CSRS

The Civil Service Retirement System (CSRS) is the original retirement program for federal employees hired before 1984. Although it is closed to new participants, employees who enrolled before the cutoff date remain covered by the program.

Established in 1920, CSRS served as the sole federal retirement system until the Federal Employees Retirement System (FERS) was introduced in 1986 under President Reagan. CSRS operates as a defined benefit plan, offering eligible employees a guaranteed lifetime income upon retirement.

The retirement annuity provided by CSRS serves as an incentive for employees to continue their government service until they qualify for benefits. Contributions to the plan are made by the employee, their agency, and the federal government. If an employee leaves federal service before becoming eligible for retirement benefits, they can request a refund of their contributions (with interest), but the matching contributions made by the agency and the government are forfeited.

Unlike defined contribution plans such as 401(k)s and the Thrift Savings Plan (TSP), participation in CSRS requires mandatory employee contributions. CSRS employees (excluding those under CSRS Offset) do not pay into Social Security and, consequently, do not earn Social Security benefits based on their CSRS-covered federal service. If a CSRS employee qualifies for Social Security benefits through non-federal employment, the amount they receive may differ significantly from their projected benefits due to specific rules governing benefit calculations.

While CSRS employees may contribute to the Thrift Savings Plan, they do not receive employer matching contributions. Additionally, they have the option to participate in the Voluntary Contribution Plan (VCP), which allows them to make after-tax contributions of up to 10% of their lifetime federal income. The interest earned on these contributions is tax-deferred.


Need help making some calculations?

To determine the dollar amount of your future federal pension check, the following calculation is made: 

 

#1: For first 5 years of service: 

“High-three salary”  x  5  x 1.5%

 

#2: For next 5 years of service: 

“High-three salary”  x  5  x 1.75%

 

#3: For any remaining years of service:

“High-Three Salary”  x years-of-service  x 2.0%

 

Then, add the 3 numbers together to get your annual benefit amount.


Meeting rooms

Once a CSRS employee completes 41 years and 11 months of service, additional service time no longer increases their pension calculation. At this point, their CSRS pension will equal 80% of their high-three average salary—the maximum percentage allowed under the plan. If they continue working beyond this service threshold, the additional CSRS contributions are deposited into a separate account that earns interest. Upon retirement, employees can either withdraw these excess contributions as a refund or transfer them into the Voluntary Contribution Plan (VCP).

The "years of service" used in the pension calculation reflects an employee’s total creditable service, which is calculated monthly. For this reason, retiring at the end of the year or the end of a month is often recommended. For CSRS employees specifically, January 3rd is considered an ideal retirement date for maximizing benefits.

The "high-three" refers to the average of a CSRS employee’s three highest-paid consecutive 12-month periods. For most federal employees, this is their final 36 months of service, though this isn’t always the case.

A subset of the CSRS program, known as CSRS Offset, was created for employees who had a break in service and later returned to federal employment. CSRS Offset combines features of both CSRS and FERS. Unlike traditional CSRS employees, CSRS Offset employees contribute to Social Security, and these contributions reduce their CSRS pension.

Understanding the distinctions, benefits, and limitations of CSRS, CSRS Offset, and related plans is crucial for federal employees to secure their long-term financial stability.

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