Reg Jones Expert's View

If you are one of the many FERS employees who have at least five years of CSRS service under their belts, you will have a CSRS component in your annuity when you retire. The calculations used to determine your annuity will be different for the FERS and CSRS elements.

Whether you’ll be eligible to retire is controlled by FERS rules. Assuming that you meet the following age and service requirements: 62/5, 60/20, or your minimum retirement age (MRA) and 30, you will be eligible for an immediate retirement. In that case, your FERS annuity will be calculated using the following formula: 1 percent x your high-3 average salary x your years and full months of FERS service. If you are age 62 or older and have at least 20 years of service, multiply your high-3 by 1.1 percent.

Your CSRS component will be calculated using the standard CSRS formula:

  • 1.5 percent x your “high-3” average salary x your first 5 years of service


  • 1.75 percent x your high-3 average salary x the years and full months of service between 5 and 10 years


  • 2 percent x your high-3 average salary x all years and full months of service over 10 years.

The sum of the FERS and CSRS calculations is your basic annuity amount.

There also are variations in how the two components are treated. Under FERS, if you are under age 62 when you retire, your FERS benefit will be reduced by 5 percent for every year you are under that age unless you 1) have at least 20 years of service and your annuity begins at age 60 or later or 2) are eligible to retire early under either the Voluntary Employee Retirement Act (VERA) or Voluntary Separation Incentive Program (VSIP). However, if you are under 55 when you take an early retirement, the CSRS portion of your annuity will be reduced by 2 percent for each year you are under age 55.

While there won’t be any age reduction in the FERS benefit if you retire early under a VERA or VSIP, you will only receive the FERS Special Retirement Supplement (SRS) if you have reached your Minimum Retirement Age (MRA) when you retire. (The SRS approximates the amount of Social Security benefit you will be entitled to based on your FERS service and is paid until age 62.) If you haven’t reached your MRA, the SRS won’t begin until you reach your MRA.

Finally, if you are under Social Security full retirement age (65 and two months for those born in 1938, rising to 67 over the next two decades depending on year of birth) and receiving a Social Security benefit, you will be subject to the earnings limitation provision. Therefore, for every $1 in earnings will be deducted for every $2 you earn above the annual limit. In 2003 that amount is $11,520. In the year you reach your full retirement age, your benefits will be reduced by $1 for every $3 you earn above a higher limit. This year that limit is $30,720.