If you are covered by Civil Service Retirement System Offset, you are part of the smallest and least understood group of federal employees. You were hired under CSRS, had at least five years of service, left government, had a break in service of more than one year and returned after Dec. 31, 1983. When you did, you were given a choice: be covered by Federal Employees Retirement System, or by CSRS and Social Security. You chose the latter.
Because you are covered by both CSRS and Social Security, you are eligible for benefits under both. However, you’ll receive the same amount you would if you were exclusively covered by CSRS. The only difference is that the money will come from two different places: The Office of Personnel Management and the Social Security Administration.
As a CSRS Offset employee, your retirement annuity will be calculated the same way that it is for any CSRS employee. To figure out what that would be, use the following formula:
- 0.015 percent x your “high-3” average salary x 5 years of service, plus
- 0.0175 x your high-3 average salary x 5 years of service, plus
- 0.02 x your high-3 x all other year and months of service.
The sum of those three calculations is your estimated retirement annuity. The nearer you are to retirement, the more accurate this estimate will be.
If you retire before age 62, you’ll receive a pure CSRS annuity. When you become eligible for a Social Security benefit at age 62, you annuity will be offset by the amount of Social Security benefit earned while a CSRS Offset employee. The offset is automatic and will occur whether or not you apply for a Social Security benefit.
When you are close to age 62, OPM will ask SSA for an entitlement determination. SSA will send OPM two benefit computations — one for all Social Security-covered earnings, the other without earnings attributable to CSRS Offset service. (If you retire at or after age 62, the offset calculation will be made when you retire.)
OPM will calculate the reduction that needs to be made in your gross CSRS annuity. By law, it will be the lesser of:
- The difference between your Social Security monthly benefit amount with and without CSRS-Offset service; or
- The product of your Social Security monthly benefit amount, with federal earnings, multiplied by a fraction, where the numerator is your total CSRS Offset service rounded to the nearest whole number of years and where the denominator is 40. Expressed as a formula, it looks like this: Social Security benefit x total years of Offset service / 40.
For example, using the first calculation, if you had three years and eight months of CSRS Offset service and were entitled to $600 a month, but only $550 with the CSRS Offset service removed, the monthly reduction would be $50.
Using the second calculation, you’d multiply that $600 by four (your years of service rounded up to the nearest whole number). That would amount to $2,400.
If you divide 2,400 by 40, the reduction would be $60. However, because the offset must be the lesser of the two computations, the reduction in your gross CSRS annuity would be $50. Future cost-of-living allowances would be applied to the amount remaining after the reduction.
If you retire from CSRS Offset before age 62, you should apply for a Social Security benefit a few months before you reach your 62nd birthday. That will give SSA time to process your case and avoid any interruption in the combined benefits you are entitled to receive. If you forget to do that in a timely manner, your CSRS annuity will still be offset and you will eventually get all the money you are entitled to under Social Security. However, it will come in the form of a retroactive payment.
Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your questions to firstname.lastname@example.org.