Federal Employees Retirement System

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The Federal Employees Retirement System (FERS) is the current civil service retirement system for United States government employees, replacing the prior Civil Service Retirement System (CSRS). Its purpose was to reform civil service to more closely align with private sector employment, especially with regards to retirement benefits.


Except for some rare instances, all Federal employees newly hired during or after 1987, as well as prior employees rehired who had less than five years nonmilitary service prior to 1987, are covered by FERS. Employees hired between 1984-1986 were transitioned to FERS in 1987; their service period prior to that is called "CSRS Offset" and benefits for that period are calculated under the old CSRS rules. Former employees with five or more years nonmilitary service who were under CSRS could, upon rehire, choose to go back to CSRS or, within six months of rehire, move under FERS (but such a move was irrevocable). Employees under CSRS also could move under FERS but such a decision was also irrevocable.

Retirement Components

The retirement aspect of FERS consists of three components:

  • The FERS annuity (a defined-benefit pension plan, similar to CSRS but at a much lower benefit, and also requiring longer tenure for a higher pension in most cases),
  • Mandatory participation in Social Security (CSRS employees do not participate in Social Security unless they also had private sector employment, and in those cases are generally subject to significant reductions), and
  • Participation in the Thrift Savings Plan (TSP, a defined-benefit contribution plan) with agency automatic and matching contributions; CSRS employees may participate in TSP but do not receive agency automatic or matching contributions.

FERS Annuity


Employee contributions to the annuity are mandatory and are made post-tax, the rate differs depending on when the employee was hired as well as higher rates for certain employee categories (mainly those who must mandatorily retire early) and does not change; even an employee leaving civil service but returning will only contribute whatever rate they contributed during their first period of civil service.[1] The government also contributes toward the annuity; the rates are dependent on employee job classification, and are based on actuarial assumptions which can and do change.

An employee leaving civil service may in most cases request a refund of contributions made; only employee contributions and earned interest are refunded (the government's contribution is forfeited). The contributions, since they were post-tax, are not taxable (but the interest is taxable). An employee is not required to request a refund; if the employee meets other eligibility requirements s/he can file for retirement and begin receiving annuity payments. Should an employee have his/her contributions refunded and later return to civil service, those refunded contributions must be repaid (with interest) or else that prior service will not be counted in the annuity (but repayment is optional).

Retirement Eligibility

An employee must meet certain combinations of age and "creditable Federal service" in order to be eligible for a FERS annuity. Certain levels of military and part-time civilian service may be "repurchased" (at a set percentage of the salary earned during that time, plus interest which compounds and changes rate over time) in order to be counted in the annuity; such repurchase is optional but must be started and completed before retirement (once the employee retires the repurchase option is no longer available).

For an "immediate" retirement annuity (which starts one full calendar month[2] after retirement), or a "deferred" annuity (which starts at age 62 or after), the majority of employees (those who do not have earlier mandatory retirement ages, such as law enforcement officers, firefighters, or air traffic controllers) must meet one of four combinations of age and service:

  • Age 62, 5 years of service
  • Age 60, 20 years of service (but a deferred annuity is unavailable under this combination)
  • "Minimum Retirement Age" (MRA),[3] 30 years of service
  • MRA, 10 years of service (but if having less than 30 years of service, the annuity is permanently reduced by 5/12 of 1% for each month the employee is under age 62, unless at retirement the employee has 20 years of service and agrees to defer the annuity until age 60)

Certain employees facing involuntary separation,[4] or "reductions in force" (RIF, or a layoff in the private sector) may be eligible for early retirement at either age 50 with 20 years service, or any age (not MRA) with 25 years. Also, disability retirement is potentially available for certain employees who due to illness or injury cannot meet the requirements of their position, the employee must have 18 months service and the agency must certify that the employee cannot be accommodated in his/her current position and was considered for other jobs (at the same grade/pay level) in the commuting area, but could not be placed in them.

Annuity Calculation

The annuity for the majority of Federal employees [5] is calculated based on three factors:

  • The employee's "high-3" salary (the average salary for the highest 36 consecutive months of pay),
  • A specified percentage (either 1% or 1.1% in most cases), and
  • The amount of "creditable Federal service" (in terms of years and whole months expressed as fractions of years; days of service less than 30 days in a month are dropped).

The "high-3" salary is usually the final 36 months of the employee's tenure, but may be an earlier period (e.g. an employee moved from an area with high locality pay differential to one with a lower differential[6] or left Federal service and returned at a lower grade). The salary includes base pay, locality adjustments (pay increases to account for cost of living in certain metropolitan areas), and shift differentials, and includes any cost of living adjustments applied to them, but does not include overtime (except for some categories involving mainly first responders), bonuses/awards, severance pay (including voluntary buyouts), cash out payments for unused annual leave and credit hours, or hazard pay.

The system is structured to provide employees an incentive to continue working until age 62 (the earliest date at which an employee can also obtain Social Security benefits), as the annuity percentage is 1.1% for employees age 62 or older with at least 20 years service, and 1% for all others. Also most employees retiring before age 62 will not receive a cost of living increase until age 62 (except for occupations where the mandatory retirement age is under 62, or employees retiring on disability).

Although unused sick leave is added to "creditable Federal service",[7] it cannot be used to increase the service time so as to make an employee eligible for retirement nor to make an employee eligible for the increased 1.1% percentage.

The actual calculation of creditable service adds years, months, and days separately for civilian employment, military employment repurchased, and unused sick leave. Days are then converted to months using 30 days as one month, with any remaining days dropped.

  • For example, an employee with 33 years, 11 months, and 17 days of actual service time, plus four months and 20 days of unused sick leave, will be calculated as having 33 years, 15 months, and 37 days of time.
  • The days are then converted to months at a rate of 30 days = one month (in this case, the 37 days will convert 30 days to one month, leaving the employee with 33 years, 16 months, and seven days, but the seven days are then dropped leaving 33 years and 16 months).
  • The months are then converted to years at a rate of 12 months = one year, with the remaining months shown as a fraction (in this case, the 16 months will convert 12 months to one year, leaving the employee with 34 years and four months, or 34 4/12 years for annuity calculation purposes).

No other types of earned leave are factored into the annuity calculation. Unused annual leave hours are "cashed out" (paid to the employee, at his/her rate of pay as if the employee remained on the payroll until the leave was used; if a COLA takes place during that time, any leave that would have been taken after that effective date is paid at a higher rate).[8] Where applicable, earned but unused credit hours are also cashed out upon retirement at the same rate as annual leave.[9] Other types of unused leave (such as compensatory time off for travel outside normal duty hours, and time off awards given in lieu of cash) are not paid and are thus lost if not used before retirement.[10][11]

Generally, an employee has the right to determine his/her "date of final separation" (i.e. the last day on the payroll; it does not have to be the final working day in a pay period[12]), but an employee cannot be on leave on that date;[13] the following day is the employee's retirement date. The annuity does not begin until one full calendar month has passed since the employee's retirement. Thus, an employee retiring on June 30 will have his/her annuity begin on August 1 (as the employee will be retired beginning July 1 and for the entire calendar month of July), but an employee retiring on July 1 will not have his/her annuity begin until September 1 (as the employee will be retired beginning July 2 but not for the entire calendar month of July, only in the following month—August—will the employee be retired for an entire calendar month). Thus, it is common for employees to retire on the last day of the month, and frequently for the date to be December 31 (as employees commonly use little or no annual leave in the final year, which added to their carryover balance from the prior year—240 hours for most employees—provides a large lump-sum in January of the following year).

Married employees must agree to provide spouses (or former spouses, in some cases), a survivor annuity (which pays a lower portion of salary to the surviving spouse or former spouse), unless the current or former spouse affirmatively consents in writing to forego the annuity.[14] Survivor annuities are also available for other persons, whether or not related by blood or marriage, but the person must provide proof of insurability. The standard survivor annuity for a spouse is 50% of the retiree's annuity (before a 10% reduction to pay for that annuity) but other options are available.

A portion of the annuity, since it was paid from post-tax earnings, is not taxable, and will be shown on the annuity statements. The non-taxable portion is very small, as the government provides the bulk of the payments needed for the annuity; however, the non-taxable portion must be pro-rated over the expected life of the retiree (and, where applicable, the expected life of the designated survivor) in accordance with tax code.

Payment at Death

If an employee/retiree dies and a survivor benefit was not chosen, then any unpaid balance of employee contributions (but not government matching contributions) is paid to the beneficiary(ies) designated.[15] If the employee/retiree did not designate any beneficiary(ies), then the "statutory order of precedence"[16] is used, as follows:

  • To the widow or widower,
  • To any surviving children (in equal shares) or their descendants,
  • To any surviving parent or parents,
  • To the court-appointed executor or administrator of the estate,
  • To the next of kin as determined by the laws of the state where the employee/retiree lived at death.


  1. This differs from the Thrift Savings Plan; although contributions from salary are automatically taken out upon hiring, the employee may elect not to participate in the TSP and request a refund of those deductions taken.
  2. This is not the same as 30 days, it means that an entire calendar month -- beginning on the 1st and ending the last day of the month -- must pass before annuities are paid; therefore, retirees often pick their retirement date as the last day of the month, with December 31 being the most common in order to maximize the amount of unused annual leave paid.
  3. The MRA ranges between 55 and 57 and is based on the employee's birth year, for a chart see https://www.opm.gov/retirement-services/fers-information/eligibility/. For example, an employee born in 1965 has a MRA of 56 years and two months; thus a person born on June 3, 1965 with the required number of years of service is eligible to retire on August 3, 2021.
  4. The separation cannot be for misconduct or poor performance.
  5. Different calculations apply for law enforcement officers, firefighters, and air traffic controllers (as these positions have mandatory retirement ages under age 62), and for employees retiring on disability.
  6. It is not uncommon for an employee to do this, especially if the area with lower differential is an area where or near where s/he (and his/her family) intend to settle at retirement, and the move is paid for by the Federal government.
  7. The conversion is based on a chart, where 2,087 hours equals one full year, for an example of the chart see http://www.federalretirement.net/sickleavechart.htm. If actual unused sick leave falls between two amounts, the higher amount is used.
  8. For OPM rules on annual leave at separation from Federal service see https://www.opm.gov/policy-data-oversight/pay-leave/leave-administration/fact-sheets/lump-sum-payments-for-annual-leave/
  9. For OPM rules on credit hours at separation from Federal service see https://www.opm.gov/policy-data-oversight/pay-leave/work-schedules/fact-sheets/credit-hours-under-a-flexible-work-schedule/ then click on topic titled "What Happens to Earned Credit Hours if an Employee Leaves Federal Employment or Transfers to Another Federal Department or Agency?"
  10. For OPM rules on travel compensatory leave see https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/compensatory-time-off-for-travel-questions-answers-to-fact-sheet/ then click on topic titled "Q27. What happens to an employee's unused compensatory time off for travel upon separation from Federal service?"
  11. For OPM rules on time off awards see https://www.opm.gov/policy-data-oversight/performance-management/performance-management-cycle/rewarding/time-off-awards/
  12. However, an employee leaving service during a pay period will not earn annual leave or sick leave for that period.
  13. A common trick is for an employee to take substantial leave -- generally sick leave in excess of what is needed to obtain additional time toward the annuity, or compensatory or awarded leave which is not paid out at separation -- until the final day, then come into the office on that day for out processing.
  14. The only exception is if the current or former spouse cannot be located.
  15. As the employee pays a very small portion of the annuity, payments are made only if the employee dies before retirement or shortly thereafter (even though, as discussed above, for tax purposes a retiree must pro-rate the employee contribution over a longer period).
  16. The order of precedence is also used for payment of insurance benefits under the FEGLI, any balance under the Thrift Savings Plan, and unpaid compensation.