The interest rate will fall from the current 2.25 percent to 1.375 percent in 2021 on required deposits and redeposits into the federal employee retirement fund.
Those are needed to get credit for service for which no retirement contributions were taken or for which refunds were received at a break in service, as well as for payments to capture credit toward federal retirement for military service time.
The figure also is the interest rate paid on “voluntary contribution” retirement savings program, which allows CSRS (but not FERS) employees to set aside money in tax-deferred accounts that can be withdrawn as a lump-sum or turned into additional annuity payments at retirement.
ask.FEDweek.com: Redeposits for Service Credit CSRS and FERS:
Some federal employees leave the government, withdraw their retirement contributions, and then return to work for the government. In those cases, the prior service time is counted toward years of service for determining retirement eligibility and the salary paid is counted for the high-3 calculation if pertinent. However, for that service to count in the calculation of an annuity or a survivor annuity, a redeposit with interest must be made, except as noted below.