Annuity penalty

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Q. If I’m at my minimum retirement age, have 20 years of service, retire and postpone my retirement until 59 instead of 60, would my annuity be reduced by 5 percent or 15 percent?

A. You’d be retiring under the MRA+10 provision. Therefore, your annuity would be reduced by 5 percent for every year you were under age 62.

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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 fedexperts@federaltimes.com.

6 Comments

  1. So, just to confirm because this stuff gets confusing….If I have at least 20 years of service at my MRA and postpone my retirement until age 59, my annuity will be reduced by 5% from 60 and not 15% from 62? Thanks everyone!

    • No. Because you will be applying for your deferred annuity at 59 instead of 60, you’ll be retiring under the MRA+10 provision. Therefore, your annuity would be reduced by 5 percent for every year you were under age 62.

      • Reg, A slight variation to original question: If I’m at my minimum retirement age, have 20 years of service, resign under MRA+10 and postpone my retirement until 62, will my annuity be calculated using the 1x or 1.1x factor?

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