Breaking Down the Finer Points of Discontinued Service Retirement

The only kind of federal retirement that isn’t considered voluntary is Discontinued Service Retirement, or DSR. An employee may become eligible for DSR if they meet the age and length of service requirements and were separated against their will, without the reasoning of “misconduct or delinquency.” The age requirements are either fifty years of age with twenty years of service, or any age with twenty-five years of service.

In either age-related instance, a minimum of five years of that service must be creditable civilian service.

The final decision as to if the separation is involuntary is made by The Office of Personnel Management makes. These actions are usually considered to be involuntary:

 Reduction-in-force (RIF):
 Abolishment of position;
 Lack of funds;
 Expiration of incumbent’s term of office
 Unacceptable performance (unless due to employee’s misconduct);
 Transfer of function outside the commuting area
 When no mobility agreement exists, reassignment outside the commuting area
 Failure to consistently meet the qualification requirements of the position. This is provided the separation is non-disciplinary and the action is initiated by the agency
 Separation at the time of probation as a result of failure to qualify due to performance only, which excludes misconduct
 The loss of military membership or the rank that is required to hold the National Guard position, resulting in separation of a National Guard technician
 Under title 5, U.S.C., Ch. 43, Subchapter II – The removal from the Senior Executive Service for poor performance.
Notice the distinction between separation due to poor job performance and separation related to misconduct. An employee who is not able to perform their duties is more likely to be eligible for DSR, while one who refuses is not.

The employee is not eligible for DSR if they decline a reasonable offer of a different position, even if an employee’s separation meets the rest of the aforementioned criteria. The reasonability of an offer is generally based upon whether the offered position is within the same agency, commuting area, the same tenure group, and within two grades of the employee’s previous position.

Much like early retirement, Discontinued Service Retirement provides for a two percent per year (1/6 of one percent per month) decrease in a CSRS retiree’s pension for each year (month) they are under the age of fifty-five. If an employee is not a special category employee, a FERS DSR retiree will not face age based decreases to their pension. They will not, however, be eligible to produce a cost-of-living increase until they have reached age sixty-two.

The employee must have received the agency’s decision for removal before the employee is considered eligible for retirement under discontinued service provisions for either unacceptable performance or disability or illness. So, if performance action were taken under 5 CFR 432, it would involve having provided the employee an opportunity to demonstrate acceptable performance during which they were not able to show improvement, followed by a proposal to remove and then notice of decision. The removal action is the cause for the employee’s retirement, so the employing agency may choose not to settle the case and remove the notice of decision to provide a clean record.

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