FERS & CSRS Monthly Annuities: The First Puzzle Piece of the Retirement Benefits Puzzle - United Benefits

FERS & CSRS Monthly Annuities

Monthly Annuities

Your pension, also called a monthly annuity, is the fundamental basis for your overall retirement income. Most federal employees fall under either the Federal Employee Retirement System (FERS) or the Civil Service Retirement System (CSRS). 

The monthly annuity from FERS and CSRS is a defined annuity, which means that you contribute a specific amount based on your salary while you are working. Then your benefit amount is based on a formula that takes into account a variety of factors, including your yearly income, years of service, your age, and what category your job title falls under. 

When you can start your pension/monthly annuity depends on two factors – your age and your years of service.

  • With 30 years of service you can retire at age 56 or 57 depending on your agency
  • With 20 years of service you can retire at age 60
  • With 5 years of service you can retire at age 62


In 1920, the Civil Service Retirement Act created 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 and after January 1, 1987. Federal workers who did not choose to convert from CSRS to FERS remain covered under CSRS.

CSRS is a classic pension plan with one component. Employees contribute between 7-8% of their paycheck to the system, and then when they retire they receive a relatively large annuity compared to their FERS counterparts. This annuity is intended to fully fund the employees retirement and includes cost of living adjustments with no restrictions on age.

Now, CSRS employees can also choose to contribute to the Thrift Savings Plan but unlike the FERS employees they do not receive matching from the federal agency.


The Federal Employee Retirement Systems (FERS) became the default retirement system for new federal employees on January 1, 1987. The biggest difference between CSRS and FERS is that while CSRS has one component – the pension – to fund retirement, FERS has three: the pension, the Thrift Savings Plan, and Social Security.

In addition to the monthly annuity, a FERS employee will also have Social Security and a Thrift Savings Plan (TSP) where they can get matching of at least 5%. This gives FERS employees more control over their retirement funds and more flexibility with retirement planning.

The FERS cost of living adjustment is not available until the employee reaches age 62. The COLA is equivalent to that given to military retirees and Social Security recipients.

FERS Annuity Supplement/Gap Coverage

Additionally, if you retire before the age of 62 and are a FERS employee, you may be eligible to receive the FERS Annuity Supplement/Gap Coverage. It bridges the gap until you reach Social Security at the age of 62, and is based on years of service and your projected Social Security income at 62. If you retire at your minimum retirement age and have 30 years of service or you retire at 60 with 20 years of service, you will be eligible for the FERS Annuity Supplement/Gap Coverage. If you retire after 62 with at least 20 years of service, then you will be eligible for a 10% increase in your FERS annuity since you never received the supplement.

Special Provisions

The Federal Employee Retirement System (FERS) and the Civil Service Retirement System (CSRS) are the retirement annuity programs for federal employees. Additionally, you may fall under Special Provisions depending on your job category that may provide enhancements to your retirement package. In short, a number of government careers which involve more physical or mental stress are provided with options for earlier retirement.

There are six agencies that are eligible for Special Provision retirement.

  • Air Traffic Controllers
  • Firefighters
  • Law Enforcement Officers (includes Customs & Border Protection Officers)
  • Capital Police
  • Supreme Court Police
  • Nuclear Material Couriers

If you have 25 years of service in any of these agencies, you can retire at any age. If you have at least 20 years of service, you can retire at age 50. For some agencies, there’s a mandatory retirement age at 57 (56 if you’re in air traffic control).

Each agency has special rules and there are many other factors to consider, including the impact on your Special Retirement supplement, Thrift Savings Plan, and cost of living adjustments. You can schedule a free appointment with a United Benefits Retirement Specialist to discuss your unique situation and gain a better understanding of how the Special Provisions Retirement system will work for you.

Common Questions About Your Monthly Annuity/Pension

Regardless if you are covered under FERS or CSRS, many people have questions about their monthly annuity when it comes time to retire.

Do I receive my pension right after I retire?

No. It may take anywhere from 6-12 weeks to get your interim pay, and you’ll have to wait 4-6 months after you retire to receive your full pension.

What will my pension be?

Your pension is based on a variety of factors, including your yearly income, years of service, your age, and what category your job title falls under. A United Benefits Retirement Specialist can help you estimate your pension benefit.

What happens when I meet my minimum retirement age but don’t have the required years of service?

If you have 10 years of service and have met your minimum retirement age, then you can retire with a pension. This is called a MRA+10 retirement. However, your pension will be reduced by 5% for each year before the age of 62.

For example, if you have 10 years of service and want to retire at 57, and your estimated monthly pension is $1000, it would be reduced by 30% (6 years x 5%), leaving you with $700/month.

What is a deferred monthly annuity?

If you don’t have the required number of years for a full retirement, you can defer your pension if you have at least 5 years of service. That means you will start receiving the full amount of your pension at the age of 62 with no reduction.

For example, if you have 10 years of service and want to retire at 57, and your monthly pension would normally be $1000. Instead of taking a 30% reduction by drawing your pension immediately upon retirement, you can defer your pension and take the full $1000 at 62.

Why would I choose a MRA+10 retirement over a deferred monthly annuity?

Your Federal Employee Health Benefits (FEHB) health insurance is tied to your retirement. You have to draw a monthly annuity in order to continue your FEHB health insurance. Many people choose to take a MRA+10 retirement in order to continue their government funded FEHB health insurance into retirement. This way, on average they only have to pay 30% of the total cost of their health insurance. Otherwise, purchasing health insurance directly they would have to pay 100% of the total cost. This negates any benefit of deferring their monthly annuity in order to receive the full pension.

Who do I talk to about my retirement benefits after I retire?

Your retirement benefit package will include a claim number and then you will receive a one-time PIN that will allow you to set a password and log into the Office of Personnel Management (OPM) website. The OPM website will show you when you’ll be paid, what your gross is, and what taxes have been withheld. After you retire, OPM will be your best resource for questions.

What happens to my pension after I pass away?

It depends on what your elections are in your retirement package. United Benefits Retirement Specialists can help you walk through your survivor benefit choices.

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