What’s the Current FERS Contribution Rate and What’s Changing in 2025?

The current FERS (Federal Employees Retirement System) contribution rate depends on the employee's hire date. For those hired before 2013, the contribution is 0.8%. Employees hired in 2013 contribute 3.1%, and those hired in 2014 or later contribute 4.4%. This option would take effect in January 2025. The federal government provides most of its civilian employees with a defined benefit retirement plan through the Federal Employees Retirement System (FERS).

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The plan provides eligible retirees with a monthly benefit in the form of an annuity. Those annuities are jointly funded by the employees and the federal agencies that hire them. Employees' contributions are counted as federal revenues.

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Nearly all federal employees participate in FERS and contribute a percentage of their salary toward their future annuity. Most people who were hired before 2013 contribute 0.8 percent, most people hired in 2013 contribute 3.1 percent, and most people hired in 2014 or later contribute 4.4 percent.

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About half of all federal civilian employees fall into the last category. Under this option, most employees enrolled in FERS would contribute 4.4 percent of their salary toward their retirement annuity. The increase in the contribution rates (of 3.6 percentage points for employees who enrolled in FERS before 2013 and 1.3 percentage points for those who enrolled in 2013) would be phased in over four years.

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The dollar amount of future annuities would not change under the option, and the option would not affect employees hired in 2014 or later who already contribute 4.4 percent. Agencies' contributions would remain the same under the option.

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FERS Contribution Rate Increases: What You’ll Pay if the Law Passes

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Proposed FERS changes:

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• Everyone moves to 4.4%, phased in from 2026–2027
  
  
• 0.8% employees: Increase by 1.8% in 2026 and another 1.8% in 2027
  
  
• 3.1% employees: Increase by 1.3% in 2025

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FERS changes

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What Is the FERS Annuity Supplement and Who Might Lose It?

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The FERS annuity supplement bridges the income gap for retirees who leave federal service before age 62 and aren’t yet eligible for Social Security.

If the current proposal is passed:

• The FERS supplement would be eliminated for any retiree after the bill’s enactment date
  
  
• Existing recipients would not lose their supplement
  
  
• Law enforcement, firefighters, and air traffic controllers under mandatory retirement rules would remain eligible if they retire at the mandatory separation age
  
  
• Those retiring early (via VERA or Deferred Resignation Program) could lose the supplement
  
  

Key Warning: If you plan to retire soon under VERA or DRP and the bill passes before your retirement date, you may lose this benefit even if you already applied.

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From High-3 to High-5: Will Your Annuity Be Smaller?

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Currently, your FERS or CSRS retirement annuity is based on your highest-paid consecutive three years of service known as High-3.

Under the new proposal:

• The calculation would change to High-5 (highest five consecutive years)
  
  
• Your pension would be smaller
  
  
• It applies to all retirements after Jan 1, 2027
  
  
• It affects both FERS and CSRS employees still working
  
  

Retirees already receiving annuities would not be affected.

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New “At-Will” Status for New Hires Tied to 4.4% Rate

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A highly controversial proposal would force new federal hires to choose between:

• At-will employment with a 4.4% FERS rate
  
  
• OR
  
  
• Full civil service protections with a 9.4% FERS rate
  

If no election is made by the end of probation, they’ll be defaulted into at-will status, which means:

• Can be terminated at any time, without notice or appeal
  
  
• Only protected against prohibited personnel practices
  

This radical shift in employment status has alarmed federal unions and watchdog groups, who call it a step toward “politicising the civil service.”

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$350 Fee to Appeal to MSPB? Yes, That’s Proposed Too

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Right now, federal workers can appeal disciplinary actions to the Merit Systems Protection Board (MSPB) free of charge.

Under the new legislation:

• A $350 filing fee would apply to MSPB cases
  
  
• The fee would begin 3 months after enactment
  
  
• If you win, you’d get the fee refunded
  

This move is widely seen as a deterrent to seeking justice, especially for lower-wage federal workers.

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Should You Retire Early Because of These Proposals?

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No not yet. While the proposals are serious, they are not yet law, and there are many steps left before any of them take effect.

According to NARFE (National Active and Retired Federal Employees Association), it’s too soon to make major career decisions based on these proposals.

“Certainly, it’s a real threat that could potentially be relevant to someone’s timing of retirement,” said NARFE’s John Hatton. “But we have time before we know whether these proposals will actually go into effect.”

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When Might These Federal Retirement Changes Happen?

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There’s no set date for passage, but timelines being discussed include:

• July–October 2025: Most likely timeframe
  
  
• Debt Limit “X-Date”: Congress aims to pass before this deadline
  
  
• If passed: Some provisions (like MSPB fees) take effect in 3 months
  

Others (like FERS contribution changes and High-5) are phased in through 2026–2027

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Summary: What Federal Employees Should Act On Now

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Final Thoughts: Stay Informed, But Don’t Panic

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While these proposed changes to federal retirement benefits are real, they are not yet law. Avoid making sudden retirement decisions based on fear or speculation.

Instead, keep an eye on the legislative process, consult with a federal benefits expert, and prepare for multiple scenarios.

We’ll continue to track these FERS changes, so you stay empowered and informed.

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FAQs on FERS Contribution Rate and Retirement Changes

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What is the percentage for FERS contributions?

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The FERS (Federal Employees Retirement System) contribution rate depends on your hire date:

• Hired before 2013: 0.8% _of basic pay
  
  
• Hired in 2013: 3.1%
  
  
• Hired in 2014 or later: 4.4%
  
  

These contributions are taken from your paycheck and help fund your future FERS annuity.

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2. Can I retire at 57 with 20 years of federal service?

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Yes, if you meet the Minimum Retirement Age (MRA). For most federal employees, the MRA is between 55 and 57, depending on birth year.

If you are 57 years old and have 20 years of creditable service, you can retire with immediate benefits under MRA + 10 rules. However:

• Your pension may be reduced by 5% for each year you're under age 62, unless you postpone receiving it.
  
  

To avoid the reduction, you can defer your annuity until age 62 (if you don't need immediate income).

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3. How to get 1.1% FERS?

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You receive the 1.1% pension multiplier (instead of the standard 1%) if:

• You retire at age 62 or older, and
  
  
• You have at least 20 years of creditable service
  
  

So, to qualify: age 62+ and 20+ years of service = your FERS annuity is calculated using 1.1% × high-3 salary × years of service.

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4. What is the FERS 1.3 percent rate?

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The 1.3% FERS contribution rate does not refer to your pension calculation. It's typically:

• A proposed or phased-in increase for certain employee groups
  
  
• Or could relate to special groups (like federal law enforcement officers or firefighters) who have different rules and contribution rates
  
  

However, for most regular federal employees, the contribution rate is 0.8%, 3.1%, or 4.4%, depending on hire date.

If you're referring to a 1.3% contribution, it could be part of a budget proposal or change in law, not a standard figure.

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