Often, service credit and creditable service are used interchangeably. While they do have similarities, they are classified as two different types of credit. A previous post looked at what creditable service is. This post will look at the differences between CSRS and FERS service credit.
Civilian Service
CSRS
If you performed CSRS service where no retirement deductions were withheld from your pay, or you received a refund of your retirement deductions, you can pay money back into the retirement system to receive credit. The payment generally affects your retirement amount.
If no retirement deductions were withheld during your service period, then a deposit can be made for the service. This deposit is the payment of retirement deductions plus interest that would have been withheld from your pay if you were covered by CSRS during this period of employment. This type of payment is not required.
Deposit for Service Ending Before October 1, 1982, and Covered by CSRS
You may make a deposit for creditable CSRS service performed October 1982 where retirement deductions weren’t withheld. You may also receive retirement credit for all this service whether you pay the deposit. Unless you pay the deposit in full, your annual retirement benefit will reduce by 10 percent of the deposit amount. Any annuity due a surviving spouse is reduced proportionately.
Deposit for Service Ending on/after October 1, 1982, and Covered by CSRS
You may make a deposit for CSRS service performed on or after this date during which retirement deductions weren’t withheld. Unless that deposit is paid in full, however, you won’t receive credit for service in your annuity computation.
If retirement deductions were withheld from your pay and later refunded, you may pay a redeposit for the service. This redeposit is the repayment of retirement deductions that were previously withheld and refunded to you, plus interest.
Redeposit Service Ending Before March 1, 1991, and Covered by CSRS
You may repay the refund you received for periods of civilian service ending before this date during which retirement deductions were withheld from your pay and later refunded to you. You will receive credit for all this service whether you make the payment or not unless you retire under the disability provision. Your annuity is subject to a permanent reduction based on the amount of the redeposit and interest due to you and your age at retirement. This reduction will not be applied to a spouse. You can avoid this reduction by repaying the refund.
Redeposit Service Ending on/after March 1, 1991, and Covered by CSRS
You may repay the refund received (see above). However, unless the redeposit is paid in full, you won’t receive credit for this service in your annuity computation. Consequently, your annuity and any annuity due to a surviving spouse will be reduced.
FERS
You may make a payment for the following types of service and credit it toward retirement,
- Any period of creditable civilian service performed before 1989 in which no retirement deductions were withheld from your pay.
- A period of civilian service when retirement deductions were withheld and then refunded to you.
- Any period of Peace Corps or VISTA Volunteer service (excluding training time) regardless of when the service was performed.
However, a payment can’t be made for any service which is not creditable under FERS, periods of leave without pay, and time covered by a lump sum leave payment.
If retirement deductions weren’t withheld during a period of service, you may pay a deposit for the service if it was performed before 1989. FERS deposits are generally 1.3 percent of your basic pay for the service plus interest. This excludes Peace Corps and VISTA Volunteer service. The 1.3 percent rate applies regardless of whether deductions would have been taken out at that rate when the service was performed.
Deposit for Service Ending Before January 1, 1989, and Covered by FERS
You may make a deposit for creditable FERS service you performed before 1989 during which retirement deductions were not withheld from your pay. If you do not pay for a period of this type of service, you will not receive credit in determining your eligibility to retire or in computing your retirement benefit.
Deposit for Service Ending on/after January 1, 1989, and Covered by FERS
With certain exceptions, a FERS employee can’t make a deposit for service performed on/after this date.
If You Transferred to FERS from CSRS, the Following Applies to the CSRS Portion of Your Annuity
Deposit for Service Ending Before October 1, 1982, and Covered by CSRS
You may make a deposit for creditable CSRS service performed before this date during which retirement deductions weren’t withheld from your pay. You will receive retirement credit for all this service whether you pay the deposit or not. Unless you pay the deposit in full, your annual retirement benefit will reduce by 10 percent of the deposit amount. Any annuity due to a surviving spouse will also be reduced proportionally.
Deposit for Service Ending on/after October 1, 1982, and Covered by CSRS
You may make a deposit following the rules above. Unless you pay the deposit in full, you won’t receive credit for the service in the computation of your annuity.
If Retirement Deductions were Withheld from Your Pay and Later Refunded to You
Redeposit Service for any Period Covered by FERS
You may pay the refund you received for periods of civilian service covered under FERS in which retirement deductions were withheld from your pay and later refunded to you. If however, you don’t pay for a period of this type of service, you will receive credit in determining your eligibility to retire, but not in computing your benefit. Your annuity and any survivor annuity will be reduced.
Redeposit Service Ending Before March 1, 1991, and Covered by CSRS
You may repay this deposit as noted above. You will receive credit for all this service whether you make the payment or not unless you retire under the disability provision. Your annuity will be subject to a permanent reduction based on the amount of the redeposit and interest due and your age at retirement. The reduction will not be applied to any annuity due to a spouse. And you can also avoid the reduction by repaying the refund.
Redeposit Service Ending on/after March 1, 1991, and Covered by CSRS
You may repay this deposit as noted above, however, unless you pay the redeposit in full, you will not receive credit for this service in the computation of your annuity. Any annuity, as well as an annuity due to a spouse, will be reduced.
Military Service
CSRS
Credit for military service performed after 1956:
- If you were first employed in a civilian position before October 1, 1982—When you become eligible for Social Security benefits, your military service after 1956 will be used in the computation of your Social Security. If you pay a deposit before retirement, for your military service after 1956, it will count towards your CSRS retirement. However, if you pay the deposit, no adjustment to your retirement benefit is made at age 62.
- If you were first employed in a civilian position on/after October 1, 1982—You won’t receive credit for your post-1956 military service unless you pay a deposit for the service before you stop working.
Amount of the Deposit
| Dates of Service | Amount of Deposit Due |
| Through 12/31/1998 | 7% of military basic pay |
| 1/1/1999-12/31/1999 | 7.25% of military basic pay |
| 1/1/2000-12/31/2000 | 7.4% of military basic pay |
| 1/1/2001-present | 7% of military basic pay |
**You must make the payment before you stop working for the federal government.
FERS
Credit for military service performed after 1956:
To receive credit for military service performed after 1956, a deposit must be paid.
Amount of the Deposit
| Dates of Service | Amount of Deposit Due |
| Through 12/31/1998 | 3% of military basic pay |
| 1/1/1999-12/31/1999 | 3.25% of military basic pay |
| 1/1/2000-12/31/2000 | 3.4% of military basic pay |
| 1/1/2001-present | 3% of military basic pay |
**You must make a deposit for post-1956 military service before you stop working for the government.
If you are entitled to have part of your retirement computed under CSRS rules, military service performed prior to your transfer to FERS falls under the following CSRS deposit rules:
- The CSRS deposit is 7 percent of your military basic pay—If you were first employed in a civilian position before October 1, 1982, you don’t pay the deposit and you are eligible for a Social Security benefit at age 62, the CSRS portion of your annuity will be recomputed at age 62 to delete credit for any post-1956 military service
- The CSRS deposit is 7 percent of your military basic pay—If you were first hired on or after October 1, 1982, and you don’t make a deposit, you won’t receive any credit for post-1956 military service.
As you can see, service credit is quite involved. Understanding this and how much you have can greatly affect your annuity in retirement and even your surviving spouses’ annuity. This is especially important to know if you happen to find yourself unable to work due to a disability. Service credit can increase your amount of creditable service, which may increase your annuity. The team at Harris Federal Law Firm has been helping federal employees for years with their disability retirement cases. If you think you may qualify for this benefit, give us a call at 877-226-2723 and schedule a FREE consultation. You can also fill out this INQUIRY form.
