Expert's View

Reg Jones

My last two articles provided detailed explanations of the combinations of age and service you need to retire on an immediate unreduced annuity under the FERS and CSRS systems, under either standard voluntary retirement rules or early retirement rules.

Now let’s examine two other forms of retirement, available to those who want leave before completing a full career.


Deferred annuities
If you leave government before you have met the age and service requirements to retire on an immediate annuity, have at least 5 years of creditable civilian service, and don’t take a refund of your retirement contributions when you leave, you will be entitled to a deferred annuity.

Under FERS rules, there are a range of times when you’d be eligible for a deferred annuity: 62 with 5 years of creditable service, 60 with 20 and at your minimum retirement age (MRA) with 30. MRAs range between 55 and 57, depending on your year of birth (refer to my column of two weeks ago for the chart, if you are unsure of your MRA).

Under CSRS rules, you’d only be eligible for a deferred annuity at age 62.

As a FERS employee you could also apply for a deferred annuity at your MRA with as few as 10 years of service. However, under the MRA+10 provision, your annuity would be reduced by 5 percent for every year (5/12 of 1 percent per month) you are under age 62, unless you have at least 20 years of service and your annuity begins at age 60 or later.

Deferred annuities are calculated using the standard FERS and CSRS formulas, with your years of service and high-3 being the ones you had on the day you left government. Under both retirement systems, you’d begin receiving annual cost-of-living adjustments (COLAs) beginning at age 62.

As a FERS deferred retiree, you wouldn’t be eligible to receive the special retirement supplement, which approximates the Social Security benefit earned while covered by FERS.

Finally, whether you under either FERS or CSRS, you would lose coverage under the Federal Employees Health Benefits and the Federal Employees’ Group Life Insurance program when you leave and you would not be eligible to reenroll when your annuity starts.


Postponed annuities
This is only available to FERS employees. If you retire under the MRA+10 provision you can postpone the receipt of your annuity to a later date to reduce or eliminate the 5 percent per year age penalty mentioned above.

Your annuity will be calculated using the standard FERS formula and be based on your years of service and high-3 on the day you retire. And that’s the amount you’ll receive when your annuity begins, minus any portion of the age penalty that remains.

If you were enrolled in the FEHB and/or FEGLI programs for the five consecutive years before you retire, you could reenroll in either or both of those programs when your annuity begins.

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FERS Retirement Guide 2022