Do Federal Employees Pay Into Social Security?
A federal employee's connection to Social Security depends on their hiring date, which places them in one of two distinct retirement structures.
Whether a federal employee pays into Social Security depends on their hiring date. This distinction creates two separate retirement frameworks for government workers. Most current federal employees are covered by a system that includes Social Security contributions, while those hired before 1984 were enrolled in an older system that operated independently of Social Security.
The Current Federal Employee Retirement System (FERS)
The Federal Employees Retirement System (FERS) was established for all federal civilian employees hired after December 31, 1983. FERS is a three-tiered plan that includes a Basic Benefit Plan pension, Social Security, and the Thrift Savings Plan (TSP), which is a tax-deferred savings plan similar to a 401(k).
A mandatory component of FERS is participation in the Social Security system. Employees covered by FERS pay Social Security taxes at the same rate as private-sector employees: 6.2% for the Old-Age, Survivors, and Disability Insurance (OASDI) portion on earnings up to the annual maximum wage base, plus a 1.45% contribution for Medicare with no wage limit. The employing federal agency matches these contributions.
The FERS Basic Benefit is a defined-benefit pension plan calculated based on an employee’s years of service and “high-3” average salary—the highest average basic pay earned during any three consecutive years of service. The Thrift Savings Plan allows employees to contribute a portion of their pay to a retirement savings account, with the government providing an automatic 1% contribution and matching employee contributions up to an additional 4%. Together, these three sources form the complete retirement plan for today’s federal workforce.
The Legacy Civil Service Retirement System (CSRS)
For federal employees hired before January 1, 1984, the retirement landscape was different. These employees were covered by the Civil Service Retirement System (CSRS), established in 1920. A feature of CSRS is that employees did not contribute to Social Security from their federal wages, nor did the government make contributions on their behalf.
The CSRS pension was designed to be a standalone retirement plan, providing a more generous annuity to compensate for the lack of Social Security coverage. CSRS employees contributed 7% to 8% of their pay to the CSRS fund, which was matched by their employing agency. The annuity was calculated based on years of service and the high-3 average salary.
A variation called “CSRS Offset” applies to employees who had a break in service and were rehired after 1983 with at least five years of prior civilian service. These employees are covered by both CSRS and Social Security, contributing a reduced amount to CSRS and the full amount to Social Security. Their CSRS annuity is then “offset,” or reduced, when they become eligible for Social Security benefits.
Interaction Between Federal Pensions and Social Security Benefits
The Social Security Fairness Act, signed into law on January 5, 2025, repealed two provisions: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). Effective January 2024, these rules no longer reduce Social Security benefits for individuals receiving a CSRS pension.
The Windfall Elimination Provision affected how a CSRS retiree’s own Social Security benefit was calculated if they also qualified from other jobs. The WEP used a modified formula that resulted in a lower monthly Social Security payment. With the repeal of WEP, these reductions ceased as of January 2024, and affected beneficiaries will have their benefits recalculated and restored.
The Government Pension Offset impacted individuals who received a CSRS pension and were also eligible for Social Security spousal or survivor benefits. The GPO rule reduced the spousal or survivor benefit by two-thirds of their CSRS pension, which in many cases eliminated the Social Security benefit. The repeal means CSRS retirees are no longer subject to this reduction and can receive the full spousal or survivor benefits they are entitled to, with adjustments made retroactively to January 2024.