Federal Employees Retirement System (FERS) employees may be eligible for Discontinued Service Retirement (DSR) under certain circumstances, primarily when they experience an involuntary separation from federal service. While Civil Service Retirement System (CSRS) employees may also qualify, this article focuses specifically on FERS.
What Qualifies as Involuntary Separation?
For a separation to be considered involuntary, it must not result from misconduct, a voluntary resignation, or a planned retirement. Situations that may lead to involuntary separation include workforce reductions (RIF), agency restructuring, budget shortages, position elimination, relocation of a position beyond the commuting area, or separation during a probationary period due to performance issues.
Discontinued Service Retirement Eligibility Criteria
To qualify for DSR, FERS employees must meet one of these requirements:
- Be at least 50 years old with 20 years of service.
- Have 25 years of creditable service at any age.
At least 5 of those years must consist of civilian service. Additionally, any unused annual leave can be credited to help meet the eligibility threshold.
Unused sick leave, while not counting toward eligibility, will be factored into your creditable service to determine your annuity amount. Under FERS, if you qualify for DSR before reaching your Minimum Retirement Age (MRA), your annuity won’t be reduced. However, you won’t receive the retirement annuity supplement—a temporary replacement for Social Security benefits—until you reach your MRA. This supplement ends at age 62, but at that point, your FERS Cost-of-Living Adjustment (COLA) begins.
Insurance Benefits Under DSR
Employees retiring through DSR can carry their insurance coverage into retirement, provided they meet the continuous enrollment criteria.
What is a “Reasonable Offer”?
You won’t qualify for DSR if your agency provides a “reasonable offer” for another position within the same agency. According to the Office of Personnel Management (OPM), a reasonable offer must:
- Be provided in writing.
- Match your qualifications.
- Be within your agency and commuting area (unless you’re subject to a geographic mobility agreement).
- Maintain the same tenure as your current role.
- Not drop more than two grade or pay levels below your current position.
For personalized guidance on your federal benefits and DSR options, consider consulting a Federal Retirement Consultant® who can address your specific questions and needs.
