Seven percent of each employee’s basic pay is deducted and withheld as the employee’s contribution to the retirement fund.
Employees credited with civilian service after July 31, 1920, for which no retirement deductions or deposits have been made, deposit with interest an amount equal to the following percentages of their basic pay for such service:
Percentage of
Basic Pay
|
Service Period
|
|---|
2.5
|
August 1, 1920 to June 30, 1926
|
3.5
|
July 1, 1926 to June 30, 1942
|
5.0
|
July 1, 1942 to June 30, 1948
|
6.0
|
July 1, 1948 to October 31, 1956
|
6.5
|
November 1, 1956 to December 31, 1969
|
7.0
|
After December 31, 1969
|
1.3
|
January 1, 1984 to December 31, 1987
|
0.94
|
January 1, 1988 to December 31, 1989
|
0.80
|
After December 31, 1989
|
No deposit is required for periods of service for which no retirement deductions were made. However, the annuity will be affected as follows:
- Nondeduction Service Performed Before October 1, 1982. A retiring employee will receive credit for this service toward his annuity; however, his annuity will be reduced by 10 percent of the amount due as a deposit unless the employee elects to eliminate the service entirely from credit for annuity purposes or completes a deposit for the service.
- Nondeduction Service Performed On or After October 1, 1982. A retiring employee will receive no credit for this service in the computation of his annuity unless a deposit with interest has been made; however, the service will be used to determine the length of service needed for annuity eligibility even without a deposit.
- Exception. In nondisability retirement cases when an alternative form of annuity (AFA) is elected, OPM will avoid collecting redeposit (and deposit) money which simply would be returned as part of a person’s lump–sum payment. Instead, OPM gives automatic credit for redeposits/deposits, including interest, thus assuring the AFA is the maximum amount possible. These are deemed deposits/redeposits which are treated as having been paid and then returned to the person as part of the lump–sum payment. (See 566.6.)
Deposits may be made or completed after the death of the employee by a survivor who is qualified to receive annuity benefits.
Deposits or redeposits require SF 2803, Application To Make Deposit or Redeposit. SF 2803 must be routed through the Eagan ASC for proper certification and/or listing of service history and for transmittal to OPM. OPM computes the amount due and furnishes the employee with instructions on how to make payment.
Each employee who has received a refund of retirement deductions, covering service for which the employee is allowed credit under CSRS, may redeposit the amount received, with interest.
The amount of redeposit due includes the sum of the refund plus interest from the date the refund was paid to the date of redeposit (or commencing date of annuity, if earlier). Interest is charged through all periods of employment and all periods of separation after October 1, 1956. Interest is computed at 4 percent through December 31, 1947, and 3 percent through December 31, 1984. After December 31, 1984, the interest rate is determined based on the average yield of securities invested in by the retirement fund during the previous fiscal year.
Previously, under existing law applicable only to CSRS, individuals who received a refund of retirement deductions covering a period of service that ended before October 1, 1990, could elect to actuarially reduce their annuity instead of making a redeposit.
Under the National Defense Authorization Act for Fiscal Year 2012, an actuarial reduction in lieu of a redeposit is available for refunds covering periods of service that ended before March 1, 1991.
In nondisability retirement cases when an alternative form of annuity (AFA) is elected, OPM will avoid collecting redeposit (and deposit) money which would simply be returned as part of a person’s lump–sum payment. Instead, OPM gives automatic credit for redeposits/deposits, including interest, thus assuring the AFA is the maximum amount possible. These are deemed redeposits/deposits which are treated as having been paid and then returned to the person as part of the lump–sum payment. (See 566.6.)
Redeposits may be made or completed after the death of the employee by a survivor who is qualified to receive annuity benefits.
See 565.23.
An employee who wishes to obtain a larger retirement annuity than is otherwise provided may purchase additional annuity by making voluntary contributions to the retirement fund, subject to the restrictions set forth in 565.42. Application is made by filing SF 2804, Application to Make Voluntary Contributions, with OPM.
Voluntary contributions are made subject to the following restrictions:
- If an employee has had creditable civilian service for which no deposit or redeposit has been made, the employee is eligible to make voluntary contributions only upon completing the deposit or redeposit.
- If an employee has at any time received a refund of voluntary contributions with interest, the employee may not make further voluntary contributions unless again employed under CSRS after a separation of more than 3 calendar days.
Voluntary contributions are made in multiples of $25, and their total may not exceed 10 percent of the total base pay received for creditable service since August 1, 1920.
The age of the retiring employee governs the amount of additional annuity the voluntary account purchases. Each $100 credited to the employee’s account purchases additional annuity of $7 a year for an employee retiring at age 55 or younger. The $7 amount increases 20 cents for each full year that the employee is beyond age 55 at the time of retirement.
The employee’s election of the type of basic annuity desired also applies to the additional annuity purchased with voluntary contributions, unless the employee indicates to the contrary in a note attached to the application for retirement.
An employee may withdraw voluntary contributions with interest under the following conditions:
- Before separation from service, or
- After separation, but before receipt of any additional annuity based thereon.
Withdrawals are made by filing with OPM using SF 2802, Application for Refund of Retirement Deductions, and indicating on the form that the application is for refund of voluntary contributions not for refund of regular retirement deductions.
If an employee dies in service, or after separation but before retirement, the voluntary contributions with interest are payable to the person(s) entitled in the order of precedence defined in 567.22.
An employee who has completed less than 5 years of civilian service at the time of separation, or of transfer to a position not covered by the CSRS, may apply for a refund of the retirement deductions made from the employee’s salary and of any sums deposited covering prior service, with interest.
To be eligible for a refund, the employee must be separated or transferred to a position not covered by CSRS for at least 31 consecutive days.
No interest is given if the refund period is 1 year or less. Interest is computed at 4 percent to December 31, 1947, and 3 percent thereafter, compounded annually to the date of separation or transfer.
SF 2802, Application for Refund of Retirement Deductions, is required. In order to receive refunds, employees generally must notify their spouse and any former spouse(s) that they plan to file applications. Employees may be barred from receiving refunds if the refund would end the court–ordered right of any spouse or former spouse to future benefits based on employees’ service.
An employee who has completed 5 years or more of creditable civilian service and is separated or transferred to a position not covered by CSRS has a choice of either a refund payment or a deferred retirement annuity at age 62.
In dollars received, the annuity, in most cases, is more valuable than the refund of retirement deductions. When employees retire at age 62, they also have the right to elect a survivor annuity.
To be eligible for a refund, the employee files the refund application (SF 2802) with OPM at least 31 days before the beginning date of any annuity for which the employee may be eligible.
The refund consists of the retirement deductions made from the employee’s salary and any sums deposited covering prior service, including deposits for post–1956 military service.
No interest is payable on refunds covering periods of service of 5 years or more.
An employee who receives a refund of retirement deductions cannot receive an annuity for the period of service covered by the deductions unless the person is reemployed in a position subject to CSRS and repays the deductions with interest (see 565.3).
