All You Need to Know About Deferring Retirement as a Federal Worker, by Marvin Dutton

Many reasons can cause a federal worker to leave government employment before they are eligible to do so. For those interested in taking this step, five years of service or more can aid the decision without the worker having to forgo pension payment. The only condition is that the worker must have opted out of taking money out of pre-saved retirement funds and must be ready to wait for some time before they can be on the annuity payroll.

This system is known as deferred retirement, and there are rules guiding the process under FERS and CSRS. For employees that the latter covers, deferment ends at the age of 62 regardless of the age a worker files for it. So by age 62, a worker who defers annuities will start receiving payment under the system.

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FERS workers who have put in a minimum of five years will be eligible for deferment payment at age 62. Workers who have put in 20 years will start getting previously deferred annuities at age 60, while those who put in at least 30 years will start receiving deferred annuities at their minimum retirement age. Workers who put in less than 30 years but more than ten years of service could also begin receiving reduced pensions when they reach their MRA. The reduction will be about 5% annual deductions until they are age 62.

To avoid the deduction, it is best to wait out the years and receive full payments later.

Recall the following about minimum retirement ages of workers based on the year of birth:

A person born before 1948 will reach his/her MRA at 55 years. Workers born in 1948 will add two months to that to make 55 years and two months. A two-month increase continues until 1953-1964. Workers born during these twelve years will reach their MRA at age 56. Again, two months of increase continue until 1970 and succeeding years. Workers born in this period will reach their MRA at age 57.

Under deferred retirement, after the waiting period, retirees will receive their deferred annuities until they die. The disadvantage in this system is that the benefits remain unchanged through the years until retirees start receiving them. As the years go by, inflation and other factors will reduce the value of the benefits.

Lastly, being eligible for deferment before age 62 will stop entitlement for SRS (special retirement supplement). The flip side here is that as soon as such a worker clocks age 62, he or she will be entitled to a Social Security benefit.