It seems as though the benefits under FERS are a lot less than the benefit under CSRS, so why would someone transfer to FERS?

It seems as though the benefits under FERS are a lot less than the benefit under CSRS, so why would someone transfer to FERS?

"Well, there are trade-offs. The typical CSRS employee who switches to FERS, will be giving up as much as one percent of the average salary for each year of service. However, the employee may be able to make up that one percent and even more from the additional Social Security benefit he or she can earn and from the additional monies in the TSP account. In addition, FERS offers more flexibility and portability than CSRS, especially for those people who may leave government service before they retire.

"There is one more important point that I need to make here. CSRS Offset employees won't retain the full benefit that you've earned to date under CSRS. If you elect to transfer to FERS your service that was subject to both CSRS and Social Security withholdings will be credited under FERS rules in the computation of the FERS basic benefit.

"So, for example, if you have 20 years of service under CSRS, the last five years being Offset service, and you transfer to FERS and work 15 more years, you will be entitled to a CSRS part based on 15 years of service, and a FERS part based on 20 years of service. The five years of offset service will be credited under FERS computation rules. As a result, the CSRS part would equal 26.25 percent of the high-3 average salary, and the FERS part would equal 20 percent. The total benefit would equal 46.25 percent of the high-3. Many offset employees wonder if they will be able to make additional TSP contributions to cover the period of offset service, and will they get agency contributions as well. There is no provision in the law to allow for retroactive contributions in this situation.

"Offset employees need to think very carefully about transferring to FERS. The more offset service an employee has, the more he or she could lose by transferring to FERS, although there may be other reasons FERS would make a good choice."

-OPM Retirement Benefits Specialist Ed Chimelowski

Return to open season guide