Pieces of the Retirement Puzzle—Pensions

Jun 1, 2021 | Retirement Income, Retirement Planning

In our previous article, we started discussing the pieces that make up the retirement puzzle. We began with Social Security. To learn more about how Social Security fits into the equation, you can read the article here. In this article, we will shift our focus to a different piece of retirement—pensions.


Your Federal Employee Retirement System benefit (FERS) will be a significant source of your income when you retire. This plan became effective in 1987. Depending on when you were hired, your contributions to this plan may look a little different. For example, if you were hired before 2013, your contribution would fall around 7% per pay period. There would be 0.8% going to FERS and 6.2% going to Social Security. 

The way the FERS basic benefit is computed is based on your length of service. The highest average basic pay you earned during any three consecutive years of service is known as the “high-3”. The FERS basic benefit is 1% of your high-3 average pay multiplied by your years of creditable service.


The two factors determining your MRA, or minimum retirement age, are the year you were born and the years of creditable service you have. Depending on your year of birth, your MRA will fall somewhere between the ages of 55 and 57.

However, if you retire at your MRA with at least ten years of service but less than 30, your benefit will be reduced. You can expect it to be deducted by 5% a year for each year under age 62.

Requirements for an unreduced FERS pension annuity are as follows:

MRA 30 years of service
Age 60 20 years of service
Age 62 5 years of service


FERS Special Group retirees, including Law Enforcement Officers, firefighters, and Air Traffic Control (ATC) employees, have a mandatory retirement age of 56 (ATC) or 57 with twenty years of experience. For an unreduced FERS Special Group pension annuity, requirements include being age 50 with 20 years of service or any age with 25 years of service.


The Civil Service Retirement Act was established in 1920 and has since been replaced by FERS. The CSRS pension differs from FERS in that the calculation factor is a bit higher. The retirement age for an unreduced CSRS pension annuity is similar to FERS except being age 55 with 30 years of service. As time goes on, there are fewer federal retirees on the CSRS plan. However, if you are on a CSRS plan, we encourage you to set up a complimentary consultation with us to discuss your situation.


If you have any questions about your pension plan, then it is time to take a closer look at your financial situation. Retirement may be closer than you think! Schedule an appointment today with Benchmark Financial Group by filling out the form online or calling David Raetz at 913-534-8256 to discuss your financial needs.

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