The FERS formula


Q. I’ve heard that the amount of government contributions to an employee’s retirement account is irrelevant. Why? How is the annuity calculated? Would I not receive a lump-sum payment (FERS refund) equal to the amount I contributed to the retirement fund?

A. The amount of retirement contributions — yours or the government — is irrelevant when computing an annuity. That’s because federal annuities are based on a defined benefit formula that doesn’t include them. For FERS, that formula is .01 x your high-3 x your years of service (.011, if you retire at age 62 or later with at least 20 years of service). When you retire, your retirement contributions wil be returned to you in the form of annuity payments. When that money runs out, you’ll begin receiving the government’s money. You would only receive a refund of your retirement contributions if you resigned from the government and asked for one. If you did, you’d cancel all future entitlement to an 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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