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.

8 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?

      • OK I’m confused above on May 3, 2019 at 4:07 you said Yes thanks for catching that to the person who said “Shouldn’t it be 5% since he has 20 years service and can receive an unreduced annuity at age 60?”

        Then on May 8, 2019 (same 20 years service) you said “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.”

        So with 20 years service at 59 is it 5% or 15%?

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