What Are the Differences Between FERS and CSRS?

CSRS is being phased out

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The U.S. 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 as well, contribute money to the employees’ retirement funds, 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?

All federal workers had the option to convert from CSRS to FERS when FERS was created in 1987. Now, all federal employees are automatically enrolled in FERS and they don't have the option to choose CSRS instead. CSRS is only available to federal workers who were in the plan before 1987 and who 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 time period among labor unions and large companies. Employees contributed a certain percentage of their pay. They expected an annuity when they retired sufficient 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 CSRS when CSRS beneficiaries die off. Rather than consisting of only a pension program, a FERS employee has a smaller pension, a thrift savings plan, and Social Security to fund his retirement.

The thrift savings plan is similar to a 401(k).

The Size of Annuity Payments

Because FERS has three components, these 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, the thrift savings plan, and Social Security benefits.

Thrift Savings Plan Rules

The U.S. government contributes an amount equal to 1 percent of each FERS employee’s contribution to each of their thrift savings accounts. FERS employees may contribute more, and the US government will match those contributions up to a certain percentage.

CSRS employees can participate in the thrift savings plan, but they receive no additional money from the federal government because FERS employees need the 1 percent 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 plans. 

The Amount Taken from Salaries

CSRS employees contribute between 7 and 9 percent of their salaries to the system. FERS employees contribute a comparable amount when Social Security is factored in. Federal employees hired during or before 2012 contribute 8 percent, and employees hired after 2012 contribute 3.1 percent. The Social Security tax rate, also called Old Age, Survivors and Disability Insurance or OASDI, is 5.3 percent. FERS employees may contribute more using the thrift savings plan.

Earliest Retirement Age

CSRS employees may retire as young as 55 years of age.

FERS employees who began their careers during or after 1970 can retire as young as 57. Older FERS employees can retire a little earlier depending on when they began their careers.