What Is CSRS Retirement and How Does It Work?

Civil Service Retirement System (CSRS) retirement is the original federal pension plan, paying a guaranteed monthly annuity for life to civilian federal employees who were first hired before January 1, 1984. Your payment is calculated from your highest three years of average salary and your total years of creditable service, funded by a payroll deduction of about 7% during your working years.¹ A 30-year employee typically retires with an annuity worth roughly 56% of that high-3 average, adjusted every year for inflation.

Who Is Still Covered by CSRS

CSRS applies to federal civilian employees who entered covered service before January 1, 1984. Everyone hired after that date went into the Federal Employees Retirement System (FERS) instead, and no new employees have been enrolled in standard CSRS in more than four decades. The covered population shrinks every year.

A separate group, CSRS Offset employees, had a break in federal service and returned after 1983. They’re covered by both CSRS and Social Security at the same time, which changes how their annuity is paid out later. That arrangement is explained further down.

What You Contribute From Your Paycheck

CSRS-covered employees contribute 7%, 7.5%, or 8% of basic pay toward retirement, depending on hire date and position category. Most pay the standard 7%.² The money is withheld each pay period and deposited into the Civil Service Retirement and Disability Fund, which pays current retirees. It doesn’t sit in an individual investment account the way a 401(k) balance does; the fund pools contributions and pays out defined benefits.

Because CSRS employees generally don’t pay Social Security taxes on their federal earnings, they also don’t earn Social Security credits through that work.²

When You Can Retire

To collect an immediate annuity the day you leave, you have to meet one of three age-and-service combinations set in federal law:

Age 55 with 30 years of service
Age 60 with 20 years of service
Age 62 with 5 years of service

These tiers come from 5 U.S.C. § 8336.³ Creditable service covers periods of federal employment when retirement deductions were withheld, plus certain military service for which a deposit has been made.

Early Retirement Under VERA

When an agency is downsizing or reorganizing, it can request Voluntary Early Retirement Authority (VERA) from the Office of Personnel Management. Under a VERA window, CSRS employees can retire as early as age 50 with 20 years of service, or at any age with 25 years.⁴ It isn’t always available; your agency has to receive specific authorization, and you have to be in a covered position during the designated window.

Disability Retirement

A CSRS employee who becomes unable to perform their job duties because of disease or injury can apply for disability retirement after only five years of civilian service. OPM must find that you can’t provide useful and efficient service in your current position and can’t be reassigned to a comparable vacant role at the same grade level.⁵ The application has to be filed before you separate from service, or within one year afterward.

Deferred Retirement

If you leave federal service before hitting the age requirements but have at least five years of creditable service, you can claim a deferred annuity starting at age 62, provided you didn’t take a refund of your contributions for your final period of service. Withdrawing your contributions when you leave might look like free cash, but it permanently forfeits the pension.

How Your Annuity Is Calculated

The calculation starts with your high-3 average salary, which is the highest average basic pay you earned during any three consecutive years of service. That’s usually the final three years before you retire. A tiered multiplier is then applied to that average based on your total years of creditable service:

First 5 years: 1.5% of high-3 per year
Next 5 years (years 6–10): 1.75% of high-3 per year
All years beyond 10: 2% of high-3 per year

The formula comes from 5 U.S.C. § 8339.⁶ Running the math on a 30-year career: 7.5% (first 5 years) + 8.75% (next 5) + 40% (remaining 20 at 2%) = 56.25% of your high-3 salary.

Unused Sick Leave

Any unused sick leave you have at retirement is converted into extra months of creditable service and added to the annuity calculation. The conversion uses a 2,087-hour work year, so roughly every 174 hours of unused sick leave adds one month of service credit.⁷ The added months increase your annuity, but they can’t be used to meet the minimum service requirements for eligibility or to change your high-3 salary.

The 80% Cap

Federal law caps the basic CSRS annuity at 80% of your high-3 average pay.⁶ You’d hit that ceiling at roughly 41 years and 11 months of service, before any sick leave credit is added. Sick leave months aren’t subject to the cap. Most people retire well before reaching it.

Survivor Benefits

When you retire, you decide whether to provide a survivor annuity for your spouse. Electing survivor coverage permanently reduces your own monthly payment. In exchange, your surviving spouse receives 55% of your unreduced annuity after your death.⁸ If you’re married at retirement and want to waive survivor coverage, your spouse has to consent in writing. The system defaults to protecting the spouse.

Unmarried dependent children can also receive survivor benefits, generally until age 18, or age 22 for a full-time student at a recognized school. A child who became disabled before age 18 can receive benefits indefinitely.⁹

You can also elect an insurable interest annuity for someone who isn’t your spouse but depends on you financially. That option takes a larger reduction from your monthly payment. Divorce decrees and court orders can require that a former spouse receive a portion of your survivor annuity, regardless of what you’d prefer to elect.

Annual Cost-of-Living Adjustments

CSRS annuities are adjusted every year to keep pace with inflation, based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The adjustment takes effect on December 1 and shows up in the January payment.¹⁰ CSRS retirees get the full CPI-W increase, while FERS retirees receive a reduced adjustment when inflation exceeds 2%. For January 2026, the CSRS COLA is 2.8%.¹¹

CSRS and Social Security

Because standard CSRS employees don’t pay Social Security taxes on their federal earnings, they don’t build Social Security credits from that work. Two provisions historically reduced Social Security benefits for CSRS retirees who qualified for Social Security through other jobs or a spouse: the Windfall Elimination Provision (WEP), which cut your own retirement benefit, and the Government Pension Offset (GPO), which reduced spousal or survivor benefits by two-thirds of your government pension and often wiped them out entirely.

Both provisions were repealed by the Social Security Fairness Act, signed on January 5, 2025. The repeal is retroactive to benefits payable for January 2024 and later.¹² If your Social Security benefit was previously reduced or eliminated because of WEP or GPO, the full amount should now be restored.

CSRS Offset

CSRS Offset employees are covered by both CSRS and Social Security at the same time. Their deductions are split: 6.2% for Social Security and typically 0.8% for CSRS, adding up to the standard 7%.² Their annuity is initially calculated using the regular CSRS formula. Once the retiree becomes eligible for Social Security, the CSRS portion is reduced by the amount of Social Security attributable to federal service.¹³ The combined total from both sources is designed to be roughly what a standard CSRS retiree would receive.

Thrift Savings Plan for CSRS Employees

CSRS employees can contribute to the Thrift Savings Plan (TSP), but unlike FERS employees, they get no agency automatic contributions and no matching.¹⁴ Every dollar in the account comes from your own paycheck. For 2026, the elective deferral limit is $24,500, with an additional $8,000 catch-up contribution allowed for employees age 50 and older.¹⁵ Even without matching, the TSP’s low-cost index funds and tax deferral make it a useful supplement to the annuity.

How Your CSRS Annuity Is Taxed

Your CSRS annuity is generally treated as ordinary income for federal tax purposes. Because part of what you contributed during your career was already taxed, a small portion of each monthly payment is considered a tax-free return of your contributions. OPM calculates the tax-free portion using the IRS Simplified Method.¹⁶ Once you’ve recovered your after-tax contributions in full, usually over a period of years, the entire annuity becomes fully taxable. State treatment varies; some states fully exempt federal pensions, others tax them partially or entirely.

How CSRS Compares to FERS

FERS replaced CSRS for employees hired on or after January 1, 1984, and the two systems are structured very differently. The differences that matter most:

Pension formula: CSRS uses the tiered 1.5%/1.75%/2% formula, producing about 56% of high-3 pay after 30 years. FERS uses a flat 1% per year, or 1.1% if you retire at 62 or later with at least 20 years, which yields about 30% of high-3 after 30 years.
Social Security: Standard CSRS employees are excluded from Social Security coverage through their federal work. FERS employees pay in and earn credits toward a Social Security benefit.
TSP matching: CSRS employees get no government contributions to TSP. FERS employees receive an automatic 1% contribution plus matching on the first 5% of pay they contribute.
Employee cost: CSRS employees pay 7% of basic pay into the retirement fund. FERS employees pay roughly 0.8% to 4.4% toward their pension depending on hire date, plus 6.2% in Social Security taxes, which ends up in a comparable range.

The trade-off is that CSRS gives you a larger guaranteed pension from a single source, while FERS spreads retirement income across a smaller pension, Social Security, and a TSP with matching. If you’re a CSRS employee who wants more retirement income than the annuity alone provides, the TSP is the main lever, and you’re pulling it entirely on your own.

1
U.S. Office of Personnel Management. CSRS Information
2
U.S. Office of Personnel Management. CSRS Offset Retirement Facts 13
3
Office of the Law Revision Counsel. 5 USC 8336 – Immediate Retirement
4
U.S. Office of Personnel Management. Voluntary Early Retirement Authority
5
Office of the Law Revision Counsel. 5 USC 8337 – Disability Retirement
6
Office of the Law Revision Counsel. 5 USC 8339 – Computation of Annuity
7
U.S. Office of Personnel Management. Retirement Facts 8 – Credit for Unused Sick Leave
8
Office of the Law Revision Counsel. 5 U.S. Code 8341 – Survivor Annuities
9
U.S. Office of Personnel Management. Survivors
10
Office of the Law Revision Counsel. 5 U.S. Code 8340 – Cost-of-Living Adjustment of Annuities
11
Congress.gov. Cost-of-Living Adjustments for Federal Civil Service Annuities
12
Social Security Administration. Social Security Fairness Act – Windfall Elimination Provision and Government Pension Offset
13
Office of the Law Revision Counsel. 5 USC 8349 – Offset Relating to Certain Benefits Under the Social Security Act
14
Thrift Savings Plan. Contribution Types
15
Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs
16
Internal Revenue Service. Topic No. 411 – Pensions, the General Rule and the Simplified Method