GS Retirement Formula - FERS And CSRS

Gs retirement formula is the FERS (Federal Employees Retirement System) annuity is calculated by multiplying your "high-3" average salary by your years of service, and then by a factor of 1% (or 1.1% for those retiring at age 62 or older with 20+ years of service).

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Here's a More Detailed Breakdown:

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High-3 Average Salary: This is the average of your highest three consecutive years of basic pay.

Years of Creditable Service: This includes all years and months of service as a federal employee.

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Multiplier:

1%: For those retiring under age 62 or at age 62 or older with less than 20 years of service.

1.1%: For those retiring at age 62 or older with 20 or more years of service.

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Formula:

Basic Formula: (High-3 Average Salary) x (Years of Service) x (1% or 1.1%) = Annual Annuity

Example: If you have a high-3 average salary of $90,000, 20 years of service, and are retiring at age 62 or older, your annual annuity would be calculated as: $90,000 x 20 x 1.1% = $19,800.

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Key Considerations:

• High-3 Average Pay: This is the average of your highest three consecutive years of basic pay, not necessarily your last three years.
• Creditable Service: This includes all years and months of service, even if not consecutive.
• Early Retirement: If you retire before age 62, your annuity may be reduced.
• Social Security: FERS is a multi-tiered system that includes a basic annuity, Social Security benefits, and a Thrift Savings Plan (TSP).
• Special Provisions: Certain federal employees, such as law enforcement officers, firefighters, and air traffic controllers, have special retirement provisions.

So basically,Your “high-3” average pay refers to the highest average basic salary you earned over any three consecutive years of service. These three years are typically your final three years of service, but they can also be an earlier period if your basic salary was higher at that time.

Basic pay includes your regular salary and any increases for which retirement deductions were taken, such as shift differentials. However, it does not include overtime, bonuses, or other additional payments.

If your total federal service was less than three years, your average salary is calculated based on the full length of your creditable federal service.

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FERS Minimum Retirement Age (MRA) Chart

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Important Notes:

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If a FERS employee has completed at least five years of service under CSRS before switching to FERS, that portion of their annuity will be calculated using the CSRS formula.

Certain FERS employees qualify for a Special Retirement Supplement, which provides an annuity equivalent to Social Security benefits earned while working in federal service. This supplement continues until they turn 62.

Eligibility for the Special Retirement Supplement:

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Employees may receive this supplement if they retire under one of the following conditions:

• After reaching their MRA with 30 years of service
• At age 60 with 20 years of service
• Under early voluntary retirement, which applies if:
• They are at least 50 with 20 years of service, or

They have at least 25 years of service at any age, provided their agency undergoes a reorganization, reduction-in-force (RIF), or transfer of function (in such cases, the supplement begins at the MRA and continues until age 62).

In cases of involuntary retirement, the supplement starts at the MRA and lasts until age 62.

To qualify for this supplement, employees transferring from CSRS or CSRS Offset to FERS must have completed at least one full calendar year of FERS-covered service.

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Computation for Non-Disability Retirements

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FERS Basic Annuity Formula

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The basic annuity under the Federal Employees Retirement System (FERS) is calculated based on your age, years of service, and high-3 average salary (the highest average salary over any three consecutive years of service).

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Special Retirement Provisions

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If you retired under one of the following special provisions, your annuity is computed differently:

Air Traffic Controllers, Firefighters, Law Enforcement Officers, Capitol Police, Supreme Court Police, or Nuclear Materials Couriers  

• 1.7% of your high-3 average salary for the first 20 years of service, PLUS
• 1% of your high-3 average salary for any service exceeding 20 years

Members of Congress or Congressional Employees (With at Least 5 Years of Service in Congress)  

• 1.7% of your high-3 average salary for the first 20 years of congressional service, PLUS
• 1% of your high-3 average salary for any other service

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Retirement with CSRS Component (Transferred to FERS)

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If you transferred to FERS and had at least 5 years of prior creditable civilian service under either:

• The Civil Service Retirement System (CSRS), or
• Social Security (but not both),

Your annuity will have two components:

1. FERS Component (calculated using the FERS formula above)
2. CSRS Component (calculated as follows)

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Computation of CSRS Component

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Special CSRS Provisions

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• Firefighters, Law Enforcement Officers, Nuclear Materials Couriers:

• 2.5% of your high-3 average salary for the first 20 years of service, PLUS
• 2% of your high-3 average salary for any service beyond 20 years

• Members of Congress or Congressional Employees:

• 2.5% of your high-3 average salary for congressional service, military service while on leave from Congress, and up to 5 years of other military service, PLUS
• 1.75% of your high-3 average salary for any other service up to 10 years (when combined with 2.5% service), PLUS
• 2% of your high-3 average salary for any service beyond 10 years

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Understanding the FERS annuity formula is just the beginning—strategic planning is key to making the most of your federal retirement. At Federal Pension Advisors, we specialise in helping federal employees navigate their retirement options, ensuring they maximise their high-3 average salary calculations, years of service credit, and annuity benefits.

Whether you’re planning for early retirement, optimising your Thrift Savings Plan (TSP), Federal retirement planning or strategising for Social Security integration, our expert team provides tailored solutions to align with your long-term financial goals. Don't leave your retirement to guesswork—let us help you secure the future you’ve worked hard for.

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CSRS Offset (Immediate or Early) Retirement

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The basic annuity for a CSRS Offset employee is calculated the same way as for a regular CSRS employee. However, there is a key difference when the employee becomes eligible for Social Security.

If a CSRS Offset employee retires and qualifies for Social Security benefits at age 62 (or later, if they retire after 62), their CSRS annuity will be reduced by the portion of their Social Security benefit attributable to their offset service. If they are not eligible for Social Security at that time, their CSRS annuity will remain unaffected.

When an employee qualifies for Social Security, the Social Security Administration (SSA) calculates their benefit in two ways:

• Including earnings from their CSRS Offset service
• Excluding those earnings

These calculations are sent to the Office of Personnel Management (OPM) to determine the appropriate reduction to the CSRS annuity.

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The offset reduction is the lesser of:

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• The difference between the Social Security benefit with and without offset service, or
• A fraction of the Social Security benefit, calculated as follows:

(Social Security Benefit × Total Years of Offset Service) ÷ 40

In most cases, this offset results in little to no change in overall retirement income, and in some situations, retirees may even receive slightly more.

If you do not return to CSRS Offset employment, your annuity reduction remains the same as when you first became eligible for Social Security. Future employment in a Social Security-covered job will not affect this reduction.

Note: If your survivors qualify for Social Security benefits based on your CSRS Offset service, their benefits from OPM will also be reduced using the same formula.

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Disability Retirement Computation (FERS)

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FERS disability benefits vary depending on the retiree’s age and years of service at retirement. Additionally, these benefits are recomputed after the first 12 months and again at age 62 if the retiree was under 62 at the time of disability retirement.

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FERS Disability Computation for Retirees Who Are:

• Age 62 or older at retirement, OR
• Eligible for immediate voluntary retirement

These retirees receive an “earned” annuity based on the standard FERS annuity formula:

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FERS Disability Computation for Retirees Who Are:

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• Under age 62 at retirement, AND
• Not eligible for immediate voluntary retirement

These retirees receive disability benefits in two phases:

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First 12 Months:  

• 60% of the high-3 average salary
• Minus 100% of any Social Security benefit received for that month
• If the earned annuity is higher, the retiree receives that amount instead

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After the First 12 Months:  

• 40% of the high-3 average salary
• Minus 60% of any Social Security disability benefits received for that month
• If the earned annuity is higher, the retiree receives that amount instead

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Recomputation at Age 62  

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At age 62, the disability annuity is recalculated as if the retiree had continued working until the day before their 62nd birthday and then retired under FERS.

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New Annuity Calculation Based on Total Service:

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• Total Service: Includes actual years worked plus time spent receiving a disability annuity
• Average Salary: Adjusted to reflect all FERS cost-of-living increases received during disability retirement