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Thursday, January 6, 2011

Credit for Military Service Under Civilian Federal Employee Retirement Systems


Katelin P. Isaacs
Analyst in Income Security

Federal employees with permanent appointments earn pension benefits under one of two retirement plans. Employees hired after 1983 participate in the Federal Employees’ Retirement System (FERS). Employees hired before 1984 participate in the Civil Service Retirement System (CSRS) unless they elected to transfer to the FERS during open seasons held in 1987 and 1998. When Congress established the CSRS in 1920, it allowed veterans who subsequently became civilian federal employees to count their years of active-duty military service toward retirement eligibility and pension benefits under CSRS. The statutes that allow military service to be credited toward a civil service pension have been amended several times over the years, mainly to coordinate civil service retirement benefits with benefits earned under Social Security.

Under both CSRS and FERS, federal employees who have served on active duty in the military can have their years of military service counted for retirement eligibility and pension benefits. The employee may be required to make a deposit to the Civil Service Retirement and Disability Fund (CSRDF) for military service to be credited toward a civil service retirement annuity. Military service can be counted toward a civil service retirement annuity only if the individual is not receiving a military pension for that service.

Veterans of active-duty military service who were hired into civilian federal employment before October 1, 1982, who do not make a deposit to the CSRDF before separating from federal employment receive CSRS retirement credit for post-1956 military service only until they are eligible for Social Security. Their CSRS annuities are reduced by the amount that is attributable to their military service when they become eligible for Social Security benefits. Those who made deposits to the CSRDF before separating from federal employment do not have their civil service annuities reduced when they become eligible for Social Security. For employees enrolled in CSRS, the required deposit is 7.0% of the total amount of basic pay received while on active duty in the military. For employees enrolled in FERS, the required deposit is 3.0% percent of their total basic military pay. Deposits made before October 1, 1985, were not charged interest. Interest is charged on deposits made after that date.

Veterans of active-duty military service hired into civilian federal employment after September 30, 1982, receive civil service retirement credit for post-1956 military service only if they make a deposit to the CSRDF. For employees enrolled in CSRS, the required deposit is 7.0% of the total amount of basic pay received while on active duty in the military. For employees enrolled in FERS, the required deposit is 3.0% percent of their total basic military pay. If the employee makes the deposit within two years of being hired into civilian federal employment, no interest is charged.



Date of Report: December 30, 2010
Number of Pages: 11
Order Number: R40428
Price: $29.95

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