Annuity reduction


Q. I have 10 years in FERS, and I’m 60. I am being offered a Voluntary Separation Incentive Payment in August. I turn 61 in October. It is my understanding that my annuity be reduced by 5 percent for each year I’m under 62. Since I am turning 61 in October, will they only reduce my annuity by 5 percent instead of 10 percent? Lastly, when I turn 62, will my annuity reduction stop and go back to what I would have received at the age of 62?

A. Your annuity will be reduced by five-twelfths of 1 percent for every month you are less than age 62. That reduction will be permanent.


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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


  1. David McKay on

    Since your are MRA+10, you have the option of postponing reciept of your FERS Annuity payments till age 62 to avoid the early retirement penalty! Or just take the penalty since it will be less than 5% and you can make it back in a few years via cost of living increases.

    If you had FEHB and/or FEGLI coverage while working you can elect to resume coverage again after you start receiving your FERS retirement payments – your premiums will be deducted from your FERS annuity on a monthly instead of bi-weekly basis. Just make sure you opt to POSTPONE, not DEFER your retirement annuity.

  2. What’s the difference between VERA and VSIP?
    Are they the same?
    Can you retire under VERA without receiving cash incentives?

  3. FAA Employee on

    VSIP = Voluntary Separation Incentive Pay
    VERA = Voluntary Early Retirement Authority

    From what I’ve seen, if there is a VSIP, there is normally a VERA at the same time, allowing you to retire early without penalty (under certain conditions).

    • Actually, it’s the reverse, with one modification. If there is a VERA, there is often – but not always – a VSIP.

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