FERS Pension Explained 2026: Contribution Rates by Hire Date
The Federal Employees Retirement System (FERS) is a three-part retirement plan for civilian federal workers hired after 1983. One of the three parts—the FERS basic annuity—requires employee contributions deducted from every paycheck. The contribution rate depends entirely on when you were first hired into federal service.
FERS Contribution Rates by Hire Date
Congress has increased the employee contribution rate twice since FERS was created. The result is three tiers, each defined by hire date and set by statute.
| Tier | Hire Date | Employee Rate | Legal Authority |
|---|---|---|---|
| FERS (Original) | Before January 1, 2013 | 0.8% | 5 U.S.C. §8422(a) |
| FERS-RAE | Jan 1, 2013 – Dec 31, 2013 | 3.1% | P.L. 112-96 (Middle Class Tax Relief Act of 2012) |
| FERS-FRAE | On or after January 1, 2014 | 4.4% | P.L. 113-67 (Bipartisan Budget Act of 2013) |
For a GS-12 Step 5 employee in the Rest of U.S. locality area earning $101,443 annually, the biweekly FERS deduction is $31.21 under the original tier, $120.95 under FERS-RAE, or $171.67 under FERS-FRAE. That is a real difference in take-home pay every two weeks.
Rehire Exception: If you were rehired into federal service and have 5 or more years of prior FERS-creditable civilian service, you may be covered under an earlier tier regardless of your most recent hire date. This is governed by 5 CFR Part 841 and OPM BALs 13-102, 14-102, and 14-107. Check with your agency HR office to confirm your tier.
What FERS Means for Your Paycheck
Your FERS contribution is a legally required pre-tax deduction. It reduces your federal taxable income but does not reduce your FICA wages (Social Security and Medicare taxes still apply to the full gross amount minus FEHB only). This distinction matters for calculating your actual take-home pay.
Biweekly FERS deduction = (Annual Salary / 26) × FERS rate
The FERS Basic Annuity: What You Get Back
In exchange for these contributions, you earn a defined-benefit pension. The formula under 5 U.S.C. §8415 is:
FERS Annuity Formula: 1% × High-3 Average Salary × Years of Creditable Service
If you retire at age 62 or later with at least 20 years of service, the multiplier increases to 1.1% per year.
For example, a federal employee with a high-3 average salary of $120,000 and 30 years of service retiring at age 62 would receive: 1.1% × $120,000 × 30 = $39,600 per year, or $3,300 per month before taxes and survivor benefit reductions.
The Three Pillars of FERS
FERS was designed as a three-legged stool under P.L. 99-335 (Federal Employees' Retirement System Act of 1986). The basic annuity is one leg. Social Security benefits (since FERS employees pay into Social Security, unlike most CSRS employees) is the second. The Thrift Savings Plan (TSP), with its 5% government match, is the third. Together they are intended to provide retirement income security.
FERS Rate Increase Proposal: What Happened
In early 2025, the House Committee on Oversight proposed increasing FERS contributions to 4.4% for all tiers (Section 90001 of the HOGR committee print). This would have raised costs significantly for original FERS employees from 0.8% to 4.4%. However, this provision was removed by the House Rules Committee before H.R. 1 passed the House on May 22, 2025. It was never enacted into law. Current rates remain as shown above. Source: CRS IF12996, IF13020.
Sources & Legal Citations
FERS Contribution Rates: 5 U.S.C. §8422 — OPM FERS Information
FERS-RAE: P.L. 112-96, Middle Class Tax Relief and Job Creation Act of 2012
FERS-FRAE: P.L. 113-67, Bipartisan Budget Act of 2013
Rehire Exception: 5 CFR Part 841; OPM BALs 13-102, 14-102, 14-107
FERS Annuity Formula: 5 U.S.C. §8415
FERS Rate Increase Removed: CRS In Focus IF12996, IF13020
FERS vs. CSRS: A Brief Comparison
Before FERS was created by P.L. 99-335 in 1986, federal employees were covered by the Civil Service Retirement System (CSRS). CSRS provides a more generous pension formula (1.5% to 2% per year depending on years of service) but does not include Social Security coverage. CSRS employees contribute 7% of pay compared to FERS's 0.8% to 4.4%. CSRS was closed to new entrants effective January 1, 1987, with limited exceptions for rehired employees.
The key practical difference: CSRS retirees rely almost entirely on their pension, while FERS retirees combine a smaller pension with Social Security and TSP savings. For a 30-year employee with a $100,000 high-3, a CSRS pension might provide roughly $56,250 per year, while a FERS pension provides about $30,000—but the FERS employee also receives Social Security benefits and has had access to the TSP government match throughout their career.
Real-World Examples: How FERS Tier Affects Take-Home Pay
The difference between FERS tiers is not trivial. Consider three employees with identical positions—GS-13 Step 5 in the Washington-Baltimore locality area (annual salary approximately $132,000):
Original FERS (0.8%): Biweekly FERS deduction of $40.62. Over a 26-pay-period year, this employee contributes $1,056 to the retirement fund.
FERS-RAE (3.1%): Biweekly FERS deduction of $157.38. Annual contribution of $4,092. That is $3,036 more per year coming out of take-home pay compared to an original FERS employee doing the same job.
FERS-FRAE (4.4%): Biweekly FERS deduction of $223.38. Annual contribution of $5,808. This employee takes home $4,752 less per year than the original FERS employee. Over a 30-year career, the FRAE employee contributes approximately $142,560 more toward their pension than the original FERS employee for the same benefit formula.
How FERS Interacts With Other Benefits
Your FERS tier does not affect your TSP government match, your FEHB premium, your FEGLI coverage, or your Social Security benefits. It only affects the amount deducted from your paycheck for the FERS basic annuity. The pension formula itself (1% or 1.1% per year of service) is identical across all three tiers—only the employee contribution rate differs.
FERS contributions are included in the paycheck deduction order before federal income tax is calculated, which means they reduce your tax withholding. However, they do not reduce your FICA wages, so your Social Security and Medicare taxes remain unchanged. This distinction is important when using our calculator—it follows the exact deduction order specified by federal payroll regulations.
Minimum Retirement Age and Eligibility
Your Minimum Retirement Age (MRA) under FERS depends on your birth year and ranges from 55 to 57. You can retire with an unreduced annuity at MRA with 30 years of service, at age 60 with 20 years, or at age 62 with 5 years. Early retirement (MRA with 10+ years) is possible but comes with a permanent 5% per year reduction for each year under age 62.
Survivor Benefits
When you retire, you have the option to provide a survivor annuity to your spouse. If you elect a full survivor benefit (50% of your unreduced annuity), your pension is reduced by 10% during your lifetime, but your spouse receives 50% of your unreduced annuity after your death. If you elect a partial survivor benefit (25%), the reduction is 5%. Under 5 U.S.C. §8442, the spousal survivor benefit is a key component of retirement planning. A married employee who does not elect at least a partial survivor benefit must obtain the spouse's written consent.
The survivor annuity is adjusted annually for cost-of-living increases, just like the employee's annuity. This makes it a valuable form of inflation-protected income for a surviving spouse, particularly compared to private-sector alternatives like purchasing an annuity from an insurance company.
Frequently Asked Questions
What is my FERS contribution rate?
Your rate depends on when you were first hired into federal service: 0.8% if hired before January 1, 2013 (5 U.S.C. §8422(a)); 3.1% if hired during 2013 (P.L. 112-96); or 4.4% if hired on or after January 1, 2014 (P.L. 113-67). Check your SF-50 or contact HR if you are unsure of your hire date.
Does my FERS deduction reduce my Social Security taxes?
No. FERS contributions reduce your federal taxable income but do not reduce your FICA wages. Social Security and Medicare taxes are calculated on your gross pay minus FEHB premiums only (under Premium Conversion, 26 U.S.C. §125).
Was the FERS rate increase enacted?
No. The House Oversight Committee proposed raising all FERS tiers to 4.4% (Section 90001 of the HOGR committee print), but this was removed before H.R. 1 passed the House on May 22, 2025. Rates remain unchanged at 0.8%, 3.1%, and 4.4%.
How is my FERS pension calculated?
The basic annuity formula is 1% × your high-3 average salary × years of creditable service. If you retire at age 62 or later with at least 20 years of service, the multiplier increases to 1.1% (5 U.S.C. §8415).
I was rehired — which FERS tier am I in?
If you have 5 or more years of prior FERS-creditable civilian service, you may retain your original tier regardless of your latest hire date. This is covered by OPM Benefits Administration Letters 13-102, 14-102, and 14-107. Contact your agency HR office to verify.