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CSRS vs FERS: What’s the Difference?

The U.S. government maintains two retirement systems for its employees—the Federal Employees Retirement System and the Civil Service Retirement System. Retirement systems are standard at all levels of government. Employees, and often employers, contribute money to the employees’ retirement funds, and retirees draw monthly income from the system.

There are a few several significant differences between the two systems:

CSRS Is Not an Option Anymore

The Civil Service Retirement System (CSRS) was available to all Federal employees in the past. However, in 1986, the Federal Employees’ Retirement System Act was enacted, establishing the Federal Employees’ Retirement System (FERS) as the new retirement system. Under FERS, Federal employees hired after January 1, 1987, participate in Social Security, and their retirement annuity will be based on their earnings and Social Security. Employees hired before that date may choose either FERS or CSRS.

Three Components VS. One Component

The FERS is a three-component system consisting of Social Security, participants’ contributions, and employers’ contributions. On the other hand, the CSRS is a one-component system, only composed of participants’ own contributions.

Adjustments in Cost of Living

The FERS adjusts the benefit amounts based on increases in the cost of living, using the Consumer Price Index (CPI). The CPI is the average price of a bundle of goods and services that a typical American might purchase. The United States Congress establishes the annual adjustments based on the yearly increase in the CPI, effective the first of the year following the year in which the CPI increased.

The CSRS does not adjust the retirement benefits based on the CPI.

Survivor Benefits

A survivor benefit is an amount paid to a widow, widower, or other eligible people when an employee dies. The FERS survivor benefit is reduced if the widow or widower also receives Social Security. The CSRS survivor benefit is not reduced if the widow or widower receives Social Security.

Disability Benefits

The FERS provides disability benefits to employees who become totally and permanently disabled

Workers injured on the job can receive monthly payments under the FERS if they cannot perform their jobs due to their injuries.

In general, the FERS covers most Federal civilian employees and some members of the uniformed services, including:

1. Regular full-time employees.

2. Employees on active military duty.

3. Employees on leave without pay or on a non-pay status.

4. Employees of the Tennessee Valley Authority.

5. Employees of the Bureau of Indian Affairs.

6. U.S. Postal Service.

7. Foreign Service employees.

8. Temporary employees serving for five years or more.

9. Volunteer firefighters.

10. Temporary employees hired before 1984.

11. Employees of the U.S. Fish and Wildlife Service.

Size of Annuity Payments

The FERS annuity payments are adjusted annually. Under the FERS, you will receive an annuity based on your age, years of service, and highest average salary. The annuity is a percentage of your highest three years of salary. The FERS benefits are designed as a career-based retirement system for Federal employees.

Annuity payments may be reduced for retiring before age 62, after 20 years of service.

Benefits are reduced if the retiree also receives Social Security.

The FERS plan is portable, meaning you can take it with you if you go to work for the following:

1. Federal Government,

2. State Government,

3. Private Industry,

4. Non-profit organizations.

Retirement Age

Employees may retire under FERS at the age of 55, after 20 years of service, and may begin to receive annuity payments immediately. Employees may retire under CSRS at the age of 50, after 25 years of service, and receive annuity payments immediately.


The Federal Employees Retirement System is a defined benefit plan. In a defined federal retirement plan, the employee gets a specific amount of money every month, no matter how long they live. When they die, their spouse will receive the same amount, even if they remarry or their spouse dies.

The Civil Service Retirement System is a defined contribution plan. In a defined contribution plan, the employee gets a specific amount of money every month, but it is a percentage of the amount he has invested in the plan, and it gets smaller as he gets older and retires.

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