Snapshot of the FERS Pension

The Federal Employees Retirement System (FERS) became effective January 1, 1987, replacing the Civil Service Retirement System (CSRS); all Federal civilian employees hired after this date are covered under FERS. FERS has three main components: The Basic FERS Retirement Pension, Social Security, and the Thrift Savings Plan (TSP). Our discussion will focus on your FERS pension, specifically, the four topics affecting the FERS pension, which are: The FERS retirement options, pension calculation, creditable service issues, and the FERS supplement.

When Can You Start Your Pension?

Eligibility for the FERS pension is primarily determined by age and years of creditable service.

Eligibility for the FERS pension (also called FERS annuity) is primarily determined by your age and number of years of creditable service. In some cases, you must have reached the Minimum Retirement Age (MRA) to be eligile. The four most common FERS pension options are: immediate, deferred, early, and disability, each with its own requirements.

Immediate and Deferred Retirement

An immediate retirement starts the first full month after you separate from service. While a deferred retirement begins at a future date when you have satisfied the eligibility requirements. If you leave Federal service before you meet the age requirements for an immediate retirement, you may be eligible for a deferred retirement. Though, you must fulfill one of the following combinations of age and years of creditable service for both options:

  • Age 62 with 5 years
  • Age 60 with 20 years
  • At least the MRA with 30 years, or
  • At least the MRA with 10 years (pension is permanently reduced by 5 percent for each year under age 62, the reduction is avoided if pension is deferred until age 62)

Early Retirement

The early retirement benefit is available in certain involuntary and voluntary separations during a “major reorganization or reduction in force.” To be eligible, you must either be age 50 with 20 years of creditable service or have 25 years of creditable service at any age.

Disability Retirement

Disability retirement requires at least 18 months of service and FERS coverage when disability occurred.

To be eligible for disability retirement, you must have at least 18 months of service and must have become disabled while covered by FERS. Additionally your disability must be expected to last at least one year. The agency must also certify that it is unable to accommodate your disability in your current position, or any vacant position you are qualified for at the same grade and within the same commuting area.

How is Your Pension Calculated?

The FERS pension is based on the average of your highest-paid consecutive 3 years of service (“high-3”), multiplied by your years of creditable Federal service, and by a percentage multiplier (either 1% or 1.1%). The “high-3” salary is time-weighted and includes basic pay, locality pay adjustments, and shift differentials, but not overtime, bonuses, or payments for unused annual leave. The following is the formula used to compute your standard or enhanced pension:

High-3 Salary X Years of Creditable Service X % Pension Multiplier = Annual FERS Pension

The FERS pension provides an incentive for you to work at least 20 years and until age 62 by increasing the standard multiplier used in your pension computation from 1% to the enhanced multiplier of 1.1%. If you retire under the Early or Deferred retirement option, your pension will be calculated using the standard multiplier.

Disability Retirement Computation

Under the Disability retirement you will receive 60% of your high-3 salary minus 100% of your Social security benefit for the first year. After the first year, you will receive 40% of your high-3 salary minus 60% of your Social Security benefit. However, you are entitled to your earned pension benefit in both instances if it is larger. When you reach age 62, your pension will be recalculated as if you had retired that year.        

Special Provision Retirement Formula

If you are a law enforcement officer, firefighter, or air traffic controller and are eligible for the immediate retirement, you may retire at an earlier age with the enhanced multiplier used to compute your pension. The following is the formula used:

High-3 Salary X First 20 Years of Creditable Service X 1.7% = A

High-3 Salary X Remaining Years of Creditable Service X 1% = B

A + B = FERS Special Provision Annual Pension

Creditable service

Creditable service refers to the years of service when your salary was subject to FERS deductions. However, there are exceptions, and you may be able to receive creditable service under the following scenarios: non-deduction, refunded service, and military service.


You may have non-deduction service (also called non-deposit service) from a period in your career when you were ineligible to make FERS contributions. Typically, this period would have occurred if you worked as either a temporary or seasonal employee. If the non-deduction occurred before January 1, 1989, you may be eligible to make a deposit for that period (generally, 1.3% of salary plus interest), allowing you to include that time as creditable service in your pension computation.


A redeposit is when you pay back refunded FERS contributions. For instance, if you leave the Federal Government and request a refund of your FERS deductions, you surrender your right to a pension for the period of service that the refund covers. However, if you return to Federal Government service, you may redeposit the refund with interest to recover your right to your prior creditable service. If you decide not to make a redeposit upon reemployment, your prior service will only be used for determining your retirement eligibility but not for computing your pension.

Military Service

The general rule is that your military service is creditable for retirement purposes if it was active service and you received an honorable discharge. Additionally the service must have been performed before your separation from Federal civilian employment. To add your military service to your creditable service for computation of your pension, you must make a deposit based on your military salary plus interest; the exact amount of the deposit will depend on the period you served. However, “Buying back” your military time may not be advantageous if you are retired military, as it is often requires that you waive your military pension (some exceptions exist).

Special Retirement Supplement

If you retire before age 62, you may be eligible for a pension supplement called the Special Retirement Supplement (SRS), also known as the FERS Supplement. The SRS was designed to bridge the gap between when you retire and age 62 (the age you become eligible for Social Security). As we discussed, Social Security is a key component of your FERS retirement and therefore the FERS supplement represents what you would receive if you were eligible to receive Social Security.

To be eligible for the SRS, you must be under age 62, and eligible for immediate retirement, early retirement, or the special provision retirement.To estimate your SRS, take your Social Security benefit estimate at age 62 (provided by the Social Security Administration), divide it by 40, and then multiply the result by the number of years you’ve been a FERS employee (rounded to the nearest whole number).

If you have earnings from wages or self-employment that exceed the Social Security annual earnings limit, your SRS will be reduced or stopped until your earnings fall below the threshold. The earnings limit doesn’t apply if you are a special category employee until you reach your MRA.

They Don’t Make Them Like This Anymore

As a FERS employee you have a robust and distinct pension benefit that can help you achieve your retirement goals. And now that you understand the basic components of the FERS pension, you have the clarity to make informed decisions when planning your retirement.

Published by Jose Armenta, MsBA, CFP®, ChFC®, EA

Jose Armenta is a CERTIFIED FINANCIAL PLANNER™ professional who specializes in helping federal employees get the most out of their federal benefits. Jose’s experience serving federal employees has provided him with valuable insight into federal employees' unique financial planning needs.

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