CSRS - FERS — What’s The Difference
I promised I’d post more articles here to try to “de-geek” some of these subjects. I already have pages of arcane detail about CSRS and FERS, but darn little that compares the two in a manner an non-geek might understand. Here’s a neat article from an expert that gives a good start:
According to a recent survey of cows in England, Bosnia, Mongolia or someplace over there, the grass really is greener on the other side!!! You can look it up.
But the investigative journalist in me is skeptical. Why? First, only a handful of cows, Holsteins, I think, took part in the survey. Second, is there really a place called Bosnia? And third, what do cows know? I mean, really!
Like cows, we humans have long pondered the grass-is-always-greener issue. Especially at the workplace. And it’s alive and well in many federal offices. There the divide is between people under the old, CSRS retirement plan and FERS, which replaced it.
Most working feds, about 7 out of 10, are under the newer FERS plan which replaced CSRS in the mid-1980s. But most people who are actually retired, that is 1.5 million as of FY 2005, are under the old CSRS system. A much smaller number, 220,000 at that time retired under the FERS system. (Rest of Mike’s Article Here:)
To hit the highlights, especially if you didn’t take the time to read all of Mike’s article:
CSRS
- Higher annuties
- Immediately indexed to inflation
- Full cost of living adjustments at retirement
- Higher contributions to retirement fund
- No Social Security contributions - Medicare only
- Add unused sick leave time to service time
FERS
- FERS employees pay the full Social Security tax
- Smaller portion of salary into the FERS retirement program.
- FERS workers also get matching contributions to their Thrift Savings Plan
- FERS retirement formula is less generous than CSRS
- TSP investments can make up the difference
- FERS retirees don’t get COLAs until age 62 (in most cases)
So there are some of the basic distinctions to help learn your way around this particular bowl of the alphabet soup. Let me know if there’s more interest in general education articles like this.Tags: csrs, fers, pension valuation, npv, divorce
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