What FERS Is
The Federal Employees Retirement System (FERS) covers most federal civilian employees first hired in 1987 or later, plus many earlier employees who chose to transfer from CSRS. It was designed as a three-part system.
The three parts are a basic annuity (a defined pension paid for life), Social Security coverage, and the Thrift Savings Plan (TSP), an individual retirement savings account. Each part works differently, and the total retirement income for a FERS employee depends on how all three are used.
The Basic Annuity
The FERS basic annuity is generally calculated as a percentage of your high-3 average salary (the average of your highest three consecutive years of basic pay), multiplied by your years of creditable service. For most retirees the standard multiplier is 1 percent per year of service. Under certain conditions, such as retiring at age 62 or later with at least 20 years of service, a higher multiplier of 1.1 percent per year may apply.
The annuity is usually adjusted for inflation through cost-of-living adjustments (COLAs), though the adjustment rules are specific and can change by law.
Eligibility Concepts
FERS eligibility is based on a combination of age and length of service. Several terms appear in official materials and are worth understanding:
- Minimum retirement age (MRA): The earliest age at which a FERS employee may begin an annuity. It depends on the year of birth and ranges from 55 to 57.
- Creditable service: The period of federal service that counts toward an annuity, which may include certain military service and periods of leave without pay in some cases.
- Unreduced annuity: Generally available at the MRA with 30 years of service, at age 60 with 20 years, or at age 62 with 5 years.
- Reduced annuity: A smaller benefit that may be available with 10 or more years of service at the MRA, with a reduction for each year the annuity starts before age 62.
Social Security Under FERS
Most FERS employees pay Social Security taxes and earn credits toward Social Security benefits. Social Security is a separate federal program with its own eligibility rules. Employees who retire before becoming eligible for full Social Security may be eligible for a temporary supplement, often called the FERS supplement, which generally ends when you reach age 62, even if you decide to delay claiming Social Security. In some circumstances it can end earlier when you become entitled to Social Security. Eligibility is limited to qualifying immediate retirements, and post-retirement earnings can reduce or eliminate the supplement. Confirm your circumstances with OPM’s FERS retirement guidance.
The Thrift Savings Plan Component
FERS employees may contribute a percentage of their pay to the TSP. Under the standard structure, the employing agency automatically contributes 1 percent of pay and matches employee contributions up to a set limit. Contributions can be made to traditional or Roth accounts where offered. The account balance depends on contributions, investment results, fees, and any withdrawals. Learn more on the TSP Guide page.
Questions to Consider
- What is your birth year, and therefore what is your minimum retirement age?
- How much creditable service will you have on your intended retirement date?
- Have you reviewed your high-3 average salary and how it may change?
- How will the FERS supplement and Social Security fit into your income before and after age 62?
- What are your TSP contribution levels and withdrawal options?
For a broader checklist, see the Retirement Planning section.
A Worked Example
Suppose an employee retires at age 62 with 25 years of creditable service and a high-3 average salary of $90,000. The standard multiplier is 1 percent, so the basic annuity is $90,000 × 25 × 1% = $22,500 per year, or about $1,875 per month. Because this employee is 62 or older with at least 20 years of service, the 1.1 percent multiplier may apply instead: $90,000 × 25 × 1.1% = $24,750 per year, or about $2,062 per month.
These figures are before any survivor annuity reduction, tax withholding, health insurance premiums, or cost-of-living adjustments, and they leave out Social Security and the TSP entirely. They show how the formula works. They are not a prediction of your benefit, which will be based on your own records.
Types of FERS Retirement
OPM groups FERS retirement into several categories. Which one applies depends on your age, your service, and the circumstances of your departure.
- Immediate retirement: An annuity that starts within 30 days of your last day of work, available when you meet one of the age and service combinations described above.
- MRA+10 retirement: Available at your minimum retirement age with at least 10 years of service. The annuity is generally reduced for each year you are under age 62 when it starts, and you can often postpone the start date to avoid or lessen the reduction.
- Early retirement: In some agency downsizing or reorganization situations, employees may qualify at age 50 with 20 years of service, or at any age with 25 years of service. This depends on the agency’s offer or an involuntary separation, so confirm it with your human resources office.
- Deferred retirement: If you leave federal service before you are eligible for an immediate annuity, you may be able to leave your contributions in the system and claim an annuity later, such as at age 62 with at least 5 years of service.
- Disability retirement: Requires a minimum amount of civilian service (generally 18 months) and a qualifying condition. OPM also requires an application for Social Security disability benefits as part of the process.
The FERS Annuity Supplement
Because the FERS annuity is designed to work alongside Social Security, many employees who retire before age 62 receive a temporary payment called the FERS annuity supplement. It is intended to approximate the part of your Social Security benefit that you earned during federal service, and it generally ends at age 62. It is generally tied to immediate retirements, such as at the MRA with 30 years of service or at age 60 with 20 years, and is not payable with a disability retirement. Earnings from work after you retire can reduce or eliminate the supplement, so anyone planning to keep working should ask OPM how the earnings test would apply.
Common Mistakes to Avoid
- Assuming that age alone decides eligibility. Under FERS, age and years of creditable service work together.
- Not checking your service history for gaps, such as unpaid leave or earlier service, until the final months.
- Overlooking the cost of a survivor annuity. Providing the maximum survivor benefit reduces your own annuity, generally by 10 percent, and the partial option by 5 percent.
- Forgetting that health and life insurance continuation into retirement have their own enrollment-history requirements.
- Relying on unofficial calculators instead of an estimate based on your actual records.
- Planning on the FERS supplement without checking whether you qualify and how outside earnings would affect it.
Frequently Asked Questions
How do I know whether I am covered by FERS or CSRS?
Your Standard Form 50 personnel actions list your retirement plan, and your agency’s human resources office can confirm it. Most civilian employees first hired in 1987 or later are covered by FERS, and many employees from earlier years moved to FERS by choice.
What is the earliest age I can retire?
It depends on your birth year. The minimum retirement age ranges from 55 to 57. Retirement at the MRA also requires enough service: 30 years for an unreduced annuity, or 10 years for a reduced one. Our article on FERS eligibility explains the rules.
Does a FERS annuity increase over time?
Generally yes, through cost-of-living adjustments. FERS COLAs usually begin at age 62 for most retirees, and the formula caps the increase relative to inflation when inflation is high. The rules are set by law and can change, so check the current OPM information.
What happens if I leave federal service before I can retire?
If you have at least 5 years of creditable service, you may leave your contributions in the system and claim a deferred annuity later. You can also request a refund of your contributions if you qualify, but taking a refund generally ends your right to a future annuity based on that service. Think carefully and read the OPM guidance first.
Is the TSP part of my FERS annuity?
No. The TSP is a separate savings account that belongs to you. Your TSP balance is paid out under its own withdrawal rules, in addition to your annuity and Social Security.