CSRS Offset Benefits

 

Benefits under CSRS Offset

CSRS Offset is a version of the Civil Service Retirement System (CSRS) established for employees who have 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. This article discusses benefits under this Offset program.

The basic concept of CSRS Offset is to provide the same retirement income, whether it comes only from CSRS or from a combination of CSRS and Social Security.

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.

CSRS Offset was created in 1987, and generally applies to employees who had a break in Federal service after 1983 that lasted longer than one year and had at least five years of civilian service as of January 1, 1987. It also applies to employees who were hired into a civilian job before 1984, but did not acquire retirement coverage until after 1984 and had at least 5 years of service as of January 1, 1987.

Those under CSRS Offset are neither in the pure CSRS system, nor are they covered under the newer Federal Employees Retirement System (FERS). Their system is closer to what CSRS includes, with the added benefit of full Social Security coverage.

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), 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.

 

Coverage and Payments Into the System

CSRS Offset employees are covered by both CSRS and Social Security. You earn retirement credit under CSRS, while also earning credits under Social Security. When you retire from the Government, your retirement benefit is computed in the same way that CSRS benefits are computed. However, when you become eligible for Social Security benefits (usually at age 62), your CSRS retirement benefit is reduced, or offset, by the value of the Social Security benefit you earned while working for the Government.

The amount CSRS Offset employees pay for retirement is the same amount that CSRS employees pay; however it is reduced, or offset, by Social Security taxes. Agencies contribute a set amount (7% of pay for most employees) to CSRS Offset.

And just like CSRS employees, CSRS Offset employees are also allowed to participate in the Thrift Savings Plan and currently may contribute up to 6% of basic pay, without a Government contribution.

 

The Offset Difference in Benefits

At retirement, CSRS Offset benefits are computed by the Office of Personnel Management in the same manner as they would be for any retiring CSRS employee. Full CSRS annuity benefits are paid until age 62, when the employee becomes eligible for Social Security. Then there’s a re-computation to determine how to “offset” the CSRS benefit. For those who already have turned 62 at retirement and have qualified for Social Security, the computation takes place only once — when their retirement claim is finalized at OPM.

The Offset computation takes into account the years the employee was paying Social Security tax and was covered under CSRS Offset. It is not a reduction of the employee’s entire Social Security benefit — just the portion that was earned during their Offset service.

The basic concept of the CSRS Offset program is to provide the same retirement income, whether it comes only from CSRS or from a combination of CSRS and Social Security. If participants are receiving Social Security benefits, the combination of the reduced CSRS retirement and the Social Security benefit will always be at least the amount they would have received if they had been rehired as pure CSRS.

The one disadvantage to CSRS Offset is if an employee decides to delay receiving Social Security benefits until after he or she turns 62. In that case, the CSRS benefit will be reduced even though the employee might not be receiving the Social Security benefit.