FERS RETIREMENT

Congress created the Federal Employees Retirement System (FERS) in 1986, and it became effective on January 1, 1987. Since its enactment, new federal civilian employees who have retirement coverage are covered by FERS.

FERS is a retirement plan that offers benefits from 3 different sources: a basic benefit plan, Social Security, and the Thrift Savings Plan (TSP). 2 of the 3 parts of FERS (Social Security and TSP) can carry into your next job if you leave the federal government before retirement.

The basic benefit and Social Security parts of FERS require you to pay your share each pay period. Your agency withholds the cost of the basic benefit and Social Security from your pay as payroll deductions; thus, your agency pays its part, too. Then, once you retire, you receive annuity payments each month for the rest of your life.

The TSP part of FERS is an account that your agency automatically sets up for you. Each pay period, your agency deposits into your account are equal to 1% of the basic pay you earn for the pay period. You can also make your own contributions to your TSP account, which your agency will match. These contributions are tax-deferred. The Thrift Savings Plan is administered by the Federal Retirement Thrift Investment Board.


CSRS Retirement

The Civil Service Retirement Act became effective on August 1, 1920, and established a retirement system for certain federal employees. It was replaced by the Federal Employees Retirement System (FERS) for federal employees who first entered covered service on or after January 1, 1987.

The Civil Service Retirement System (CSRS) is a defined benefit, contributory retirement system. Employees contribute to the expense of the annuities to which they become entitled. CSRS covered employees' share 7, 7.5, or 8% of pay to CSRS and, while they generally do not pay Social Security retirement, survivor, and disability (OASDI) tax, they must pay the Medicare tax (currently 1.45% of pay). The employing agency matches the employee's CSRS contributions.

CSRS employees may increase their earned annuity by contributing up to 10% of their basic pay for their creditable service to a voluntary contribution account. Employees may also donate a portion of their pay to the Thrift Savings Plan (TSP). There is no government contribution, but the employee contributions are tax-deferred. For more information about TSP, see the TSP website.

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