When it comes to agency-sponsored early retirement, FERS employees have a big advantage over their CSRS counterparts. Image: G.Tbov/Shutterstock.com
By: Reg JonesEarly retirement is a siren call for many federal employees. It conjures up a vision of getting a quick retirement benefit and moving on to do whatever they can imagine. Anything from a new – and better – job to casting bait in a local pond.
The first thing to know about early retirement is that you can’t just raise your hand and get it. It has to be offered to you, and that most commonly happens where agencies are substantially cutting back or reorganizing their workforces. That was pretty common years ago, much less so now. Still, it does happen, so it pays to know the rules just in case one comes your way.
To qualify for early retirement if it is offered, you must be at least age 50 with 20 years of service or at any age with at least 25. If you are already covered by the Federal Employees Health Benefits and/or Federal Employees’ Group Life Insurance programs, you can continue that coverage in retirement if you have been enrolled in them for the five years before you retire.
Note: The five-year requirement can be waived if you are enrolled in either (or both) of those programs and have been given a specific notice of reduction-in-force affecting your position.
If you are a FERS employee who retires early, you are entitled to a benefit that isn’t available either to those who retire under the MRA+10 provision or to your CSRS brethren (yes, there are still some in the federal workforce—tens of thousands of them, actually). The good news is that you will be eligible to receive the special retirement supplement (SRS), which approximates the Social Security benefit you earned while covered by FERS. The bad news is that it won’t kick in until you reach your minimum retirement age.
There are two downsides to retiring early under FERS. First is that your annuity won’t be increased by annual cost-of living adjustments until you reach age 62. Second, neither will your SRS, which ends at age 62 when you are first eligible to apply for a Social Security benefit.
When it comes to agency-sponsored early retirement, FERS employees have a big advantage over their CSRS counterparts. If you are a FERS employee who accepts an early retirement offer before reaching the correct retirement age for immediate retirement, there won’t be any age penalty.
Under CSRS, there is an annuity reduction of 2 percent (1/6 percent per month) for every year under age 55. Possibly it would be more accurate to say there “was” such a reduction, since by definition everyone first hired after 1983 was put in FERS.
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