There’s a relatively little-known and even less-understood provision of federal retirement law called CSRS Offset. You are among the relatively small group of employees in it if you were rehired after December 31, 1983, had a break in CSRS coverage of more than one year, had at least five years of CSRS service on January 1, 1987, and didn’t elect to transfer to FERS.
As a CSRS Offset employee, you are covered by the Civil Service Retirement System and Social Security. When you retire, you will be eligible for benefits under both systems. However, that doesn’t mean that you get full benefits from each for your period of federal service. What you will get is the same amount of money you would have gotten had you been exclusively covered by CSRS. Only the money you receive will come from two different sources – CSRS and Social Security.
When you retire, your annuity will be calculated in the same way as it would for any regular CSRS employee. If you retire before you reach age 62, you will receive a pure CSRS annuity. When you become eligible for a Social Security benefit at age 62, OPM will have to determine how much your CSRS annuity will need to be offset. To do that, OPM will ask the Social Security Administration to provide two benefit computations – one for all of your Social Security-covered earnings, the other without the earnings that can be attributed to your CSRS Offset service. If you retire after age 62, those computations will be made when you retire.
Once OPM has the data from SSA, it will calculate the amount of your offset. By law, it will be the lesser of:
◦ the difference between your Social Security monthly benefit amount with and without CSRS-Offset service; or
◦ the product of your Social Security monthly benefit amount provided annually by the Social Security Administration, multiplied by a fraction, where the numerator is your total CSRS Offset service rounded to the nearest whole number of years and where the denominator is 40.
While OPM and SSA can calculate the amount of the offset using the first method, the second is the only one that employees can use. The good news is that it provides a reasonably close estimate. For your convenience, I’ve converted it into a formula:
Social Security Benefit x Total Years of Offset Service
40
It’s important to remember that the offset only applies to service under CSRS Offset. Any additional Social Security benefit to which you may be entitled based on non-federal employment will not be affected.
A note to the wise. If you retire before you are 62, be sure to apply for a Social Security benefit a few months before you reach that landmark birthday. That will give the Social Security Administration time to process your case and will reduce the possibility that you will experience a sudden drop in your pay when OPM offsets your CSRS annuity. However, if you do slip up, all is not lost. You will eventually get a retroactive payment from SSA.
