Two programs govern civil service retirement benefits. First, the Civil Service Retirement Service (CSRS) covers federal employees who entered the civil service prior to January 1, 1987. Second, the Federal Employees Retirement System (FERS) covers those federal employees who entered the program after January 1, 1987. To calculate your civil service retirement benefits, it is important to ascertain whether CSRS or FERS covers you.
Calculating Your Annuity
Determine your "high-3" average salary. For both CSRS and FERS retirement benefits, your high-3 is the highest average basic pay you received during any three consecutive years of service. Generally, it is your salary for your final three years in the civil service. However, if you made more money earlier on in your career, those three consecutive highest years can count.
Add up your years of service. For CSRS, the Office of Personnel Management (OPM) calculates 1.5 percent of your high-3 for each of your first five years, and 1.75 percent of your high-3 for each of your next five years. You then receive two percent of your high-3 for each year of service beyond ten years.
If FERS governs your retirement, calculate your years of service based on the FERS formula. The OPM uses a simpler formula for FERS employees. If you are over the age of 62 and have 20 years of service at retirement, you receive 1.1 percent of your high-3 for each year of service. If you are younger than 62, or are at least 62 but have less than 20 years of service at retirement, you receive 1 percent for each year of service.
- CSRS provides cost-of-living increases periodically, while FERS does the same only if you meet certain criteria. To receive FERS cost-of-living increases, you must be over the age of 62; retire as an air traffic controller, firefighter or law enforcement official; retire on disability; or have your retirement computed partially under the CSRS.
- The following factors may reduce your civil service retirement benefits. For CSRS, if you retire before the age of 55 or provide for a survivor, your benefits will be reduced. For FERS, if you retire at the minimum retirement age and have ten or more years of service, your retirement benefit will be reduced by five-twelfths of 1 percent for each full month that you were under the age of 62 when your annuity started.
Items you will need
- Recent W2