You know you can retire on an immediate, unreduced annuity if you meet the age and service requirements. But suppose you want to leave government (or are pushed out by a reduction in force) before you hit one of the combinations for voluntary retirement. What then? Well, you may be entitled to either a deferred or a postponed annuity. Let me explain the differences between them.

Deferred Annuity
If you leave government before being eligible to retire on an immediate annuity, have at least 5 years of creditable civilian service, and don’t ask for a refund of your retirement contributions, you’ll be eligible for a deferred annuity.

Under both CSRS and FERS, your benefit will be based on your high-3 salary and length of service at separation (note: unlike in voluntary retirement, unused sick leave is not added to actual service time). Not surprisingly, certain other rules are different.

If you are covered by CSRS, you’d be eligible to begin receiving a deferred annuity at age 62. That benefit will be increased afterward by an annual cost-of-living adjustment (COLA).

If you are covered by FERS, you have more options. You’d be eligible for an unreduced deferred annuity at age 62 with 5 years of service, 60 with 20, or at your minimum retirement age (MRA) with 30. You’d also be eligible for a reduced FERS annuity at your MRA with 10 years of service. That reduction would be 5 percent for every year you were under age 62 (5/12 percent per month) at separation.

Deferred retirees are not eligible to receive the FERS special retirement supplement, which for other FERS people who retire before age 62 approximates the amount of Social Security benefit earned while a FERS employee and is paid up to age 62. At that age, you would start receiving your full Social Security benefit and would become eligible for a COLA on your FERS civil service benefit.

If you are a deferred retiree under either CSRS or FERS, you lose FEHB and FEGLI coverage on separation and won’t be able to reenroll in them when your annuity begins.

Postponed Annuity
CSRS employees aren’t eligible for a postponed annuity, only FERS employees are.

A postponed annuity is available if you are a FERS employee who: has met the age and service requirements to retire under the MRA+10 provision; wants to postpone the receipt of the annuity to a later date in order to reduce or eliminate the 5 percent per year age penalty for not meeting the age and service requirements for an unreduced annuity; and does not take a refund of retirement contributions on separation.

Your annuity would be calculated using the standard FERS formula and based on your length of service (including unused sick leave) and high-3 as of your separation, reduced by any part of the age penalty that’s left. While you wouldn’t be entitled to the SRS, you would be entitled to receive a Social Security benefit and a COLA on your FERS civil service benefit beginning at age 62.

As with deferred retirement, you would lose FEHB and FEGLI coverage on separation—but unlike in deferred retirement, in postponed retirement when your annuity begins you could reenroll so long as you were enrolled for the five consecutive years before you separated.