What Is CSRS? Retirement Benefits for Federal Employees

CSRS retirement benefits for federal employees come from the Civil Service Retirement System, a defined-benefit pension plan that covers most civilian federal workers hired before January 1, 1984. Unlike a 401(k), CSRS guarantees a monthly payment for life based on your years of service and salary history. The Office of Personnel Management administers the program, processes payments, and maintains the records.¹

Who Is Covered

Coverage turns almost entirely on hire date. The Federal Employees’ Retirement System Act of 1986 made FERS the retirement system for anyone whose civilian federal service began after December 31, 1983. If you were hired into a covered federal position before that date, you generally fall under CSRS.² To collect any annuity at all, you need at least five years of creditable civilian service.³

A separate track called CSRS Offset covers certain employees who left federal service and came back. If your break in CSRS-covered service lasted more than 365 days and ended on or after January 1, 1984, and you had at least five years of creditable civilian service as of December 31, 1986, you fall under CSRS Offset.⁴ Offset employees pay into both CSRS and Social Security at the same time, with total retirement withholding capped at 7% of pay. At retirement, the CSRS annuity is reduced by the portion of the Social Security benefit attributable to the federal service performed under Offset.⁵

When You Can Retire

CSRS offers an immediate annuity, one that starts within 30 days of separation, if you hit any of three age and service combinations:

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

Long-tenured employees can reach benefits well before traditional retirement age.⁶

If you leave before meeting any of those combinations, a deferred annuity is still possible. You have to wait until age 62, and you still need the five years of creditable service. Nothing pays during the waiting period, and the annuity is figured on your salary and service at the time you left, with no inflation adjustment for the years in between.⁶

Involuntary Separations and Early Outs

An employee separated involuntarily (not for cause), or during a major reorganization or reduction in force, can retire earlier: age 50 with 20 years of service, or any age with 25 years. The tradeoff is a permanent age reduction. If you’re under 55, the annuity drops by one-sixth of 1% for each full month you’re short of age 55, roughly 2% per year, and the reduction does not go away when you later turn 55.⁷

What You Pay In

CSRS is funded through payroll deductions split between the employee and the agency. Most employees contribute 7% of basic pay, and the agency matches it dollar for dollar. Law enforcement officers, firefighters, and air traffic controllers contribute 7.5% because they qualify for enhanced retirement benefits. Members of Congress and certain congressional employees pay 8%.⁸

Standard CSRS employees do not pay the Social Security OASDI tax on federal earnings. Their retirement deductions go entirely to the CSRS fund. They do pay the Medicare hospital insurance tax of 1.45% on all pay, plus an additional 0.9% on wages above $200,000 in a calendar year.⁸⁹ The practical consequence at retirement: CSRS retirees are eligible for Medicare Part A but generally do not draw Social Security retirement benefits based on their federal service.

How the Annuity Is Calculated

Two numbers drive your annuity: your High-3 average salary and your total years of creditable service. The High-3 is the highest average basic pay you earned during any three consecutive years. Usually that’s your final three, but an earlier stretch counts if your pay was higher then. Basic pay includes salary and locality adjustments, not overtime or bonuses.¹⁰

A tiered formula then applies:

1.5% of High-3 for each of the first 5 years
1.75% of High-3 for each of the next 5 years
2% of High-3 for each year beyond 10

The graduated scale rewards longevity. Someone retiring after 30 years with a High-3 of $100,000 receives about $56,250 per year, or 56.25% salary replacement. The maximum basic annuity is 80% of High-3, a ceiling that generally affects only those with more than 41 years and 11 months of service.¹⁰

Unused Sick Leave

Your unused sick leave balance at retirement gets added to your total service for the annuity calculation. OPM converts sick leave hours into days and months using a 2,087-hour work year, which works out to roughly eight hours per day of credit. Only full months count; odd days drop off.¹¹ Sick leave credit can push your annuity above the 80% cap.¹⁰ For someone with hundreds of banked hours, the effect on the monthly check is real.

Military Service Deposits

Military service before your federal civilian career can count toward the CSRS annuity, but generally only if you make a deposit. For most service periods the deposit is 7% of your military basic pay during those years. Interest accrues on unpaid balances, so paying early in your civilian career costs less than waiting.¹² Skip the deposit and you may still get credit for military time in the calculation, but your benefit could be reduced at age 62 if you’re also eligible for Social Security.

Cost-of-Living Adjustments

CSRS annuities receive annual COLAs tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers. When the index rises, OPM applies a matching percentage increase to monthly payments. CSRS retirees receive the full COLA regardless of their age at retirement, which is a meaningful advantage over FERS, where retirees under 62 generally do not receive COLAs.¹³

If you retired within the past year, your first COLA is prorated by how many months you’ve been drawing an annuity. OPM sends a letter explaining the prorated amount. After your first full calendar year as a retiree, later adjustments apply in full.¹³

The Thrift Savings Plan Alongside CSRS

CSRS employees can contribute to the Thrift Savings Plan, the federal government’s tax-deferred savings plan comparable to a 401(k). One important difference from FERS: the government makes no automatic contribution and provides no matching funds for CSRS participants. Every dollar in a CSRS employee’s TSP account is the employee’s own money.⁸

For 2026, the annual elective deferral limit is $24,500. Employees age 50 and older can add $8,000 in catch-up contributions, bringing the total to $32,500. A higher catch-up limit of $11,250 applies to employees age 60 through 63, allowing up to $35,750 per year.¹⁴ Even without matching, TSP contributions lower current taxable income and grow tax-deferred, which makes them worth considering as a supplement to the guaranteed CSRS annuity.

Social Security Interaction

Because CSRS employees don’t pay Social Security taxes on federal earnings, they generally don’t earn Social Security credits for those years. Many CSRS retirees do have some Social Security eligibility from non-federal work, such as a part-time job, a prior private-sector career, or self-employment. Two provisions historically reduced Social Security benefits for people receiving a government pension from non-covered employment.

The Windfall Elimination Provision applied a modified formula that used a lower replacement factor on the first bracket of earnings, which could cut monthly Social Security payments by several hundred dollars. The Government Pension Offset reduced Social Security spousal or survivor benefits by two-thirds of the recipient’s government pension.¹⁵ For many CSRS retirees, GPO wiped out spousal benefits entirely.

The Social Security Fairness Act, signed into law in January 2025, repealed both WEP and GPO. CSRS retirees whose Social Security benefits were previously reduced or eliminated should check with the Social Security Administration for current calculations, as implementation of the repeal has been phased in over time.

Survivor Benefits

CSRS lets you provide a continuing income stream to your spouse after your death, at a cost: electing a survivor annuity reduces your own monthly payment for as long as you live. You make the election at retirement. A full survivor annuity pays the surviving spouse 55% of your unreduced annuity. A partial survivor benefit with a smaller reduction is also available.¹⁶

A surviving spouse qualifies if the marriage lasted at least nine months. OPM waives the nine-month requirement when death results from an accident. Marry after retirement and your new spouse can become eligible once the nine-month threshold is met, but you have to actively elect the reduced annuity.¹⁷

Children may also receive survivor payments. Eligible children include unmarried dependents under age 18, unmarried full-time students between 18 and 22, and unmarried disabled children over 18 whose disability began before age 18, as certified by the Social Security Administration.¹⁷

Former Spouse Court Orders

Divorce decrees or court-approved property settlements can award a former spouse a portion of the survivor annuity. A qualifying court order received by OPM takes priority; OPM cannot pay a survivor benefit to a current spouse if doing so conflicts with the order.¹⁸ For a CSRS employee going through a divorce, the survivor annuity allocation is one of the most consequential items in the settlement. Reversing it after OPM processes the order typically takes another court action.

Health Coverage for Survivors

A surviving spouse receiving a CSRS survivor annuity can continue coverage under the Federal Employees Health Benefits program, but only if the retiree was enrolled in a Self and Family plan at the time of death. Remarriage before age 55 ends the survivor’s FEHB enrollment unless the marriage to the deceased lasted 30 years or more. Remarriage at age 55 or older does not terminate coverage, though the new spouse and their dependents are not covered.¹⁹

How CSRS Annuities Are Taxed

CSRS annuities are subject to federal income tax, but not the full amount. Because you contributed after-tax dollars through the 7% payroll deduction during your career, a portion of each monthly payment is treated as a tax-free return of your contributions. OPM calculates the tax-free share using IRS life expectancy tables and shows the breakdown on your annual 1099-R. Once your total contributions have been fully recovered, typically after several years in retirement, the entire annuity becomes taxable.

State income tax treatment varies widely. Some states fully exempt federal pensions, others offer partial exclusions often tied to reaching a certain age, and others tax the annuity like any other income. Checking your state’s current tax code before choosing where to retire can save a meaningful amount each year.

1
U.S. Office of Personnel Management. Services Online
2
Office of the Law Revision Counsel. 5 USC Chapter 84 – Federal Employees Retirement System
3
Office of the Law Revision Counsel. 5 USC Subchapter III – Civil Service Retirement – Section: Eligibility for Annuity
4
Defense Civilian Personnel Advisory Services. Civil Service Retirement System Offset
5
eCFR. 5 CFR Part 831 Subpart J – CSRS Offset
6
U.S. Office of Personnel Management. Eligibility
7
U.S. Office of Personnel Management. Retirement Facts 1 – Civil Service Retirement System
8
U.S. Office of Personnel Management. CSRS Information
9
Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
10
U.S. Office of Personnel Management. Computation
11
U.S. Office of Personnel Management. Credit for Unused Sick Leave Under the Civil Service Retirement System
12
Defense Finance and Accounting Services. Civilian Pay Fact Sheet – Military Service Deposit
13
U.S. Office of Personnel Management. Cost of Living Adjustments (COLA) FAQs
14
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
15
Social Security Administration. Program Explainer – Government Pension Offset
16
Office of the Law Revision Counsel. 5 USC 8341 – Survivor Annuities
17
U.S. Office of Personnel Management. Survivor Benefits
18
eCFR. 5 CFR Part 838 Subpart G – Procedures for Processing Court Orders Awarding Former Spouse Survivor Annuities
19
U.S. Office of Personnel Management. Information for Retirees and Survivor Annuitants – Federal Employees Health Benefits