Q. I am a CSRS Offset retiree. I attended more than one pre-retirement seminar and was given examples of my retirement situation, along with reassurances that my retirement would closely follow the examples and that I was very fortunate to be CSRS Offset, and would be very happy.
I was told to check with Social Security to find out about my offset. Neither the Office of Personnel Management nor Social Security could know the exact amounts until I retired.
Following my retirement, everything, except Social Security, was in disorder for six months. OPM explained that they had to check with SS about the calculation of my offset, and that took some time. When I contacted SS, they said there was no offset for me because of my lengthy employment history and more than 30 years of SS payments (and I paid both CSRS and SS amounts since 1983).
The bottom line is, at the pre-retirement seminar, I was shown and walked through one method for calculating the offset and told that there was also another and that the one with the lowest amount would be used to determine my offset. My eventual monthly OPM payments were about $1,000 a month less than those demonstrated in the example based on all that was known about my salary and SS payment history at the pre-retirement seminar. I realize that the pre-retirement amount could be off a little, but $1,000/month is a lot. Each time I tried to sort this out, I was told by SS that there was no offset, and I was told by OPM that they used the offset given to them by SS.
To this date, this matter has never been satisfactorily explained and resolved. SS even sent me a letter stating that I was not subject to any offset, and OPM continues to state that my pension offset was based on the information supplied to them by SS. Can you supply me with someone to walk me through the calculations that were apparently so far from real?
A. While I’m not able to do case work, I may be able to explain how CSRS Offset works. You were put in CSRS Offset because you were a former CSRS employee who had a break in service of over a year and then returned to work for the government. Your retirement deductions were split in the following way: 0.8 percent to CSRS and 6.2 percent to Social Security. If you retired before age 62, at age 62, your CSRS annuity would be offset (reduced) by the amount of Social Security benefit you earned while covered by CSRS Offset. In general, the amount of money you received would be the same, it would just come from two different places: OPM and the Social Security Administration. If you retired at age 62 or later, the offset would occur on the day you retired.
The method used to determine the offset requires, among other things, the establishment of your average indexed monthly earnings (AIME), something that us mere mortals can’t do. As a result, most who are affected by the offset use the following formula to approximate what the offset will be:
Take the Social Security benefit estimate at age 62, multiply it by your high-3, and divide the product by 40.
However, because a portion of you annuity comes from your earlier period of pure CSRS service, you’d be subject to the windfall elimination provision. The WEP would reduce your Social Security benefit if you had fewer than 30 years of substantial earnings under Social Security.
