Q. I’m a FERS employee and plan to retire at minimum retirement age, which is 56. However, I’ll have fewer than 30 years of service. Is the 5 percent per year penalty based on each year short of 30 years, or is it based on each year short of age 62?
A. The MRA+10 provision allows FERS employees to retire at their minimum retirement age with fewer than 30 years of service. If you retire under that provision, your annuity will be reduced by 5 percent for every year (or 5/12 of 1 percent per month) that you are under age 62.
27 Comments
Also, you could retire at age 60 unreduced if you have at least 20 years service.
Would the penalty still apply if the annuity was deferred until the age of 62?
The 5 percent per year penalty continues to reduce by 5/12ths of 1 percent per month until you reach age 62, unless you have at least 20 years of service. If you do, then the penalty ends at age 60.
I believe if you postpone you could avoid the penalty. I’m not sure about eligibility for FEHB in that case, I would check on that.
Any FERS employee who retires under the MRA+10 provision and postpones the receipt of his annuity to a later date can reenroll in the FEHB program as long as he was covered by the program for the 5 consecutive years before he retired or from his first opportunity to enroll.
So the penalty isn’t forever? It stops at 62?
As I understand, the penalty is forever.
No. As I wrote on October 22, “The 5 percent per year penalty continues to reduce by 5/12ths of 1 percent per month until you reach age 62, unless you have at least 20 years of service. If you do, then the penalty ends at age 60.”
As I wrote on October 22, “The 5 percent per year penalty continues to reduce by 5/12ths of 1 percent per month until you reach age 62, unless you have at least 20 years of service. If you do, then the penalty ends at age 60.”
Reg, I think what some people are confused about is if the penalty, once applied, continues for life or if it gets restored back to the full non-reduced level of the annuity start at age 60 or 62?
The penalty, once imposed at the start of retirement, is forever and does not end. One may avoid the penalty by continuing to work, but if he or she retires with a penalty, that penalty is forever — such a retiree does not get a boost (end of the penalty) when he or she reaches 60 or 62. At least, this is how I understand it.
So this i can not find in OPM information and my most recent FedHR Navigator Retirement Benefits Estimate ran by our HR says that my annuity will be reduced by 25% vs 15% as is being suggested by this answer. The situation is if i retire at MRA 57, I will have 22 years 7 months. So is what your saying is that this should only be a 15% reduction correct?
Here’s the rule: If you retire at your MRA with at least 10 but less than 30 years of service, your retirement benefit will be reduced at the rate of 5 percent per year (5/12ths of 1 percent per month) that you are under age 62, unless youhave 20 years of service and your annuity begins at age 60 or later.
I think that’s wrong. Once you retire early that’s your pension for life. It doesn’t increase when you turn 60.
If you do the MRA plus 10 and have 400 hours of sick time , do you get that sick time in the form of pay?
Sick leave has no cash value. It can only be used to increase the amount of your annuity if there is enough of it to make a difference. For example, if you have 176 hours of sick leave, it would increase your length of service by 1 month.
Sorry, but the statement is a virtual quote from OPM’s own website. The rules are different for 1) those who retire under the MRA+10 provision and 1) those who have 20 years of service and retire at age 60.
Do you know if SSA will be offering an early out retirement this year 2020?
No, I don’t.
If I retire early at age 58 with 23 years of FERS service, even if I take the 5% penalty for each year prior to age 60, am I still entitled to the supplemental annuity? My minimum retirement age was 56. Your response is appreciated.
Possibly you could begin receiving the supplement at age 60 since 60 yrs old with 20 years is full retirement but definitely not at age 58 with 23 years. Also, the reduction is 5% for every year under 62 not 60 so your annuity would be reduced by 20 percent if you went at 58
“If you retire voluntarily on an immediate annuity which is not reduced for age, you may be eligible for the annuity supplement, in addition to your regular monthly FERS benefit. You may also receive the supplement if you retired involuntarily before attaining your Minimum Retirement Age (MRA) or voluntarily because of a major reorganization, reduction in force, or an early retirement for Members of Congress. However, in these three instances, you will not be eligible for the annuity supplement until you reach your Minimum Retirement Age (MRA). If you receive a deferred benefit, a disability benefit or an immediate MRA+10 benefit, you will not be eligible for the annuity supplement.”
https://www.opm.gov/retirement-services/fers-information/types-of-retirement/#Eligibility4
i left service at age 53 with 23 years of service. Can i take my retirement at age 60 without reduction, or do i have to wait until 62. thanks for the reply
Assuming that you didn’t receive a refund of your retirement contributions when you left, you can retire at age 60 and have no reduction in your annuity.
What is the best early retirement route if you don’t want to have a reduced penalty but desire to retire early. My MRA is 56 and I will have 20 years at age 55. What’s the earliest I could retire and preserve funds? Also am I doomed to have no medical in early retirement unless I wait to retire at 60 ? Is there a way to pay medical and not draw retirement with penalty?
The earliest you could retire is at your MRA. If you did so you’d be retiring under the MRA+10 provision. If you did that, your annuity would be reduced by 5 percent for every year (5/12ths of 1 percent per month) that you were under age 56. You could avoid that penalty by delaying the receipt of your annuity until you reach age 56. As for your coverage under the FEHB program, if you leave on an immediate annuity, your coverage would continue without a break. If you delay the receipt of your annuity, you would receive a 31-day premium-free extension of your FEHB coverage and be offered an opportunity to continue that coverage under the temporary continuation of coverage provision of law. If you elected to do that, you’d be responsible for paying the entire premium with no government contribution, plus 2 percent to cover administrative expenses. If you declined that option, your coverage would stop; however, you’d be able to re-enroll when your annuity begins at age 56.
I think references in the answer to age 56 may have been improvidently or hastily provided.