A civil service retirement pension is a benefit payout as a result of contributions to the Civil Service Retirement System by federal employees. The Civil Service Retirement Act established this retirement system in 1920 and was replaced by the Federal Employees Retirement System in 1987.Continue Reading
A civil service retirement pension is accrued by both tax-deferred contributions from employees who are actively working and matching contributions from employers. Employees typically contribute 7 to 8 percent of their pay to the retirement system and share in the expenses of the annuities, instead of paying social security retirement or survivor and disability tax. Medicare tax must still be paid. After a required number of years of service, employees who reach the designated retirement age can withdraw a pension from the retirement system.
Although the minimum employee contribution ranges from 7 to 8 percent as of 2015, employees can increase contributions up to 10 percent to a voluntary contribution account. The government does not contribute to the civil service retirement plan.
Eligibility for the civil service retirement plan and pension may vary based on employer guidelines. However, in most cases, eligibility is based on the number of years of creditable service with the employer and the employee's age. Upon retirement, most employees are eligible for an immediate retirement benefit as long as they have at least five years of creditable civilian service and have reached the age of 62.Learn more about Financial Planning