Annuity calculation


Q. I am in the Department of the Interior Bureau of Reclamation. I will have 30 years of federal service on Feb. 2, 2016, and will be 60 on Jan. 24, 2016. My minimum retirement age is 56. The Office of Personnel Management’s Web page says if you retire before 30 years service or MRA, your pension is reduced 5 percent for each year unless you have more than 20 years service and your benefit starts at age 60 or later. Does this mean that if I retire at age 59 but defer pension until I am 60, my pension would be .01 times 29 times average of high-3? So, if I defer my pension, I lose one year of my pension. But if do not defer my pension, I lose 5 percent of it each year I am retired (in both instances, I would lose the difference between .01 times 29 times average high-3 and .01 times 30 times average high-3)?

A. I’m going to cut to the chase. If you retire after reaching your MRA but have fewer than 30 years of service, your annuity would be calculated using the .01 multiplier, and it would be reduced by 5 percent for every year (5/12 percent per month) that you are under age 62. You could postpone the receipt of your annuity to a later date to reduce or eliminate the age penalty. Note: If you waited until you were age 60 to retire, you would only need to have 20 years of service to retire.

P.S. You can’t retire before your MRA. You could only resign and apply for a deferred annuity.


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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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