Expert's View

Reg Jones

By now most employees who planned to retire before the end of the leave year have either left or put in paperwork to do so. That still leaves a number of employees who may be eligible for either a deferred or a postponed annuity. This time around, let’s focus on the deferred annuity.

A deferred annuity is one where you leave the federal government and:
• don’t meet the age and service requirements to retire,
• do have at least five years of creditable service,
• don’t take a refund of your retirement contributions, and
• do apply for an annuity when you reach the right age.


If you are a CSRS employee in this situation, your deferred annuity can begin at age 62. If you are a former FERS employee, you have more options. You can retire at age 62 with at least five years of service, age 60 if you have at least 20, and at your minimum retirement age (varying from 55 to 57 by your year of birth) with 30. You can also retire under the MRA+10 provision, but with a big age-reduction penalty, unless you postpone the receipt of your annuity to a later date.

If you leave under those conditions and later apply for a deferred annuity, it will be based on your years and full months of service and your high-3 on the day you left government. Just that and nothing more. If you had any unused sick leave to your credit when you left, it won’t be added to your actual service and used to increase your annuity. Nor will your annuity be increased by any cost-of-living adjustments (COLAs) that have been given to retirees after you left government.

However, if you were covered by CSRS, you will be entitled to any subsequent COLAs once you begin receiving your annuity. On the other hand, if you were covered by FERS, with rare exception you won’t be entitled to any COLA until you reach age 62.

There is one more downside to retiring on a deferred annuity. Even if you were enrolled in the FEHB and/or FEGLI programs for 5 years before you left government, you won’t be able to reenroll in either one of them when you begin receiving your annuity. The only way you could regain that coverage would be to return to work for the government in a position that offers those benefits.

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FERS Retirement Bundle: 2021 FERS Guide & TSP Handbook