What the CSRS Offset system is, and why it produces some of the most confused federal retirees.

Of every retirement system code I see on a federal employee’s SF 50, the one that produces the most confusion is CSRS Offset. Retirement Plan Code 3. The label makes it sound like a minor adjustment to CSRS. It is actually a separate hybrid system with its own rules, its own Social Security treatment, and its own set of planning mistakes that don’t apply to anyone else.

If you have it, you should know what it does and what it doesn’t.

Who ends up in CSRS Offset.

CSRS Offset covers federal employees who had some CSRS-covered service and some FERS-covered service— typically someone hired before January 1, 1987 who had a break in service of more than 365 days, or someone who switched between CSRS and FERS positions and didn’t (or couldn’t) make a clean election.

The defining feature is that the employee pays into both systems: the older CSRS contribution rate (7%, 7.5%, or 8% depending on hire date) on their CSRS-covered earnings, and the FERS contribution rate (currently about 0.8% for most employees in 2026) on their FERS-covered earnings.

How the annuity is computed at retirement.

Here is where the system earns its name. At retirement, OPM computes the annuity as if the employee were CSRS the entire time, using the CSRS tiered formula (1.5% / 1.75% / 2.0%). That produces a tentative gross annuity.

Then OPM computes the FERS annuityfor the employee’s FERS-covered service alone, using the FERS formula (1.0% or 1.1% per year).

The Offset employee then receives the CSRS-computed annuity,reduced by the amount of any Social Security benefit attributable to their FERS-covered earnings. That reduction is what the system calls the “offset.”

In plain English: a CSRS Offset employee gets the better of the two formulas, less a Social Security clawback that only applies once they start drawing Social Security and only reflects the FERS portion of their earnings.

What this means in practice.

The Social Security timing decision is the single largest planning lever for CSRS Offset employees. The earlier you claim Social Security, the earlier the offset kicks in — because the offset is calculated against your actual Social Security benefit at the time you receive it.

If you claim Social Security at 62 and your benefit is, say, $1,800 a month, the offset starts reducing your CSRS annuity by $1,800 a month (the portion attributable to FERS-covered earnings, prorated). If you wait until 70 and your benefit grows to $2,800 a month, the offset grows accordingly. The CSRS-computed annuity itself doesn’t change. The deduction against it does.

The TSP, survivor election, FEHB, and FEGLI decisions all interact with CSRS Offset in ways that mirror FERS more than CSRS, because most of those programs track to the FERS rules by default. But the annuity math is its own thing, and it requires its own model.