Civil Service Retirement System / CSRS OFFSET
The Civil Service Retirement Act, which became effective on August 1, 1920, established a retirement system for certain Federal employees. It was replaced by the Federal Employees Retirement System (FERS) for Federal employees who first entered covered service on and after January 1, 1987.
The Civil Service Retirement System (CSRS) is a defined benefit, contributory retirement system. Employees share in the expense of the annuities to which they become entitled. CSRS covered employees contribute 7, 7 1/2 or 8 percent of pay to CSRS and, while they generally pay no Social Security retirement, survivor and disability (OASDI) tax, they must pay the Medicare tax (currently 1.45 percent of pay). The employing agency matches the employee’s CSRS contributions.
CSRS employees may increase their earned annuity by contributing up to 10 percent of the basic pay for their creditable service to a voluntary contribution account.
CSRS Offset is a version of CSRS established for employees who completed at least five years of civilian federal service creditable under CSRS, but who also have come under the Social Security system at some point. Individuals covered under CSRS Offset pay Social Security taxes and a reduced CSRS contribution. CSRS retirement and survivor benefits are offset by the value of the Offset service in their Social Security benefits.
Those under CSRS Offset are neither in the pure CSRS system, nor are they covered under the newer Federal Employees Retirement System. Their system is closer to what CSRS includes, with the added benefit of full Social Security coverage. Some have called this the “best of both worlds.” Others have just called it confusing. Most people under CSRS Offset once were in CSRS, but had a break in their federal service. If they were rehired after 1983 (with a greater than one year break in service), then they were required to start paying Social Security taxes. If they had at least five years of civilian service under CSRS, they then were placed in CSRS Offset and given the option of ultimately switching to FERS.
THRIFT SAVINGS PLAN – Employees may also contribute a portion of pay to the Thrift Savings Plan (TSP). There is no Government contribution, but the employee contributions are tax-deferred.
CSRS employees have many options available making it especially important for you to plan early. As a CSRS employee, you will face several difficult decisions that will affect your post-retirement quality of life.
VEBS will produce a Personalized Federal Employee Benefits report that will provide you with your current benefits and future retirement income. This report is tailored to you and will help you to make your retirement planning much easier.