Creditable service seems pretty straight forward—your years of service with the federal government count towards your retirement. Still, there are several instances where this can become complicated. This post will only focus on creditable service under FERS.
Creditable Service
Creditable service usually includes the following:
- Federal covered service, meaning your pay is subject to FERS retirement deductions.
- Unused sick leave–which is used to increase your total creditable service and it’s only used for annuity computation purposes only.
- Federal service performed before 1989. This is because an employees’ pay was not subject to retirement deductions as long as there was a deposit* made. To see exceptions to this rule, visit https://www.opm.gov/retirement-services/fers-information/creditable-service/
*A deposit is the payment for a period of employment when retirement deductions were not withheld from your salary. The deposit amount is, generally, 1.3% of your salary plus interest. You are not required to make this payment. However, if you don’t, this service will be eliminated from being used for computation purposes.
Non-Deduction Service
This refers to a period of employment occurring before January 1, 1989. This time can only count towards creditable service if you make a deposit for that time. Service occurring on or before that date isn’t creditable for any purpose.
Refunded Service
This type of service allows you to re-deposit money that was refunded to you (if you left a federal job, took a refund on retirement contributions and later returned to work for the federal government) when you left. You would then get credit for this service.
- If the refund occurred before March 1, 1991, you are allowed to re-deposit the money, plus accrued interest, or have your annuity actuarially reduced based on how much you owe and your age when you retire.
- If the refund occurred after February 28, 1991, you’ll have to re-deposit the money, plus interest, to get any credit for that service.
Interest is charged from the mid-point of periods of service and is compounded annually. It is charged to the date the deposit is paid in full or annuity begins, whichever comes first. If you do not pay for a period of this type of service, you will still receive credit in determining your eligibility to retire, but not for this service in computing your retirement benefit.
Military Service
Military service in the United States Armed Forces is creditable for retirement purposes if it was active service, terminated under honorable conditions, and performed prior to your separation from civilian service for retirement.
- You are not required to make a deposit if your service was performed before 1957.
- If your service was performed on, or after, January 1, 1957, a deposit is required to credit the service to establish title to an annuity or to compute that annuity.
To see how calculating creditable service affects CSRS employee’s, visit https://www.opm.gov/retirement-services/csrs-information/creditable-service/
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