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, you are a CSRS Offset employee. Your numbers may be small, and getting smaller with each passing year. However, for that reason you may not be getting the information you need to smoothly make the transition from employment to retirement.
As a CSRS Offset employee, you are covered by the Civil Service Retirement System and Social Security. When you retire, you’ll be entitled to benefits under both systems. While you’ll get is the same amount of money you would have gotten had you been exclusively covered by CSRS, the money you receive will come from two different places – 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’ll receive a pure CSRS annuity. When you become eligible for a Social Security benefit at age 62, 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 based on your CSRS Offset employment. 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.
OPM and SSA can calculate the amount of the offset using the first method. You can’t. That’s why you’ll have to use the second one, which provides a reasonably close estimate of what you’ll receive. Here’s the formula:
Social Security Benefit x Total Years of Offset Service
FYI: 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 won’t be affected.
P.S. If you have fewer than 30 years of substantial earnings under Social Security, your Social Security benefit will be reduced because of the windfall elimination provision. I’ll explain how that works in next week’s article.