Postponed and deferred annuities


The countdown to the end of the year is on. Some federal employees considering retirement may be eligible for either a postponed or deferred annuity.

Postponed annuity

A postponed annuity is an option for FERS employees who have reached their minimum retirement age and have at least 10 years of creditable service. However, if you retire under the MRA + 10 provision, there’s a hefty financial penalty. If you have fewer than 20 years of service, that penalty is 5 percent for every year (5/12 of 1 percent per month) that you are under age 62. If you have at least 20 years of service, the penalty applies until you reach age 60.

You can avoid the penalty by postponing the receipt of your annuity to a later date. The annuity you eventually receive will be based on your years and full months of service and your high-3 on the day you retire. Whether you retire on an immediate annuity or postpone its receipt to a later date, any unused sick leave you had when you left government will be used in the computation of your annuity.

If you retire on an immediate annuity and were covered under the Federal Employees’ Group Life Insurance Program and the Federal Employees Health Benefits Program for the five consecutive years before you retired, your coverage will continue. If you postpone the receipt of your annuity, your coverage will be suspended. However, under the Temporary Continuation Provision of law, you can maintain your health benefits coverage by paying the entire premium plus 2 percent. While there isn’t a comparable provision that would allow you to continue your FEGLI coverage, you can buy an individual policy.

Deferred annuity

A deferred annuity is one where you:

  • Don’t meet the age and service requirements to retire.
  • Have at least five years of creditable service when you leave the federal government.
  • Don’t take a refund of your retirement contributions.
  • Apply for an annuity when you reach the right age.

If you are a former CSRS employee, the age at which your deferred annuity can begin is 62. If you are a former FERS employee, you can retire at age 62 with at least five years of service, age 60 if you have at least 20 and at your MRA with 30. You may also retire under the MRA + 10 provision, but with the same age-reduction penalty mentioned above, unless you postpone the receipt of your annuity to a later date.

Your deferred annuity will be based on your years and full months of service and your high-3 on the day you left government. If you had any unused sick leave at that time, it won’t be added to your actual service and used to increase your annuity. Nor will your annuity be increased by any cost-of-living adjustments that have been given to retirees after you left. However, once you begin receiving your annuity, you’ll be treated the same as all other retirees.


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to


  1. HI – I left federal employment May 2020 as my job was relocated outside of the commuting area and I finally found another job. With the confusion and lockdown situation of COVID, I was still considered a Navy civilian until August (Someone messed up) when I was finally seperated, although backdated to May 2020. I’ve never received my post employment information that was promised to arrive in the mail, and I’m in limbo: Do I have to complete some paperwork to officially “pospone retirement” and preserve my health benefits I had planned to take at 62? Should this have been copleted PRIOR to my seperation? I was 57 years old and 11 months with 14 years 11 months service and 3 months sick leave on the books at the time of “seperation.” Also, what is the rule of continuous health coverage for employess who’s positions were moved outside the communiting area – is it 3 years or 5 years, and how do I check how many years of coverage I had prior to seperating ( I briefly had coverage from my school distict (second job) but I cannot remember how long prior to my seperation). Thank you.

    • What your agency should have provided you is a Standard Form 52 separating you from your job and a notice that you can continue your health benefits coverage under the Temporary Continuation of Coverage provision of law. Under TCC you can enroll in a plan of your choice and pay the premiums to your former agency. The cost of that coverage to you is 100 percent of the premiums, plus 2 percent to cover administrative costs. That coverage can last up to 18 months.

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