A Brief History
The Federal Employee Retirement System (FERS) is the successor to the
Civil Service Retirement System (CSRS) which started for new hires on
January 1, 1984, and having a full effect on every employee not vested with 5
years of service prior to January 1, 1987.
During the transition between FERS and CSRS, some employees were
given the option to switch to the new FERS system. However, all
employees hired after the formal implementation of FERS were entered
into this system automatically.
CSRS and FERS differ primarily in the sources and amounts of income
they provide participants upon retirement. CSRS retirees do not participate
in the federal Social Security system. CSRS participants generally have
not paid into Social Security and therefore are ineligible to receive Social
Security benefits in retirement. They are paid only through the CSRS
annuity but at a rate twice the FERS rate.
The FERS Annuity
FERS participants, on the other hand, have three primary sources of income after retirement: The FERS annuity is a defined benefit plan similar to the CSRS annuity. The primary difference between the FERS and CSRS annuities is the cost difference that participants pay into their respective systems. CSRS participants contribute 7.0% of their annual salaries, whereas FERS employees hired in 2014 or after currently contribute 4.4%. (Those hired prior to 2013 pay only .8% and those hired in 2013 pay 3.1%).
FERS participants pay the standard 6.2% of their annual salaries into the social security system. Upon retirement, FERS participants receive a standard Social Security benefit payment which does not affect their pension amount. The majority of CSRS participants receive nothing from Social Security but if they do qualify to receive Social Security, those benefits will be reduced by the amount of pension they receive from the CSRS system. Conversely, CSRS Offset employees pension will be decreased by the amount of Social Security they receive.
Three Basic Standards To Qualify
This is the goal for most federal employees: get as much retirement pay as soon as they qualify. There are three basic standards to qualify for immediate retirement with 100% of your pension:
Retire at age 62 or older with at least 5 years of creditable federal
Retire at age 60 or older with at least 20 years of creditable federal service
Retire having reached your Minimum Retirement age which is at least age 55 – 57 with no less than 30 years of creditable federal service.
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