When to apply for retirement benefits, CSRS and FERS, separated before MRA?

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Separated before MRA, 17 years under FERS plus 5 years frozen under CSRS. Don’t need income right now, is there any benefit to applying for CSRS annuity before age 62? Can FERS annuity be claimed at a different time than CSRS? Is it better to apply for FERS annuity at MRA (56-59), or wait? How long can you wait (CSRS will start automatically at age 62, can FERS be deferred past age 62?)?

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Posted by (Questions: 1, Answers: 3)
Asked on March 24, 2022 6:33 pm
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When you are vested in CSRS, meaning you had 5 or more years and then elected FERS, you are FERS for retirement purposes with a CSRS component. What this means is you must retire using the FERS age and service requirements but your retirement will be computed using the CSRS formula for the time frozen under CSRS and time under FERS will be computed using the FERS formula, those two amounts will be added together to provide your FERS retirement benefit. OPM uses the same high-3 for both components. Survivor benefits will be taken from the entire amount using the FERS 50% maximum benefit or 25% partial benefit if elected. You cannot split these two benefits simply because you worked under both systems. Since you separated prior to reaching your MRA, Minimum Retirement Age, your only retirement option is called a deferred retirement.
A deferred retirement does not permit you to reinstate your FEHB when your retirement benefits commence, there is no credit for any unused sick leave, and no FERS Retiree Annuity Supplement will be payable. Your retirement will be based on your years/months of creditable service and your high-3 average salary as of the date you left federal service. Because you are FERS with a CSRS component and you have more than 20 years of combined service, you are eligible for this benefit without an age penalty at age 60. If you elect to take your retirement at your MRA, the entire calculation will be age penalized 5% for each year you are under age 62. This would be a permanent reduction for life.
No retirement is automatic from OPM, you must make application.
Which is better for you…this is a decision you will have to make.

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Answered on March 27, 2022 4:14 pm
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Thank you - I had read on OPM's website that CSRS would start automatically at age 62, that must be for people who never elected to go to FERS. So since I am FERS with a CSRS component, do I only fill out the FERS application? I will be 60 next year, if there is no age reduction (and no deferred credit like Social Security has for putting it off until later) I may just go ahead and claim it. I will have my % of high 3 reduced for excess LWOP (to finish my degree while I was a co-op under CSRS) and for part time work under FERS after my kids were born (plus some LWOP the last year before I resigned). Does the 20 years of service still apply if my CSRS is adjusted to something like 3x1.5% instead of 5x1.5% and the FERS is adjusted to 15.5x1% instead of 17x1%? Does the WEP based on the CSRS component apply to reduce my Social Security benefit if I elected to change in 1987 and have more than 5 years in FERS (the SSA website was not clear whether the exemption applied to any CSRS vested pension or only those who were covered under FERS only and chose not to stay vested in CSRS for a portion of their service)?

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Posted by (Questions: 1, Answers: 3)
Answered on March 27, 2022 6:43 pm