Discontinued service retirement (DSR or early retirement) is one of the most misunderstood types of retirement as it is only available for federal employees who are involuntarily separated without cause, including reductions in force (RIFs) or performance-related reasons, before becoming eligible for optional retirement and who meet certain requirements.
Involuntary separation means any separation against the employee’s will and without the employee’s consent and includes refusal to accept a reassignment outside of the commuting area unless geographic mobility is a job requirement, lack of funds, and medical inability to perform duties–although the latter may also lead to disability retirement. See Basics of Disability Retirement – Federal Legal Corner – 10/17/01. There is also DSR due to major reorganizations, major RIFs, or major transfers in functions as determined by the Office of Personnel Management.
Federal employees who are separated for misconduct are not eligible for discontinued service retirement but may retire if they meet the requirements for optional retirement.
In order to be eligible for DSR, you must have 20 years of creditable service and be at least 50 years old or have 25 years of service at any age. The discontinued service annuity begins on the first day of the month after the occurrence of the event on which payment of the annuity is based. Under the CSRS retirement system, an annuity is reduced by 1/6 of 1 percent for each full month (2 percent per year) the employee is under age 55 at the time of his or her retirement. There is no penalty under the FERS retirement system based on age.
If you resign your position before the effective date of the scheduled separation for the above reasons, the separation is still considered to be involuntary for DSR if you have received notice of a specific separation date. There is also a requirement that you cannot turn down the offer of a position within your commuting area that is not lower than two grades or pay levels below your present position. Under certain circumstances, an employee who is restored to earning capacity after receiving a disability retirement may be entitled to DSR if he meets the requirements for early retirement.
** This information is provided by the attorneys at Passman & Kaplan, P.C., a law firm dedicated to the representation of federal employees worldwide. For more information on Passman & Kaplan, P.C., go to http://www.passmanandkaplan.com. **