Annuity reduction


Q. I turned 60 on May 17. As of this past November, I have 27 years as a fed. If I retired now, with less than 30 years, is there a penalty? How much?

A. You would be eligible for an unreduced annuity at age 60, which would be calculated using this formula: .01 x your high-3 x your years and full months of service.


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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. Happy Memorial, sir,
    The 10% reduction in my CSRS Offset annuity, (employment before October 1982) means the total of 7% deposit and 3% interest?

  2. WEP, CSRS Offset, Under Full Retirement Age, Less that 30 years of substantial earning; which of these have a greater and less amount of reduction? Thank you, sir.

    • Only you can determine which of these has the greater or lesser impact. To help you work it out, I’ll describe the effects of each on your retirement benefits. First, if you are under age 55 (CSRS retirement age), you can’t retire unless you are offered an early retirement opportunity by your agency. If it doesn’t, you’d have to wait until you were age 55 to apply for an annuity. That annuity would be based on the following formula:

      0.015 X your high-3 X 5 years of service, plus
      0.0175 X your high-3 X 5 years of service, plus
      0.02 X your high-3 X all remaining years of service

      The fewer years of service you have, the smaller your annuity.

      If your agency did offer you an early retirement opportunity, your annuity would begin immediately, and would be calculated in the same way.

      Second, at age 62, your CSRS annuity would automatically be reduced by the amount of Social Security benefit you earned while covered by CSRS Offset. The amount you receive would be the same, it would just come from two difference places (OPM and Social Security).

      Third, if you have fewer than 30 years of substantial earnings under Social Security, you’d be subject to the windfall elimination provision. The WEP would reduce – but not eliminate – your Social Security benefit at age 62 (or later if you delay its receipt).

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