The History of the Civil Service Retirement System

The Civil Service Retirement System was established in 1920.

The modern federal civil service system traces its roots to 1883. The Civil Service Retirement System, or CSRS, was created in 1920. By then, many people were staying on the job well past retirement age because there was no pension program. The CSRS provided a means for people to retire while also allowing younger employees to enter and revitalize the workplace.

Civil Service

The Civil Service Retirement System is a contributory retirement system with defined benefits. The Federal Employees Retirement System, or FERS, replaced the CSRS on Jan. 1, 1987, and from that point on, people who enter federal service are no longer eligible for CSRS.

Federal Employees

In 1983, changes in Social Security law required that all federal civilian employees hired after that year be subject to Social Security withholding taxes. Previously, federal employees in the CSRS program did not pay Social Security taxes and, at retirement, had no Social Security accounts. These changes in Social Security law led to creation of the FERS, which has a reduced defined benefit but additional Social Security benefits and optional participation in a tax-deferred 401(K) savings plan, called the Thrift Savings Plan, or TSP.

Comparisons

Disagreement over which retirement system is better continues as of November 2010, even though, with few exceptions, federal civilian employees have no control over which retirement system they are enrolled in. There are distinct advantages and disadvantages to both systems.

References

• U.S. Office of Personnel Management: FERS Retirement
• U.S. Office of Personnel Management: CSRS Retirement
• Government Executive: Retirement Planning -- CSRS vs. FERS