FERS Postponed Retirement

A FERS Postponed Retirement is when you separate from service with at least 10 years of creditable service, and you have at least reached your MRA (Minimum Retirement Age). But instead of drawing your pension when you separate from service – you postpone it until later.

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Under the Federal Employees Retirement System (FERS), employees who reach their Minimum Retirement Age (MRA) with at least 10 years of creditable service have the option to retire early. However, choosing to commence retirement benefits immediately results in a permanent reduction of 5% for each year (or 5/12 of 1% per month) the retiree is under age 62. To avoid this reduction, employees can opt for a postponed retirement, delaying the start of their annuity until a later date, thereby receiving unreduced benefits.

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Key Points:

• Postponed Retirement Eligibility: Available to FERS employees who have reached their MRA (typically between ages 55 and 57, depending on birth year) with at least 10 years of service.
• Avoiding Age-Based Reduction: By postponing the commencement of retirement benefits, retirees can avoid the 5% per year reduction applied to those who start receiving benefits before age 62.
• Health and Life Insurance Coverage: Employees who choose postponed retirement can reinstate their Federal Employees Health Benefits (FEHB) and Federal Employees' Group Life Insurance (FEGLI) upon the commencement of their annuity, provided they were enrolled in these programs for the five years immediately preceding their separation.
• Application Process: To initiate postponed retirement benefits, individuals must submit Form RI 92-19 ("Application for Deferred or Postponed Retirement") to the Office of Personnel Management (OPM). It's recommended to file this application approximately 60 days before the desired annuity start date.

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Considerations:

Deferred vs. postponed retirement fers: It's crucial to distinguish between deferred and postponed retirement. Deferred retirement applies to those who leave federal service before qualifying for immediate benefits and wish to start them later. In contrast, postponed retirement is for those eligible for immediate benefits (under the MRA + 10 provision) who choose to delay them to avoid reductions and retain insurance benefits.

Insurance Eligibility: Only those opting for postponed retirement can reinstate FEHB and FEGLI coverage upon annuity commencement. Those choosing deferred retirement are not eligible to reinstate these benefits.

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Real-Life Examples of FERS Postponed Retirement

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Example 1: Federal Employee Avoiding the Early Retirement Penalty

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Maria, a 56-year-old federal employee, has worked for the government for 25 years. She has reached her Minimum Retirement Age (MRA) and qualifies for retirement under the MRA + 10 rule. However, if she starts receiving her annuity immediately, her pension will be reduced by 5% for each year she is under age 62 (a total of 30% reduction).

Instead, Maria chooses postponed retirement. She leaves federal service but delays her annuity payments until she turns 62, allowing her to receive full benefits with no reduction. Since she was enrolled in Federal Employees Health Benefits (FEHB) for at least five years before leaving, she can reinstate her health insurance when she begins receiving her annuity.

Example 2: Retiring Early While Keeping Health Insurance Benefits

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James, a 58-year-old federal employee, has 15 years of service. He qualifies for MRA + 10 but does not want to take an immediate annuity due to the early retirement penalty. Instead, he postpones his annuity until age 60, which is when he will have at least 20 years of service—making him eligible for full benefits with no penalty.

By choosing postponed retirement instead of deferred retirement, James retains the ability to reinstate his FEHB health insurance when his annuity starts at age 60. This ensures he remains covered without having to find private insurance.

Example 3: A Federal Employee Wanting to Work in the Private Sector Before Fully Retiring

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Linda, a 57-year-old federal worker, has 30 years of service and qualifies for an immediate FERS retirement with no penalty. However, she wants to transition into a private-sector job while keeping her future FERS annuity intact.

Instead of retiring immediately, Linda postpones her retirement benefits. This allows her to work elsewhere while preserving her eligibility for FEHB and FEGLI benefits when she later starts drawing her annuity. When she decides to begin receiving her pension at age 62, she gets full benefits with no penalty and can resume her federal health insurance.

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Difference Between Deferred and Postponed Retirement FERS

The difference between Deferred FERS Retirement and fers postponed retirement lies in when you start receiving your pension and whether you retain health and life insurance benefits.

Deferred FERS Retirement

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• Available if you leave federal service before reaching the minimum retirement age (MRA) but have at least 5 years of service.
• You can apply for your pension later, once you reach the appropriate retirement age (typically 62 for full benefits, or earlier with reduced benefits).
• No access to FEHB (Federal Employees Health Benefits) or FEGLI (Federal Employees' Group Life Insurance) in retirement.
• No credit for sick leave.

fers postponed retirement

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• Available if you retire under the MRA+10 provision (Minimum Retirement Age with at least 10 years of service).
• You delay receiving your pension to avoid or reduce the early retirement penalty (5% per year before age 62).
• You can reinstate FEHB and FEGLI when your pension starts, as long as you were enrolled in these programs when you left federal service.
• Sick leave is credited toward your pension calculation.

Key Difference

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• Deferred retirement permanently loses FEHB and FEGLI.
• Postponed retirement allows you to resume FEHB and FEGLI when you begin collecting your pension.

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Also read - will fers supplement be eliminated

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Postponed FERS Retirement Rules:

Eligibility for Postponed FERS Retirement

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• You must have at least 10 years of creditable civilian service before separating from federal service.
• You must have reached your Minimum Retirement Age (MRA) before separating. If you separate before reaching your MRA, you would qualify for a Deferred FERS Retirement, not a Postponed FERS Retirement.
• You must leave your FERS retirement contributions in the system.

How It Works

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• Later, when you are ready to start your pension, you contact OPM to activate your FERS annuity.
• A key condition is that you must have been eligible for an MRA+10 Retirement when you separated. This eligibility is what gives you additional perks over a Deferred Retirement.

Why Postpone Instead of Taking MRA+10 Retirement Immediately?

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• If you take your MRA+10 Retirement immediately, your pension is permanently reduced by up to 35% depending on how far you are from age 62.
• By postponing your pension, you reduce or eliminate this reduction and receive a larger annuity later.
• Biggest Advantage of Postponed FERS Retirement
• If you were eligible for FEHB (Federal Employees Health Benefits) when you separated, you can reinstate FEHB in retirement once you activate your pension.
• This is a major advantage over a Deferred FERS Retirement, where FEHB cannot be reinstated.

Who Should Consider Postponed FERS Retirement?

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• Postponed retirement makes sense only for those eligible for MRA+10 Retirement but who want to avoid the early retirement penalty.
• If you were eligible for MRA+30, 60+20, or 62+5, then there’s no reason to postpone—immediate retirement is the better option.

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How Does Postponed FERS Retirement Work?

Postponed FERS Retirement is an option under the Federal Employees Retirement System (FERS) that allows eligible federal employees to delay receiving their pension to avoid early retirement penalties while preserving key benefits like FEHB (Federal Employees Health Benefits).

Step 1: Meeting Eligibility Requirements

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To qualify for a Postponed FERS Retirement, you must:

• Have at least 10 years of creditable civilian service before you separate from federal service.
• Have reached your Minimum Retirement Age (MRA) when you separate.
• Leave your FERS retirement contributions in the system.
• Have been eligible for an MRA+10 Retirement (meaning you met the MRA and had at least 10 years of service when you separated).

Step 2: Separating from Federal Service

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Once you separate from federal service, you do not start your pension immediately. Instead, you postpone your annuity payments until a later date to avoid or reduce early retirement penalties.

Step 3: Choosing When to Start Your Pension

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You can apply to start your pension later by contacting the Office of Personnel Management (OPM). The key timing options are:

• At age 60 (if you have at least 20 years of service) – No reduction.
• At age 62 (if you have at least 5 years of service) – No reduction.
• If you start earlier, your pension will be permanently reduced by 5% per year for each year you are under age 62.

Step 4: Restoring Benefits Like FEHB

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One major advantage of postponing FERS retirement is that, if you were eligible for FEHB health insurance at the time of separation, you can reinstate it when you start receiving your pension. This is not possible with a Deferred Retirement.

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How Long Do You Have to Postpone Your FERS Retirement?

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When you choose Postponed FERS Retirement, you delay your pension until you meet the requirements for regular FERS retirement. Once you reach those requirements, you can start your pension without any reduction for early retirement under the MRA+10 rule.

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When Can You Start Your Pension?

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The age at which you can start your postponed pension depends on how much creditable service you had when you left federal service:

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Since most people considering Postponed Retirement have less than 20 years of service, they typically must wait until age 62 to avoid the pension reduction.

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How Is This Different from Deferred FERS Retirement?

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• In Postponed Retirement, you were already eligible for MRA+10 Retirement before you separated from service.
• The key advantage of Postponed FERS Retirement is that you can resume FEHB (Federal Employees Health Benefits) in retirement, but you cannot do this with a Deferred FERS Retirement.

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Why Postpone Instead of Taking MRA+10 Retirement Immediately?  

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If you start your pension as soon as you separate under MRA+10, your annuity is permanently reduced by 5% per year for every year you are under age 62. By postponing, you avoid this reduction and maximize your pension.

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