What Are the Differences Between FERS and CSRS?

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The US government maintains two retirement systems for their employees -- the Federal Employees Retirement System and the Civil Service Retirement System. Retirement systems are common at all levels of government. Employees -- and often employers -- contribute money to the employees’ retirement fund, and retirees draw monthly income from the system. There are several significant differences between the two retirement systems for federal government employees.

Who Is Eligible?

When FERS was created all federal workers at that time had the option to convert from CSRS to FERS. Now all federal employees are automatically enrolled in FERS and do not have the option to choose CSRS. CSRS is only available to federal workers who were in the plan before 1987 and chose to remain with CSRS in lieu of switching to FERS.

One Component vs Three Components

CSRS was started on January 1, 1920, and is a classic pension plan similar to those established during the same period among labor unions and large companies. Employees contribute a certain percentage of their pay, and when they retire, they expect an annuity for them to maintain a standard of living similar to what they experienced during their working years.

FERS was started on January 1, 1987, and is meant to succeed the CSRS when its beneficiaries die out. Rather than only consisting of a pension program, FERS employees have a smaller pension, Thrift Savings Plan and Social Security.

The Thrift Savings Plan is similar to a 401(K).

Size of Annuity Payments

Because FERS has three components, those components offer retirees less money each. The annuity payment for CSRS retirees is designed to be their only income whereas FERS retirees have the annuity, Thrift Savings Plan and Social Security.

Thrift Savings Plan Rules

The US government contributes an amount equal to 1.0% of each FERS employee’s to each employee’s thrift savings account. FERS employees may contribute more, and the US government will match those contributions up to a certain percentage.

CSRS employees may participate in the Thrift Savings Plan, but they receive no additional money from the federal government. This is because FERS employees need the 1.0% to have a comparable retirement to CSRS employees.

Social Security Participation

CSRS employees do not participate in Social Security. FERS employees do as one of the three components of their retirement plan.

Amount Taken from Salary

CSRS employees contribute between 7.0% and 8.0% of their salary to the system. FERS employees contribute a comparable amount when Social Security is factored in. Federal employees hired during or before 2012 contribute 0.8%, and employees hired after 2012 contribute 3.1%. The Social Security tax rate -- also called Old-Age, Survivors, and Disability Insurance, or OASDI -- is 5.3%. FERS employees may contribute more using the Thrift Savings Plan.

Earliest Retirement Age

CSRS employees may retire as young as 55 years old. FERS employees who began their career during or after 1970 can retire as young as 57 years old.

Older FERS employees can retire a little earlier depending on when they started their careers.

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