Are you Eligible for a FERS Retirement Annuity?

I just met up with a colleague this past weekend who works at the Treasury Department.  He’s a fellow Veteran and has a few questions about performing a Military Service Credit Deposit.  We’ll call him ‘Bill’.

Just one quick question. If I leave Treasury after say 2 years, will I still draw a pension? Or do I have to finish a full 20 years of service?

Bill –

There are 2 issues here-  First is the Eligibility to draw a FERS Annuity, Second is how many years go in to the FERS Annuity Calculation.

FERS Annuity Eligibility–

As best I can tell, you need to establish 5 years of ‘Creditable Civilian Service’ for eligibility to draw a FERS Annuity.  In most all cases ‘Creditable Civilian Service’ pretty much means days spent as a Federal Employee- so you’ll have to stick with it for 5 years if you want to draw a FERS Annuity later.

Per OPM, you are eligible for either an Immediate or Deferred FERS Annuity if you are age 62 and have 5 years of Creditable Civilian Service.  It’s an Immediate Annuity if you retire at age 62, it’s a Deferred Annuity if you retire prior to age 62 (you wait until age 62 for the Annuity payments to commence).

OPM further defines Creditable Civilian Service, and the ‘cats and dogs’  cases where you can earn additional credit.  A Military Service Credit Deposit (unless performed prior to 1989) is not one of them.

… on a personal note, I performed a Military Service Credit Deposit shortly after becoming a Fed.  While my Service Computation Dates for RIF and Leave were adjusted, my Civilian Service Computation Date remained unchanged- it remained the day I signed on as a Federal Employee.

Improving FERS Annuity calculation with a Military Service Credit Deposit-

A Military Service Credit Deposit (into the FERS Annuity) is a great deal.  In most cases, your rate of return will be somewhere between 10-16 percent since your “High 3” salary average is done at or near the top of your earning years, while the ‘buy-in’ is purchased as a percentage of base pay during your years as junior enlisted or officer (and in some cases as an Academy Midshipman or Cadet)-  You are buying credit for Annuity years at pennies on the dollar.

Not a part of the original question, but often associated with the same conversation is the vesting of your TSP Agency (1%) contributions.  You need 3 years of Federal Civilian Service until your TSP Agency (1% Automatic) contributions are vested.  Service covered under USERRA (Reserve/Guard mobilization) counts towards TSP Vesting.

Best of Luck with your decision!

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