Federal Employees Retirement System

The Federal Employees Retirement System (FERS) is the retirement system for employees within the United States civil service. FERS became effective January 1, 1987 to replace the Civil Service Retirement System (CSRS) and to conform federal retirement plans in line with those in the private sector.

FERS consists of three major components:

Since January 1, 1984, employees with fewer than 5 years of nonmilitary experience on December 31, 1986 were covered under interim retirement rules under which they were covered by both CSRS and the Social Security system. They made reduced payments to the CSRS (1.3 percent of earnings instead of the usual 7 percent) and contributed their full employee share to Social Security. Employees with more than 5 years of nonmilitary service on December 31, 1986 continued under the dual benefit coverage unless they opted to switch to FERS between July 1, 1986 and December 31, 1987. Employees covered only by CSRS remained covered by it unless they opted to switch to FERS.

The FERS annuity is based on a specified percentage, multiplied by (a) the length of an employee's Federal service eligible for FERS retirement (referred to as "creditable Federal service", which may not be the actual duration of Federal employment) and (b) the average annual rate of basic pay of the employee's highest-paid consecutive three years of service (commonly referred to as the "high-3" period). The "high-3" period normally is, but does not have to be, the final three years of service; for example, an employee taking a voluntary downgrade to avoid a reduction-in-force (RIF, a layoff in private-sector terms) could have a high-3 period in an earlier time frame.

The annuity does not begin until one full calendar month has passed since the employee's retirement. Thus, an employee retiring on the last day of a month (June 30, for example) will have his/her annuity begin on August 1 (as the entire month of July will have passed), but an employee retiring during a month (July 1, for example) will not have his/her annuity begin until September 1 (as July will not be a full month passed, but August will be).

Eligibility for Social Security benefits and TSP withdrawals are covered by the regulations for those plans.

Most new federal employees hired on or after January 1, 1984 are automatically covered under FERS. Those newly hired and certain employees rehired between January 1, 1984 and December 31, 1986 were automatically converted to coverage under FERS on January 1, 1987. Rehired federal employees who worked prior to December 31, 1983 and had 5 years of civilian service by December 31, 1986 can choose between remaining in CSRS or electing FERS within 6 months of rehire. Once an employee is covered by FERS or elects to switch from CSRS to FERS coverage, the employee remains covered by FERS. Employees of Nonappropriated Fund Instrumentalities of the Departments of Defense and Homeland Security participate in a separate retirement system, except when retaining previous coverage under a different retirement system following a transfer.

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