Does CSRS Offset add up?

A Reader Writes:

In your column titled "Windfall elimination and CSRS," I think you missed the mark.

Your questioner stated that his federal pension would be reduced at age 62. I believe that his question was referring to the Civil Service Retirement System Offset situation, not the Windfall Elimination Provision (WEP).

According to my local human resources officer, the CSRS Offset situation is this: Besides CSRS and Federal Employees Retirement System programs, there is the Offset retirement program.

Members under the CSRS Offset retirement program have their pay docked equal to the amount paid by people in CSRS, but it is split into two portions: one part goes to the Social Security Administration and another goes into the CSRS account.

When the individual retires, he or she receives the normal CSRS pension until age 62, when the Social Security pension kicks in. At that point, the years that the individual contributed to Social Security under the CSRS Offset program are removed from the CSRS pension calculation, reducing the individual's CSRS pension.

Supposedly, the combination of the two is at least as great as the CSRS pension.

My wife is enrolled in the CSRS Offset plan, and in May will receive her first check from SSA and her first reduced CSRS pension. Then I'll know if it's true. I'm a bit concerned because the explanation above doesn't ring true to me.

Example: A person has 20 years under CSRS Offset and no other federal employment years. He has no other "substantial earning years" under Social Security. He retires and receives an Office of Personnel Management pension of 30.25 percent of his high-three earning years. At age 62, his CSRS Offset years are removed from the OPM calculations, which makes the agency pension $0. The Social Security payment is not going to be as high as the pension.

I'm also concerned about the interaction between CSRS Offset and WEP. The OPM pension will be reduced to account for money coming from SSA. The Social Security pension will be reduced to account for money coming from OPM. Sounds to me like taking a double hit.

Milt Replies:

You're right, besides CSRS and FERS, there is the CSRS Offset program. FERS was created through legislation in January 1987. The CSRS Offset plan is designed for people who have had a break in federal service for specific periods.

Employees who work under the CSRS Offset provisions are covered by CSRS and Social Security. They earn retirement credits under the relatively generous CSRS formula, and also have the portability of Social Security coverage.

When you retire, your CSRS annuity will be computed under the same rules that apply to other CSRS retirees. However, when you become eligible for Social Security benefits, (usually at age 62), your annuity will be reduced — or offset — by the value of the Social Security benefit you earned during your CSRS Offset service.

In other words, when you become eligible for Social Security, instead of getting one check from OPM that reflects all your federal service, some of the payment will come from SSA. If you are not eligible for a Social Security benefit, there is no offset in your CSRS annuity.

In computing the offset, SSA looks at the federal earnings from the time when you were covered by both Social Security and CSRS and makes two computations: A Social Security benefit with those earnings included, and then without those earnings included. These two amounts are sent to OPM so that OPM can determine the CSRS Offset amount.

For detailed examples about how the offset is computed, see the CSRS Offset retirement fact sheet from OPM.

A Reader Writes:

I wish to know how I can get dates and places I have worked from 1988 to 1997 so that I can give the information to the Social Security disability people. I can't remember all of them.

Milt Replies:

Ask the Social Security Administration for a detailed earnings record for these years. The best approach is to visit your local Social Security office and explain what you want.

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at milt.zall@verizon.net.