The Impact on Annuities when Returning to Government

Like many jobs in life, the government will have a certain percentage of retirees return in some capacity after retiring. Along with many other questions that may be circulating your mind, perhaps you’re considering going back right now, employees aren’t sure of how it affects their annuities.

While the annuity stops in some cases, it may continue in others. Below, we’ve laid out four conditions/groups that may have their annuity stopped. For CSRS retirees who then reenter the world of governmental work, the annuity will stop if one of the four applies. Alternatively, FERS retirees will only see their annuity stop if they belong to one of the first two.

Disability Annuitants – The Office of Personnel Management (OPM) may learn that you have been restored to earning capacity (or have recovered) before then being reemployed.

Disability Annuitants (not for a National Guard Technician position) – If you were no longer allowed membership in the National Guard on medical grounds and therefore were awarded a disability annuity.

Involuntary Annuitants – Perhaps you were separated from your role involuntarily? Sometimes, the law may impose certain requirements depending on the length of service or age. However, you’re now in a permanent role (this includes excepted, career, and career-conditional).

Presidential Appointment Annuitants – Subjected to retirement deductions, you might receive a Presidential appointment as an annuitant.

What Happens When an Annuity Stops?

If you fall into any category as a CSRS retiree or one of the first two as a FERS retiree, you’ll fall in line with others that have service history and position similar to your own after reentering federal work. Eventually, you’ll leave for a second time, and the annuity will be continued (unless the new separation entitles you to a deferred or immediate annuity).

If we look at examples, the majority of those who have their annuity stopped upon retirement are CSRS employees; digging even deeper, common reasons for retirement include transfer of function, a RIF, or reorganization. After retiring under lowered service requirements and age, the individuals are considered to be completing interrupted careers.

For those who met the required age and service criteria and received an immediate annuity, their annuities may have continued after returning to work. When this occurs, their salary will only complement the annuity. For example, the amount of annuity received will be taken from one’s earnings (some rare exceptions exist to this rule).

Returning to Employment

If you’re considering a return to work, keep in mind that annuitants can earn either a redetermined or supplemental annuity.

Supplemental Annuity – With this option, it’s added to your existing annuity. While working on a full-time basis continuously for at least twelve months, you should be eligible for a supplemental annuity. For those only working on a part-time basis, the qualification time will be longer.

Redetermined Annuity – As long as you work for five years (minimum), you may be able to select a redetermined annuity. With this option, your existing annuity will be replaced completely.

Remember when we said there were exceptions to the rule of earning a reduced salary with annuities? This is because some people do receive a full salary and a full annuity after returning to work. Normally, this will only occur when the role is one that requires heavy training and experience and, therefore, where recruitment is difficult. Alternatively, it can occur with emergency employment and where there’s a direct threat to property or life. While in the process of being rehired, there’s no harm in asking whether one of the exceptions applies to your position!