers whose careers yielded relatively lower wages; families also receive more benefits than do single workers with similar careers. Couples in which only one person served as the primary earner might well receive benefits similar to couples in which both worked and one had substantially lower wages than the other. Also see Section 9 of this chapter.

Federal Retirement Plan Financing

Federal retirement plans are primarily financed through the taxing power of the federal government. In CSRS and FERS, employee contributions provide only part of the actual program revenue necessary to meet benefit obligations. Instead, these mandatory payments are part of the criteria that must be satisfied to meet eligibility requirements. Federal and postal employee contributions to Social Security are revenues that the federal government uses to meet benefit obligations of the program; the employer share of Social Security taxes for federal and postal workers covered by the program must be raised from the general public in the same way as all other federal financial requirements. Only in TSP are the funds paid out directly related to the amount put in; account balances depend on employee investments—and for FERS employees, agency contributions—and investment returns.

The Civil Service Retirement and Disability Trust Fund—Benefits in CSRS and FERS are paid from the Civil Service Retirement and Disability Trust Fund, although it is important to appreciate that this federal account is not money that can be separated from the government’s general financial operations. Agency money to the trust fund is mingled with various general Treasury payments, with any amounts not needed for the immediate payment of benefits retained in the Treasury as an account balance. The trust fund is a device that assures that benefit checks can be issued independent of any annual appropriations. Through a series of internal transactions, the fund is automatically assured of adequate revenues to meet all benefit obligations of the fund. Thus, the impact of CSRS and FERS on federal taxpayers each year is equal to the sum of benefit payments from the program, minus the sum of employee money contributed to the program during the year.

Social Security Trust Funds—Payments for the Old-Age, Survivors, and Disability Insurance benefits of Social Security are also made from a trust fund maintained as a federal financial operation. Money is collected from the payrolls of the nation’s employers and employees, and amounts not needed for immediate benefit payments are held in the Treasury as an account balance.

As previously noted, the Social Security program is a social insurance program—a mechanism for regulating the flow of purchasing power from workers to beneficiaries, most of whom no longer work. Thus, the program’s financing is fundamentally an exchange between wage earners and beneficiaries, with the assumption that earners eventually become beneficiaries.

Thrift Savings Plan—TSP accounts are the personal property of the investor (certain vesting rules apply to government contributions on behalf of FERS employees). Under “traditional” investing, investments are deducted from pay before taxes, and the investments and their associated earnings are taxable when withdrawn. Under “Roth” investing, investments are made with post-tax money that is tax-free at withdrawal, as are the associated earnings if certain conditions are met. See Chapter 6, Section 1.

CSRS and FERS: General Eligibility Requirements

In order to have the right to either an immediate or deferred annuity on separation from the government, all employees must have at least five years of creditable civilian service. Those under CSRS further must have been employed under CSRS for at least one of the two years preceding separation for retirement, unless eligible for disability retirement.

Under FERS, employees only have to satisfy the first condition (five years of creditable service) to be eligible for an immediate annuity. Employees also must be covered by FERS when they retire, but no minimum final period of service is required.

To retire and draw an immediate annuity, employees also must meet one of the specified combinations of minimum age and service requirements, as well as any special requirements that may be applicable to the type of retirement they are taking.

To qualify for a deferred retirement annuity (which generally is available starting at age 62), employees must meet the general service requirements and separate from federal service for any reason (or transfer to a government position not under CSRS or FERS) before becoming eligible for an immediate annuity. Such employees also must leave all their retirement contributions in the retirement fund to be entitled to receive a deferred annuity.

For information on the age and years of service combinations for various types of retirement, see Retirement: Main Types and Eligibility Conditions, below in this section. For information on the effect of separations from government employment before retirement eligibility, see Refunds of Contributions at Separation in Section 2 of this chapter as well as Retirement—FERS and Retirement—CSRS in Chapter 8, Section 5.

Mandatory Retirement—Mandatory retirement applies only in certain occupations. Career appointments in the Foreign Service covered by the Foreign Service Act of 1980 are subject to mandatory retirement at age 65. Also, mandatory retirement at younger ages generally applies in law enforcement, firefighting and air traffic control positions. See Section 8 in this chapter.

Annuity Bar for Security Offenders—Under 5 U.S.C. 8311-8312 payment of federal retirement benefits is barred to persons (or their survivors) who have committed certain specified offenses or acts involving national security. Their retirement contributions, with interest, will be refunded.

Retirement Misenrollments

Public Law 106-265, the Federal Erroneous Retirement Coverage Corrections Act (FERCCA) of 2000, addresses the problems created when federal agencies put some of their employees in the wrong retirement plan—most commonly, but not always, involving employees first hired during the 1980s. Since misenrollments still are being discovered, it is prudent to review your retirement coverage to ensure that it is correct, especially if you have had a break in service or a change in the type of appointment since first being hired. This will be reflected in Box 30 of your most recent Standard Form 50 (Notification of Personnel Action): for CSRS, a 1 or 6; for CSRS Offset, a C or E; for FERS, in most cases a K, KR or KF (L, M or N if a “special category” employee). If you believe there is any chance you might be misenrolled, contact your personnel office. 

Available Relief—The FERCCA law provides several options for those who are found to be misenrolled. Depending upon what the retirement coverage error was and how long an employee was in the wrong retirement plan, FERCCA may provide an employee one or all of the following:

• a choice between retirement plans; 

• a new opportunity for make-up contributions to the employee’s Thrift Savings Plan account; 

• lost earnings on make-up contributions already made as well as those made in the future; 

• payment for certain expenses and losses related to correction of a retirement coverage error; and 

• an opportunity to receive credit for civilian or military deposit service by taking an actuarial reduction in the employee’s retirement benefit, instead of paying a deposit. 

Those whose errors are discovered after they retired generally have the same choices under FERCCA that active employees have. If an employee, former employee, or retiree would have had a choice under FERCCA but died before making an election, then the survivor can make that election instead. Those who elect a retirement plan that increases their annuity will be paid interest on the difference between the two rates. The interest will be retroactive to April 1, 2002, and will be paid up through the current date. The interest will be payable at variable rates. 

FERCCA does not affect you: 

• if you worked under the wrong plan for less than three years after December 31, 1986;

• if you belonged in FERS and your agency corrected your records when it discovered the error and you later separated and took a refund of all FERS retirement deductions;

• if you belonged in FERS and your agency corrected your records when it discovered the error and you chose to withdraw your TSP contributions; or

• if you received a payment ordered by a court or provided as settlement of a claim for losses resulting from a retirement coverage error, you may not make an election under FERCCA unless you repay the amount you received or OPM waives repayment.

Certain employees whose agency placed them in FERS in error could choose to remain in FERS when the agency discovered its error. If they declined FERS, the agency placed them in the correct retirement plan (CSRS, CSRS Offset, or Social Security only). If you already had this opportunity, you may not change your decision.

Social Security—If you should have had Social Security coverage during your federal employment, then you must have Social Security coverage in addition to your federal retirement coverage. If your agency incorrectly put you in CSRS when it should have put you in CSRS Offset, it must correct your retirement coverage to CSRS Offset. The Social Security law requires you to have Social Security coverage. Likewise, if your agency incorrectly put you in CSRS Offset when it should have put you in CSRS, it must correct your retirement coverage to CSRS because you are not eligible for Social Security coverage during your federal employment. You cannot choose to keep your Social Security coverage. However, Social Security will give you credit for all but the last three years before your record was corrected.

Thrift Savings Plan—If you are erroneously covered by FERS and you choose to move out of FERS, FERCCA allows you to keep the employee investments you made to your TSP account in your TSP account (even if the investments exceeded the CSRS maximum under a policy in effect before 2005 under which CSRS and FERS employees were subject to differing percentage of salary investment limits apart from the annual dollar limit). However, all agency contributions that were made to your account and the attributable earnings must be removed from your account if you do not remain under FERS. 

If you choose FERS coverage under FERCCA, you may make up employee investments that you could have made had you been correctly covered by FERS. In addition, you will receive the agency automatic (1 percent) contributions and agency matching contributions that you should have received had you been correctly covered by FERS. Finally, you will receive lost earnings on both your own investments and agency make-up contributions. (Prior to FERCCA, lost earnings were payable only on agency make-up contributions.) The lost earnings will be determined the same way lost earnings are determined on agency make-up contributions under TSP regulations. 

Erroneous FERS Coverage of Less Than Three Years—OPM Benefits Administration Letter 02-103 (at
provided instructions for correcting errors involving erroneous FERS coverage that lasted for less than three years of service. It included instructions for correcting errors where an employee is in FERS by mistake and can choose to stay in FERS. These are sometimes called “deemed” FERS elections (see 5 CFR 846.204(b)(2)).

If You Are or Might Be Misenrolled—If you are not sure you are or were in the right retirement plan:

• If you are an employee, your employer has your personnel records and will review them to determine whether an error has been made. Therefore, you should notify your employer’s human resources office if you believe an error has been made in your case. Notify your current employer even if you believe the error occurred while you were employed at another agency.

• If you are not currently employed by the government, you should notify: Office of Personnel Management, Retirement Operations Center, P.O. Box 45, Boyers, PA 16017-0045. You can also contact OPM at Notify OPM regardless of whether you are a retiree, survivor, or separated employee.

Additional information about FERCCA is at (under “Aids”), phone (888) 767-6738; rules are at 5 CFR 831, 839, 841 and 846. Benefits Administration Letter 10-104 and its appendixes at contain guidance according to the type of error made.

Assistance Available—Agencies are under orders to provide counseling and other types of assistance to employees in discovering any misenrollments and in deciding what to do should a misenrollment be discovered. 

Once an individual is determined to have been misenrolled, counselors provide a written election summary including the election options available to that person, the details of the financial benefits under each option and a printout of employment and payroll history. The individual will be asked to review the material, provide any other pertinent information to the counselor and ask questions about the options, through telephone calls, written correspondence and face-to-face counseling. 

After the individual makes an election, the counselor prepares an implementation package including instructions to the pertinent agency offices. Once it’s determined that you have been misenrolled, counselors will provide a written election summary including the election options available to you, the details of the financial benefits under each option and a printout of your employment and payroll history. You will be asked to review the material, provide any other pertinent information to the counselor and ask questions about the options, through telephone calls, written correspondence and face-to-face counseling. After you make your election, the counselor will prepare an implementation package including instructions to the pertinent agency offices.

Deadlines—If you have a choice of retirement plans under FERCCA, you have a deadline of six months from the date you receive formal notice explaining your options. If you fail to make an election within the time limit:                  

• If you are in CSRS or CSRS Offset and belonged in either FERS or Social Security-only, you are considered to have elected CSRS Offset. 

• If you are in FERS, you are considered to have elected that system if you belonged in CSRS, CSRS-Offset or Social Security-only.

If your qualifying retirement coverage error was previously corrected and you fail to make an election within the time limit, you are considered to have elected to remain in your current retirement plan. Your election is irrevocable once your employer or OPM processes it. If you do not make a timely election, the resulting coverage is also irrevocable.

Your election is effective on the date that the retirement coverage error first occurred. This means that your election will be retroactive, or will change your retirement coverage for a period of service in the past.

Appeal Rights—You can appeal these decisions to the Merit Systems Protection Board: your employer’s determination that your error is not subject to FERCCA rules; your employer’s determination that you are not eligible to elect retirement coverage under the rules; and OPM’s denial of your request for a waiver of the time limit for making an election. You may not seek review of a decision under any employee grievance procedures, including those in 5 U.S.C. 71 and 5 CFR 771. After exhausting your administrative remedies, you may bring a claim against the government under 28 U.S.C. 171 or 1346(b). You may also bring a claim against the government under any other provision of law if your claim is for amounts not otherwise provided for under FERCCA rules.

Death Before Retirement 

Under CSRS, no lump-sum death benefit is payable immediately to a currently employed worker’s survivors who qualify for an annuity. A lump-sum death benefit may be payable later if annuity amounts paid out do not equal the deceased employee’s contributions, plus interest, when a survivor benefit ends. 

Under FERS, a “basic” death benefit is payable to an actively employed worker’s surviving spouse. The amount is equal to an indexed lump-sum figure ($33,998 in 2019), plus 50 percent of the larger of the employee’s final or high-3 average salary. This basic death benefit may be paid in a lump sum or in 36 monthly installments. Survivors may also be eligible for monthly annuity payments. 

Under CSRS and FERS, if you leave no survivors who qualify for an annuity, your retirement contribution, plus interest, is paid as a lump sum.

See Benefits Upon Death in Service in Chapter 8, Section 4.

Retirement: Main Types and Eligibility Conditions

Employees who meet the general eligibility criteria may qualify for several different types of retirement benefits. Generally, the availability of any of these alternative forms of retirement depends on a variety of factors. For the majority of employees, the most significant criteria involve attainment of certain minimum age and length of service requirements. However, the availability of some other types of retirement may depend on factors such as an individual’s health or physical ability to work (for example, a disability retirement) or a worker’s employment situation (for example, a discontinued service retirement during a reduction in force).

The types of retirement generally available to federal employees include:

Voluntary Retirement—When federal employees meet the age and service requirements for a voluntary retirement, they may retire at any time with an immediate, full annuity. (This kind of voluntary retirement also is known as a “standard” retirement.) For CSRS-covered employees who meet the general eligibility requirements (see above), voluntary retirement is an option once the following minimum age and creditable service requirements are satisfied: age 62 with five years of service; age 60 with 20 years of service; and age 55 with 30 years of service.

FERS-covered employees who meet the general minimum requirement (i.e., five years creditable service) are eligible for a standard or voluntary retirement once they meet certain minimum age and service requirements. The combinations for unreduced FERS benefits are: age 62 with five years of service, age 60 with 20 years of service, and minimum retirement age, or MRA (which ranges between 55 and 57, depending on year of birth) with 30 years’ service. Reduced annuities are payable at the MRA for those with between 10 and 29 years of creditable service. See CSRS and FERS: Basic Annuity Computations in Section 4 of this chapter. (Note: FERS employees may retire after completing 10 years of service and reaching their MRA, and may postpone receipt of benefits in order to reduce or eliminate the reduction, as described below.)

Deferred Retirement—This is another form of retirement that normally is taken on an optional basis. Under CSRS, former employees who leave their contributions in the retirement fund are eligible for an annuity that starts at age 62 if they have completed at least five years of creditable civilian service and were covered by CSRS for at least one year within the two-year period immediately before separating.

Under FERS, former workers who have completed five years of creditable service and leave their contributions in the retirement fund are eligible for deferred benefits. Unreduced deferred benefits are payable at age 62, age 60 with 20 years of service, or at the minimum retirement age with 30 years of service. Separated workers electing the deferred benefit at the MRA with at least 10 but fewer than 30 years of service will have their annuities reduced by 5 percent for each year of age (5/12 percent per month) that they are under age 62 when it begins. 

See Computing Deferred Retirement Benefits in Section 4 of this chapter for how deferred retirement benefits are calculated. 

Deferred annuitants are eligible to provide a survivor annuity for their spouses. They are also eligible to enroll in the Federal Long-Term Care Insurance Program or continue previous coverage by paying the premiums directly. They are not eligible to participate in the Federal Employees Dental and Vision Insurance Program or the Federal Employees Health Benefits or Federal Employees’ Group Life Insurance programs (see Temporary Continuation of Coverage in Chapter 2, Section 1, and Converting to an Individual Policy in Chapter 2, Section 2, for potential alternatives for continued health and life insurance).

Postponed Retirement—Employees who retire under the FERS MRA+10 provision (minimum retirement age with at least 10 but fewer than 30 years of service) may postpone the receipt of their annuities to a later date to reduce or eliminate the 5 percent per year penalty for each year of age (5/12 percent per month) they are under age 62. Unlike in deferred retirement, those who were otherwise eligible to carry their Federal Employees Health Benefits and Federal Employees’ Group Life Insurance coverage into retirement may re-enroll in those programs when their annuities begin; they also may rejoin the Federal Employees Dental and Vision Insurance Program at that time. They can continue an existing enrollment in the Federal Long-Term Care Insurance Program or apply to newly enroll at any time.

Disability Retirement—Federal and postal workers covered by CSRS or FERS who become unable to continue in their federal or postal positions because of the onset of a disabling condition generally are eligible for a disability retirement. Under CSRS and FERS, federal and postal employees no longer able to perform in their positions (or other vacant positions at the same grade or pay level) are assumed to be disabled for federal or postal service, even though they might be able to hold some other job. This definition of disability is different than that used by Social Security (see Social Security Disability Benefits in Section 9 of this chapter).

Employees generally must meet all of the following conditions to be eligible for disability retirement.

• They must have completed at least five years of civilian service if covered by CSRS, 18 months if covered by FERS. 

• They must, while employed subject to either retirement system, have become totally disabled for useful and efficient service in the position occupied or any other vacant position of the same grade or pay level for which they otherwise are qualified.

• Their application for disability retirement must be filed with the OPM in accordance with specified time limits. If they are covered by FERS, they must also apply for Social Security disability benefits or OPM won’t process their applications.

Early Retirement—Both CSRS and FERS allow employees who do not meet the normal age and service requirements to retire early with an immediate (but possibly reduced) annuity under certain circumstances. The purpose is to reduce the disruption in the workforce when an agency is reorganizing or downsizing, while allowing employees who meet certain criteria to retire rather than undergo involuntary separation, transfer or downgrading. 

The two basic kinds of early retirement that may be made available to certain employees are:

• Early Voluntary Retirement—An agency may offer an “early out” option to employees during a downsizing, such as a reduction in force or reorganization, or for workforce restructuring purposes, such as to improve skills mixes. To be eligible an employee must meet certain minimum age and service requirements: at least age 50 with 20 or more years of creditable service or at any age with at least 25 years of creditable service. FERS employees who retire early will face no age reduction penalty. On the other hand, CSRS retirees who are under age 55 will have their annuities permanently reduced by one-sixth of 1 percent for each full month they are under age 55 (2 percent per year). 

• Discontinued Service Retirement—A “discontinued service retirement” (DSR) is an involuntary retirement that provides an immediate annuity to employees who are retired against their will. OPM determines whether a separation was involuntary. Other than their involuntary nature, DSRs are similar in many respects to an early voluntary retirement. They have the same minimum age and service requirements (age 50 with 20 years or any age with 25 years of service) but are subject to several additional requirements or procedures.

Employees are not eligible for either early voluntary retirement or discontinued service retirement if they are separated on charges of misconduct or poor performance. 

For more details, see Section 5, Early Retirement, in this chapter.

Phased Retirement

Under 5 U.S.C. 8336 and 8142, agencies may allow employees eligible to retire under certain combinations of age and service to reduce their work schedules and receive a combination of salary and retirement benefits for a period before retiring fully.  

Phased retirement is voluntary to both the employee and the agency, and available only to an employee who has worked full-time for the preceding three years and is eligible for voluntary retirement with 20 years of service at age 60 under both CSRS and FERS; or with 30 years of service at age 55 under CSRS and at minimum retirement age (currently 56) under FERS. The rules exclude those eligible for retirement in other ways, including under other standard age and service combinations for voluntary retirement (see CSRS and FERS: Basic Annuity Computations in Section 4 of this chapter) and those eligible for voluntary retirement only under early retirement rules (see Section 5 of this chapter). Also ineligible are those subject to mandatory retirement (see Section 8 of this chapter). 

An employee entering phased retirement is not separating from federal employment and is not eligible for a buyout (voluntary separation incentive payment). An employee leaving phased retirement to fully retire may be eligible for a buyout if meeting the eligibility criteria, however. 

Entry into phased retirement is not guaranteed and is subject to agency policies that can restrict eligibility to certain positions, limit the duration of a phased retirement period, and impose other restrictions. Agencies must have written policies that cover those issues as well as matters such as who has authority to approve or reject an employee’s request and the standards to be used in making that decision. A time limit, if set, may be shortened or extended on the mutual consent of the employee and the agency.

Phased retirees may work only on a half-time schedule and generally must spend at least 20 percent of their time at work in mentoring activities. 

The work schedule may be subject to collective bargaining provisions. Intermittent schedules are not allowed. A phased retiree may not work in more than one position at a time, but at management’s discretion can transfer to a different position in the same or a different agency or can return to full-time work. In the latter case the phased retirement annuity would end, and on the individual’s later full retirement, the phased retirement period would be treated as a period of part-time employment.

Mentoring can encompass a wide range of activities that allow for the transfer of knowledge and skills from one employee to others, and in particular is meant for preparing workers to take over the responsibilities of the position. Agencies have discretion to set their own policies on the mentoring requirement, and exceptions are allowed under limited circumstances.

Phased retirees receive half of the salary of the position and half of the annuity they accumulated up to the point of phased retirement, without offset. The computation of what is termed a “phased retirement annuity” is based on service and “high-3” salary at that point. Unused sick leave is not counted in the calculation of that annuity; instead, it remains to the individual’s credit and the amount at later full retirement is included in the benefit calculation at that time. Phased retirees under FERS are not eligible for the Special Retirement Supplement.

Any deposit to capture military service credit or any redeposit to recapture civilian service after taking a refund of retirement contributions on a prior separation from federal service generally must be made before the phased retirement begins. While making a deposit to get credit for refunded service that ended before March 1, 1991 is optional, the annuity will be subject to an actuarial reduction if not paid. In the case of a phased retiree’s death in service, a survivor can make a deposit or redeposit in order to be credited with that service time in a survivor annuity on the same basis as if the decedent had not been a phased retiree. 

A phased annuity cannot be reduced to provide a survivor benefit; survivor benefits to those in phased retirement follow the rules for active employees, not retirees. 

Phased retirement annuities are subject to court orders providing for division, allotment, assignment, execution, levy, attachment, garnishment, or other legal process on the same basis as other annuities. The salary portion similarly is subject to garnishment and other legal processes on the same basis as other federal employee pay. 

The annuity portion is increased by any applicable cost-of-living adjustments according to the policies of the person’s retirement system; the salary portion is increased by relevant pay raises.

For benefits purposes, individuals in phased retirement status generally are considered to be active employees. They are subject to required contributions to their federal retirement system based on their salary received, while those under the Civil Service Retirement System may make voluntary retirement contributions (see CSRS Voluntary Retirement Contributions in Section 2 of this chapter). Phased retirees similarly are treated as active employees, not separated employees, for Thrift Savings Plan purposes, meaning that they may continue making investments and may take loans and in-service withdrawals but are not eligible for post-separation withdrawal options.

For purposes of Federal Employees’ Group Life Insurance program coverage levels and the government contribution toward the cost of Basic coverage, a phased retiree is deemed to be receiving the full-time pay of the position. Similarly, eligibility for the Federal Employees Health Benefits program is unchanged and the government continues to pay its full share of FEHB premiums (even though part-time workers in general receive only a prorated share). Further, phased retirees can continue to pay their share of premiums from pretax salary. 

Rules governing enrollment and participation in the flexible spending account, Federal Dental and Vision Insurance Program and Federal Long-Term Care Insurance Program are the same as for all other eligible employees. Entry into phased retirement and transition from phased retirement either to full retirement or to full-time federal employment are not qualifying life events for purposes of FEHB and FEDVIP enrollment and coverage changes outside an open season. However, time in phased retirement does count toward the requirements to have coverage under FEHB and FEGLI before retirement in order to carry those benefits into full retirement, as described in FEHB Coverage After Retirement in Chapter 2, Section 1, and Life Insurance in Retirement in Chapter 2, Section 2. 

Guidance on FSAs and insurance benefits is in Benefits Administration Letters 14-208 and -209 at

As with standard retirement, an individual cannot receive both a phased retirement annuity and injury compensation benefits (apart from schedule awards) at the same time, as described in Chapter 5, Section 5.

Standard leave accrual rules for part-time employees apply to phased retirees; accrual is prorated based on hours in pay status. An employee does not receive a lump-sum payment for unused annual leave upon entering phased retirement but rather maintains his or her annual leave balance. A lump-sum payment for unused annual leave will be made at full retirement.

Normal rules for premium pay such as holiday pay that apply to part-time employment also apply, as do the policies for overtime pay. Official travel during periods the employee is otherwise scheduled to work counts as hours of work, and a phased retiree is eligible to earn compensatory time off for official travel occurring on personal time under standard policies. A phased retiree further may earn and use compensatory time off for religious purposes under the normal rules.

A phased retiree similarly is treated as a part-time employee for within-grade increase, furlough, transfer of function and reduction in force purposes, remains bound by ethics rules and restrictions on outside employment, and remains subject to disciplinary actions for performance or conduct reasons. Any complaint procedures, including any applicable administrative or negotiated grievance procedures that are available in regular employment, remain available to phased retirees. 

A death of an employee in phased retirement status is treated as a death in service (see Benefits Upon Death in Service in Chapter 8, Section 4) for purposes of a survivor annuity, and the phased retirement period will be treated as a period of part-time employment in the computation of that annuity. The basic employee death benefit component for those under the Federal Employees Retirement System (see Death Before Retirement above in this section) is based on the full-time rate of the position.

A phased retiree may retire fully at any time with no agency approval needed. However, an individual cannot go in and out of phased retirement status; only one such change is permitted lifetime. 

Phased retirement is elected using SF 3116 (for both CSRS and FERS) in conjunction with the standard retirement application form, SF 2801 for CSRS and SF 3107 for FERS. Instructions for completing the application for phased retirement are on SF 2825 for CSRS and SF 3117 for FERS. The SF 3116 also is used for those in phased retirement to return to full-time work and/or change agencies. Instructions for applying to leave phased retirement for full retirement are in SF 2826 for CSRS and SF 3118 for FERS. The forms are available in personnel offices and at

At full retirement, a composite annuity will be paid. A “fully retired phased component” will be calculated to take into account the actual time worked as a phased retiree, using the “high-3” at that point (based on the full-time salary rate of the position) and including crediting for the amount of unused sick leave at that time. That will be added to the originally calculated annuity, which will then be paid in full, including any applicable inflation adjustments of the phased retirement period. See 5 CFR 831.1741. The composite annuity is subject to a reduction for a survivor annuity election, if applicable. It will also be subject to the actuarial reduction for unpaid redeposit for CSRS refunded service that ended before March 1, 1991, if applicable. The resulting final annuity will be subject to standard rules regarding continued insurance coverage in retirement, court orders and other policies. 

The commencing date of the composite annuity is the day after the employee in phased retirement status separates from service. Regardless of when the composite annuity is effective, it will be increased by the full cost of living adjustment applicable when the next COLA is paid.  

Detailed policies and examples of computations are in Benefits Administration Letters 14-108 and -109 at

Learn more about phased retirement benefits in 1105 Media Inc.’s book Phased Retirement for Federal Employees. Please call (800) 989-3363 for ordering information.

2021 Digital Almanac

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