Q: My question is if one does not withdraw the Voluntary Contributions Program (VCP) upon retirement, what rate of interest will it earn? I have been told that if you do not withdraw the VCP, the so called basic interest of 7 percent is not the interest but rather the rate of repaying the principle. Thanks.
A: Interest only accrues to the date you leave government, retire, or transfer to a position not covered by CSRS of FERS, whichever is earlier. On the other hand, if you separate from the government with entitlement to a deferred annuity at age 62, interest will continue to accrue to the beginning date of your annuity or death, whichever is earlier. However, if you ask for a refund before receiving a deferred annuity, interest will only be paid to the date of your original separation.
