CSRS Offset Basic Annuity Calculation
The basic annuity for a CSRS Offset employee is calculated in the same as that for a regular CSRS employee:
- 1.5% x High-3 x first five years of service
- plus 1.75% x High-3 x next five years of service
- plus 2.0% x High-3 x all years of service over 10
CSRS Offset Annuity Reduction
Your CSRS Offset annuity is reduced by the portion of your total Social Security benefit that is payable based on federal service performed after 1983 while covered by both the CSRS and Social Security.
Your annuity will not be reduced by any portion of your Social Security benefit that is based on service other than CSRS Offset employment.
When Will the CSRS Offset Annuity Be Reduced?
Normally, OPM will contact SSA when you are close to age 62 (the normal age of Social Security eligibility), to obtain an entitlement determination. If you are eligible to receive Social Security benefits, SSA will provide OPM with information concerning your benefits. Please note that even if you do not apply for Social Security benefits when first eligible, the reduction in your annuity must still be made if you are eligible for Social Security benefits.
If you retire at age 62 or later and already are entitled to Social Security benefits, the offset in your annuity will be made at retirement. If you never become eligible for Social Security benefits based on your own employment, there is no offset.
How is the Offset Computed?
The Social Security Administration takes the Federal earnings in the period(s) when you are covered by both Social Security and CSRS and computes a Social Security benefit with those earnings included, and then without those earnings included. These two amounts are sent to OPM so that we can determine the CSRS Offset amount.
Your CSRS benefit is computed as explained above. The offset reduction is then subtracted from the annuity rate to become your new gross annuity rate.
The offset reduction is the lesser of:
- the difference between the Social Security monthly benefit amount with and without CSRS Offset service (service after December 31, 1983, covered under the interim CSRS provisions or the CSRS Offset provisions); or
- the product of the Social Security monthly benefit amount, with federal earnings, multiplied by a fraction where the numerator is the employee's total CSRS offset service rounded to the nearest whole number of years and the denominator is 40.
|Social Security Benefit||X||
Total Years of Offset Service
In this example, the employee is age 62, and has 3 years and 8 months of offset service.
|Social Security monthly benefit with offset service||$600|
|Social Security monthly benefit without offset service||$550|
Social Security amount with federal earnings:
$600 X 4 years* = $2400 divided by 40 = $60
(*Nearest whole year to 3 years 8 months)
In this example the offset to the CSRS annuity would be $50, since that is the lesser amount.
UPDATED: 10/13/2016 -- Source: OPM RI 83-13