Expert's View

Reg Jones

It’s a fact of life that many people work for a number of years in a job and, for one reason or another, leave before they are eligible to retire. What’s different for those who work for the federal government is that during their working time there, deductions have been taken from their pay toward a civil service annuity.

While many who resign from the government ask for a refund of those contributions, some do not (often because they were not even aware that they could). Those who leave their contributions in the fund – especially those who weren’t even aware that they could get a refund – are the people I want to talk to today, as well as any of you who are thinking about resigning from the government before retirement eligibility.

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Here’s why: If you leave your contributions in the retirement fund, you will be entitled to a deferred annuity if you meet some fairly minimal requirements.

• If you either have or had a minimum of 5 years of creditable service under CSRS, you can apply for an annuity at age 62.

• If it was under FERS, you can apply at age 62 with 5 years of service or at age 60 with 20. You can also retire at your minimum retirement age (MRA) with at least 10; however your annuity will be reduced by 5 percent for every year (5/12ths of a percent per month) that you are under age 62.

Again (and it can’t be stressed enough): that’s only if you do not take a refund of your retirement contributions after separating from the government before eligibility for an immediate annuity.

Like an immediate annuity, a deferred annuity is based on the formulas under CSRS and FERS taking into account total creditable service and your highest three consecutive years of average salary, your “high-3.” It similarly will be paid to you every month for the rest of your life after it begins. And, if you are married when you apply for a deferred annuity, you similarly may elect to provide a survivor benefit for your spouse.

I’ve just described the pluses in a deferred annuity. However, there are a few minuses.

While the formulas for computing a deferred annuity are the same as those for computing a regular annuity, the high-3 used will be the one you had on the day you left government. It won’t be increased by pay raises in your old job or by retiree cost-of-living adjustments that occurred after you left. So, the greater the distance between when you leave and when you are eligible for a deferred annuity, the more inflation will have taken its toll on your benefit.

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In addition, unlike in an immediate annuity, any unused sick leave hours you had to your credit on the day you left government won’t be added to your years of service when your deferred annuity is computed. Finally, as a deferred annuitant, you won’t be able to reenroll in either the Federal Employees Health Benefits (FEHB) or the Federal Employees’ Group Life Insurance (FEGLI) programs.

If you know – or think – you’ll be eligible for a deferred annuity, go to www.opm.gov and click on Forms. Then click on OPM Forms and download a 1496A (CSRS) or RI 92-19 (FERS). Mail the completed form to OPM no earlier than two months before you reach the retirement age noted above. Your deferred annuity will begin on your birthday. If you apply at a later date, your annuity will be paid retroactively to that date.

Retirement Can Be Deferred, with Strings Attached

Deferred and Postponed Federal Annuities

Report: What Goes Into Your Federal Annuity and How to Boost It

The MRA+10 Option Under FERS

FERS Retirement Guide 2021