Are You a Candidate for Federal Government Disability Annuity Retirement?

Disability retirement is:

1. An employee benefit
2. Intended for those employees who are unable to complete a normal career due to disease or injury
3. Who meet the statutory, regulatory and/or administrative criteria

FERS v. CSRS Retirement System Differences

CSRS is being phased out but some employees are still in the system.

The U.S. government maintains two retirement systems for its employees—the Federal Employees Retirement System and the Civil Service Retirement System. Retirement systems are common at all levels of government. Employees, and often employers as well, contribute money to the employees’ retirement funds and retirees draw monthly income from the system.

There are several significant differences between these two systems.

CSRS Is No Longer an Option

All federal workers had the option to convert from CSRS to FERS when FERS was first created in 1987. Now all federal employees are automatically enrolled in FERS—they don’t have the choice of electing CSRS instead.

It is not to say that no federal employees have CSRS, however. CSRS is still available to federal workers who were in the CSRS system before 1987 and who chose to remain with CSRS instead of switching to FERS at that time. Their benefits were not terminated with the introduction of FERS.

FERS is intended to fully succeed CSRS when the CSRS beneficiaries eventually die off.

One Component vs. Three Components

CSRS was established on January 1, 1920, and it’s a classic pension plan similar to those established during the same time period among labor unions and large companies. Employees contribute a certain percentage of their pay. When they retire, they receive an annuity sufficient to maintain a standard of living similar to what they experienced during their working years.

Assuming the worker has at least 30 years in federal service, the CSRS benefit is generally sufficient to provide a comfortable lifestyle even without Social Security or any retirement savings. It’s indexed for inflation.

A FERS employee has a smaller pension, one not intended to fully fund his retirement on its own. He also gets a thrift savings plan and Social Security to fund his retirement in addition to the pension program.

The thrift savings plan is similar to a 401(k), so it’s possible that a FERS employee can come up short in retirement if she doesn’t handle the plan efficiently. But having the TSP gives FERS employees more control over and flexibility with their retirement plans. FERS workers typically retire with double the savings that CSRS workers accumulate, although CSRS employees do have superior pension benefits.

Disability Benefits 

It’s generally accepted that the FERS plan has the edge here, at least for employees who have passed 18 months of service. Benefits are slightly greater, and, of course, CSRS employees are not generally entitled to Social Security disability because they don’t have sufficient Social Security credits.

Survivor Benefits 

Survivors of CSRS employees are entitled to survivor benefits of 55% of the initial unreduced CSRS benefit. It drops to 50% for FERS survivors—after a 10% reduction. FERS survivors would typically receive Social Security survivor benefits as well, however, and would presumably inherit the balance remaining in the thrift savings plans as well.