Expert's View

If you retire on an immediate unreduced annuity, you can carry your FEHB and FEGLI coverage into retirement. Image: Sergio Sergo/Shutterstock.com

Reg Jones

In my last article I wrote about many of the changes that occur when you move from being an employee to a retiree. What I want to do now is spell out the rules governing your eligibility to retire.

I’ll start with those covered by the Civil Service Retirement System (CSRS) because you are the ones who are not only the most likely to be eligible to retire now but also may have been eligible to do that for a long time. That’s because by definition, if you are under CSRS (or its cousin, CSRS-Offset that involves Social Security coverage) you first were hired by the government before 1984.

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Immediate annuity – CSRS

You can retire on an immediate, unreduced annuity when you have the following combinations of age and service:

• 62 with 5

• 60 with 20

• 55 with 30

However, the age and service rules change if your agency is offering early retirement through the Voluntary Early Retirement Authority (VERA). Then you can retire with either of the following combinations of age and service:

• 50 with 20

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• at any age with 25

FYI: Under CSRS early retirement there is a reduction for retiring under age 55 that would affect very few, if any people, today. Your annuity will be reduced by 2 percent for every year (1/6 of 1 percent per month) that you are under age 55; however, regardless of your age, you’ll be entitled to any cost-of-living adjustments (COLAs) that are added to CSRS retiree annuities.

Immediate annuity – CSRS Offset

While the age and service combinations needed to retire are the same for CSRS and CSRS Offset employees, there is a major difference in how your annuity will be paid when you reach age 62. At age 62 your CSRS annuity will be reduced by the amount of Social Security benefit you earned while a CSRS Offset employee. That reduction will be made even if you don’t apply for a Social Security benefit.

Deferred annuity

If you don’t meet any of the eligibility requirements to retire on an immediate annuity, you can always leave government and apply for a deferred annuity. To be eligible you’ll need to have at least 5 years of service, not ask for a refund of your retirement contributions when you leave, and meet one of the following age and service combinations when you finally apply for that annuity:

• 62 with 5

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• 60 with 20

• at 55 with 30

FYI: If you were a CSRS Offset employee, the reduction in your CSRS annuity at age 62 will be the same as that mentioned above.

Health benefits and life insurance

If you retire on an immediate unreduced annuity, you can carry your Federal Employees Health Benefits (FEHB) and Federal Employees’ Group Life Insurance (FEGLI) coverage into retirement.

However, if you leave before being eligible for an immediate annuity, your FEHB coverage will end after a 31-day free extension of coverage. At that point you’ll have the option of continuing your FEHB coverage at you own expense, plus 2 percent, for up to 18 months. As for FEGLI, you’ll have the option of purchasing individual life insurance at your own expense.

Alert: If you apply for a deferred annuity, you won’t be able to reenroll in either the FEHB or FEGLI programs.

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