How disability annuities are calculated


In my Aug. 15 column, I went over the basic criteria that determine disability retirement eligibility. In this column, I’ll explain how disability annuities are calculated.

Under CSRS
If you are a Civil Service Retirement System employee, your annuity will be the higher of your earned annuity or a guaranteed minimum annuity.

Your earned annuity, as with any other CSRS annuity, is the sum of three factors: 1.5 percent of the average of your highest three consecutive annual salaries, your high-three, multiplied by five years of service; plus 1.75 percent of your high-three, multiplied by five more years of service; plus 2 percent of your high-three multiplied by all additional years of service. The guaranteed minimum annuity is the lower of two numbers: 40 percent of your high-three or the annuity you would have earned if you had worked to age 60. If you have 22 years or more of creditable service or if you are 60 or older when you retire, your disability benefit will equal your earned benefit.

If you are receiving military retired pay or veterans compensation in lieu of military retired pay, your disability annuity will be based on your earned benefit unless the total of that benefit plus your military benefit is less than the guaranteed benefit. In that case, you’ll receive the additional amount needed to reach the guaranteed minimum.

Regardless of the age at which you retire on disability, you’ll receive any annual cost-of-living adjustments that are added to the annuities of other CSRS retirees.

The Office of Personnel Management will continue to check your disability retirement eligibility until age 60. After that, you will be considered permanently disabled. Unlike Federal Employees Retirement System employees, your disability annuity won’t be converted to a regular annuity.

Under FERS
The way a FERS disability annuity is computed depends on your age and service.

If you are already 62 years old and have at least five years of service but less than 20, you’ll receive your earned annuity. It will be computed using the standard FERS formula: 1 percent of your high-three multiplied by your years and full months of service. If you are 62 years old and have completed at least 20 years of service, the multiplier will be increased to 1.1 percent.

If you are under age 62 and not eligible for voluntary retirement, for the first 12 months you’ll be paid 60 percent of your high-three minus any Social Security disability benefit you receive. After the first 12 months, you’ll be paid 40 percent of your high-three minus 60 percent of any Social Security disability benefit.

If you retired before age 62, at age 62 your disability benefit will be recomputed as if you had worked to age 62. Your earned service time will be added to your time on the disability roll and the total multiplied by 1 percent. The product will be multiplied by your high-three on the day you went on disability retirement, and increased by all FERS cost-of-living adjustments between that date and age 62. At that point, you will no longer be a disability retiree but, instead, a regular retiree.

Just as is true of CSRS disability retirees, regardless of the age at which you retire on disability, you’ll be entitled to receive any annual COLAs that are added to the annuities of other FERS retirees.

What you won’t be able to receive if you retire before age 62 is the special retirement supplement, which approximates the Social Security benefit you earned while a FERS employee. Disability retirees aren’t eligible for that benefit.

Other notes
Some of you served under both CSRS and FERS. As a rule, when you apply for disability retirement, that CSRS service is treated as FERS service. However, there’s an exception: If the combined benefit for your CSRS and FERS service is greater than 60 percent of the earned annuity, you’ll receive your earned annuity. Unless you are totally disabled for any gainful employment, you won’t receive any federal tax benefit from being on disability retirement. OPM’s determination that you are disabled doesn’t meet IRS criteria for a tax-free benefit. However, a determination by the Social Security Administration may. For more information, go to or visit an IRS office.


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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