How Does the Civil Service Retirement System (CSRS) Work?

The Civil Service Retirement System (CSRS), created by the Civil Service Retirement Act of 1920, is a defined benefit and retirement savings system for certain federal employees. The CSRS was replaced by the Federal Employees Retirement System (FERS) for federal employees who started service on or after January 1, 1987.

So while new federal employees are not in the CSRS system, millions of Americans are still impacted by it.

As such, it is important to understand the basic eligibility requirements, pension benefit, impact on other retirement benefits, and survivor benefits. For a review of the differences between the FERS and CSRS click here.

Changes to the System

Throughout the decades it was in effect, the CSRS underwent multiple changes and modifications. As such, not all individuals covered under the CSRS have identical benefits. Additionally, air traffic controllers, law enforcement, and certain other federal employees have special retirement provisions that do not apply to all members of the CSRS.

Calculating Your Benefit

The main retirement benefit in the CSRS is an annuity that is computed based on your length of service and “high-3” average salary.

  • The “high-3” average salary is determined by the highest three consecutive years of average basic pay. As your years of service increase, so does the annuity formula calculation.
  • For the first five years of service, the CSRS annuity is calculated as 1.5 percent times your “high-3” times your years of service up to five.
  • The next five years are added to the first calculation but at 1.75 percent times your “high-3” for this period.
  • After the first ten years, the calculation is two percent times your “high-3” for this period.

The system rewarded long-service employees by increasing their benefits after the first five years and more after ten years. Additionally, the “high-3” average basic pay tends to increase the longer you work, as most federal employees make more money over time than in their earlier work years with the government.

Early retirement before age 55 generally resulted in a significant benefit reduction of 1/6 of a percent for each full month you retired before age 55. For instance, if you retired 12 months early, it would be a full 2 percent reduction in benefits.

Read more on TheBalance

Business professional using his tablet to check his financial numbers

401(k) Calculator

Determine how your retirement account compares to what you may need in retirement.

Get Started

Get in Touch

In just minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Find an Advisor