Expert's View

CSRS Offset is one of those quirky hybrids. That’s why I get so many requests to revisit the subject. If you are covered by CSRS Offset, you know what I mean when I say quirky. You are paying into the Civil Service Retirement System and Social Security: 6.2 percent to Social Security and.8 percent to CSRS (1.3 percent if you are a special category employee). At retirement, your annuity will be calculated under CSRS rules. And that’s the annuity you’ll receive, unless you are eligible for a Social Security benefit at age 62. That’s when your annuity will be “offset” by the amount of the Social Security benefit you earned while covered by CSRS Offset. This is true whether or not you apply for that Social Security benefit.

Under the law, the Office of Personnel Management uses two formulas to determine the amount of the offset. The offset reduction is the lesser of: the difference between the Social Security monthly benefit amount with and without CSRS Offset service or the product of the Social Security monthly benefit amount, with federal earnings, multiplied by a fraction where the numerator is the employee’s total CSRS Offset service rounded to the nearest whole number of years and the denominator is 40. Got that?

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Fortunately, there’s a simple formula you can use. It’s the one mentioned in the second method. And it will give you an answer that’s close enough to what the final result will be to satisfy most people. Here it is:

Social Security benefit x total years of Offset service (rounded up) ÷ 40

You should be receiving a Social Security benefit estimate from the Social Security Administration. If you don’t have one, you can get it by going to www.ssa.gov and asking for one.

I’ll use an example to show you how simple the calculation is. Let’s say that SSA’s estimate of your Social Security monthly benefit is $1,000. You’ve been covered by CSRS Offset for 10 years, so you multiply that $1,000 by 10. The result is $10,000. Now you divide that by 40 and come up with a monthly benefit estimate of $250. That’s the amount that will be “offset” from your monthly CSRS annuity.

There you have the basics of how your time under CSRS Offset will be treated. However, you also need to know that any additional Social Security benefit you earned before or after being under CSRS Offset will not be affected by the formulas discussed above. And, as a CSRS Offset employee, when you retire, you won’t be affected by the windfall elimination provision (WEP) or the government pension offset (GPO) if you were first hired after December 31, 1983. Sounds like a good deal to me.