Civil Service Pensions

Civil service pensions are granted to the retired civil servants in the United States. They are payments to the retired civil servants and act as their income after retirement. Civil servants were the first groups to be covered by formal pension arrangements.

Civil service pensions are offered by the state, local and federal governments. They can either be defined as benefits or contribution plans. Civil service pensions are provided under the civil service retirement system. CSRS covers employees employed before 1987. FERS covers employees employed after 1987 and those who have voluntarily switched to FERS from CSRS.

Civil service retirement system pension is a defined benefit pension system. Civil servants contribute seven percent of their pay. However this civil service pensions are not based on these contributions. The amount received from the CSRS pension system depends on the number of years worked for the federal government and the salary earned. CARS pension is received every month after retirement for the rest of a retired civil servant’s life.

The civil service pensions can be calculated using the high 3 salary, years of credible service and the pension multiplier. High 3 salary is the salary received for the three highest paying consecutive years of service. Civil service pensions have three levels of multipliers. They are based on the years of service. Effective multiplier for first five years is 1.5%, next five years 1.75% and any number of years after that 2%.The CSRS pension may be reduced in the case of early retirement and when survivor benefits are chosen.

FERS pension is also called the FERS annuity. A small percentage of the pay is contributed to the FERS pension at every pay period. FERS pension system is also a defined benefit system like the CSRS pension system. Therefore the pension amount received does not depend on the amount contributed. A basic monthly pension is received after retirement for the rest of the life under this system. Similar to the CSRS system, the FERS pensions are also calculated using the high 3 salary, years of credible service and pension multiplier. However the pension multiplier is lower in the FERS system.

For civil servants with thirty years of credible service, immediate and regular civil service pensions are available under the FERS system. However a civil servant with ten to twenty nine years of credible service will not receive full FERS pension. Civil service pensions will permanently be reduced by five percent for every year under the age of sixty two in case of early retirement. FERS pensions will also not receive cost of living adjustments until the retired civil servant reaches the age of sixty two.

Civil service pensions make the civil service attractive; secure the future of retired civil servants and retiring them in a socially acceptable manner.