Disability Retirement Calculation

Disability Retirement Under CSRS

The annuity paid to a CSRS employee who retires because of disability is the higher of two figures:

  • the “earned benefit” (see calculation formulas above); or
  • a “guaranteed minimum disability annuity” which is the lower of: 40 percent of the high-3; or the annuity that the employee would have been eligible to receive if he or she continued working until age 60.

The “earned benefit” will be the one received if an employee has 22 years or more of service or is age 60 or older at retirement. At least one of those circumstances typically applies since CSRS generally covers those first hired before 1984.

Enhanced disability annuities are paid to disability annuitants and their survivors if the annuitant performed service under an occupation such as law enforcement with special retirement calculation provisions. See https://www.opm.gov/retirement-services/publications-forms/benefits-administration-letters/2010/10-105.pdf.

Disability Retirement Under CSRS Offset

The annuity paid to CSRS Offset disability retirees is the same as that paid to CSRS employees. However, because they are covered by Social Security, they also must apply to SSA to determine whether they are eligible for a disability benefit under their rules.

If they qualify for both benefits, the law requires that OPM reduce their CSRS benefit by the value of the Offset service portion of their Social Security benefit. Since OPM does not know how much annuity to pay until it finds out whether SSA will award a benefit, applicants for disability retirement must provide proof they have filed for Social Security disability benefits or a statement from SSA saying that they are not eligible for such benefits.

Social Security often awards disability benefits later than OPM because of the differences in the rules for the OPM benefits and those of Social Security, which are more stringent. Therefore, OPM must be notified immediately if SSA does award benefits. If those awards are retroactive, the disability retiree should set aside the amount of money he or she has been overpaid because OPM will reduce the annuity retroactively to the beginning of the Social Security Benefit, and bill the retiree for the overpayment.

Enhanced disability annuities are paid to disability annuitants and their survivors if the annuitant performed service under an occupation such as law enforcement with special retirement calculation provisions. See https://www.opm.gov/retirement-services/publications-forms/benefits-administration-letters/2010/10-105.pdf.

Disability Retirement Under FERS

Disability benefits for FERS employees are based on the expectation that they will be receiving both FERS and Social Security benefits. Therefore, when filing for a FERS benefit, they also must file with Social Security.

In the first year, the formula used for determining benefits is 60 percent of high-3 average pay minus the entirety of any Social Security disability benefit to which you are entitled. After the first year and until age 62, if the disability continues, the annuity amount will depend on whether the employee is eligible for a Social Security disability benefit:

  • Not eligible: 40% of high-3 average pay.
  • Eligible: The FERS annuity will be reduced by 60 percent of the initial Social Security benefit. However, the resulting total of the two benefits will be equal to at least 40 percent of the high-3 plus 60 percent of the Social Security benefit.

Enhanced disability annuities are paid to disability annuitants and their survivors if the annuitant performed service under an occupation such as law enforcement with special retirement calculation provisions. See https://www.opm.gov/retirement-services/publications-forms/benefits-administration-letters/2010/10-105.pdf.

Note: If the earned annuity (.01 x years of service x high-3) is higher than the rates produced after the reduction for Social Security, the employee will receive the higher benefit.

Assuming that the disability continues, at age 62, the disability annuity will be recomputed. In effect, the employee will begin receiving the annuity he or she would have gotten if not disabled and had worked to age 62. In making this recomputation, the high-3 average salary will be increased by all FERS COLAs that took effect while the employee received a disability annuity.

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