How the Gradual Decline of CSRS Continues to Shape Retirement Outcomes for the Few Still Eligible

Key Takeaways

• CSRS continues to shape retirement outcomes for a small group of public sector retirees, even though it was closed to new hires in 1984.

• The system’s decline highlights contrasts with FERS, especially in areas such as pension amounts, Social Security integration, and survivor benefits.

Looking Back at the Legacy of CSRS

The Civil Service Retirement System (CSRS) was the primary retirement program for government employees from 1920 until it was replaced by the Federal Employees Retirement System (FERS) in 1987. By the time CSRS closed to new participants, it had already set the framework for decades of retirement planning. In 2025, only a small number of active employees and retirees remain under CSRS, yet its impact still shapes how retirement benefits are understood.

As a retiree or someone nearing retirement under CSRS, you benefit from one of the most generous defined-benefit pensions ever provided in government service. Unlike FERS, CSRS was not tied to Social Security, meaning that for decades participants relied primarily on their pension and any personal savings. This structure still has lasting consequences today.

Why CSRS Still Matters in 2025

Even though the system is decades old, CSRS remains relevant. Several factors explain why:

• Pension Security: CSRS offers annuities that can exceed 50% to 80% of an employee’s high-3 average salary, providing reliable income.

• Survivor Benefits: Spousal benefits under CSRS remain strong, though they often require elections at retirement.

• Comparisons with FERS: Current employees under FERS look at CSRS retirees with recognition that the latter group often receives higher monthly income without relying on Social Security.

The decline of CSRS has created a generational divide in the public sector, with younger employees accustomed to a more diversified, less generous retirement framework.

Shifts That Led to the Decline

The decision to phase out CSRS was not sudden. Several developments in the 1970s and early 1980s pointed toward change:

1. Social Security Integration: Congress wanted all new federal employees to participate in Social Security, something CSRS did not include.

2. Cost Concerns: CSRS was expensive for the government to maintain, as it provided high pensions without employee contributions to Social Security.

3. Policy Alignment: By transitioning to FERS in 1987, the federal government aligned retirement benefits with broader private-sector trends of blending pensions with defined contribution plans.

The Size of the CSRS Population Today

In 2025, fewer than 50,000 employees remain under CSRS, compared to millions under FERS. Retirees under CSRS, however, still number in the hundreds of thousands, making them a significant, though shrinking, group. Every year, attrition reduces this population, and within the next decade, CSRS is projected to become primarily a historical program.

Retirement Income Under CSRS

For those still drawing a CSRS annuity, the structure remains simple and predictable:

• Annuity Formula: Based on years of service and high-3 salary average, with percentages that increase steadily with tenure.

• Cost-of-Living Adjustments (COLAs): CSRS retirees receive full COLAs tied to the Consumer Price Index (CPI), which can result in higher long-term protection against inflation compared to FERS retirees, who may face COLA reductions.

• No Social Security Dependence: CSRS retirees may qualify for Social Security if they worked in other covered employment, but most rely primarily on their pension.

Survivor and Spousal Protections

CSRS includes survivor benefits, but elections at retirement directly affect the retiree’s annuity. This means:

• A reduction in monthly benefits for the retiree if survivor benefits are elected.

• Spousal benefits calculated as a portion of the retiree’s annuity.

• Limited flexibility compared to FERS, where survivor and spousal arrangements integrate with Social Security.

For surviving spouses, CSRS continues to provide an important safety net.

Healthcare and CSRS Retirees

CSRS retirees maintain access to the Federal Employees Health Benefits (FEHB) program in retirement, provided eligibility rules were met. This access is critical because it offers continuity of coverage, even into advanced age. Coordinating FEHB with Medicare remains a key strategy for CSRS retirees today.

Comparing CSRS and FERS Outcomes

Looking at retirement in 2025, you can see clear distinctions between CSRS and FERS outcomes:

• Pension Amounts: CSRS pensions tend to be larger as a standalone benefit.

• COLA Treatment: CSRS retirees receive full COLAs, while FERS retirees sometimes receive partial adjustments.

• Social Security: FERS retirees rely on Social Security in addition to their smaller pension and Thrift Savings Plan (TSP) accounts.

• Savings Requirements: CSRS retirees often had less pressure to save aggressively in TSP, whereas FERS retirees depend heavily on TSP balances.

The Role of the Windfall Elimination Provision

Until 2024, many CSRS retirees with Social Security-covered work outside the federal system faced reductions under the Windfall Elimination Provision (WEP). However, with the repeal of WEP in 2025, those reductions no longer apply. This change enhances retirement income for CSRS retirees who also earned Social Security benefits elsewhere.

What the Decline Means for Policy

The shrinking CSRS population shapes retirement policy in several ways:

• Administrative Simplification: With fewer active participants, agencies devote fewer resources to managing CSRS.

• Budgetary Impacts: While legacy costs remain, the shift to FERS has reduced the government’s long-term pension liabilities.

• Historical Lessons: Policymakers often point to CSRS as an example of a generous but unsustainable system in today’s economic climate.

Challenges Still Facing CSRS Retirees

Even with strong benefits, CSRS retirees encounter unique challenges in 2025:

1. Healthcare Costs: Rising healthcare expenses place pressure on FEHB and Medicare coordination.

2. Longevity Risk: With longer life expectancies, retirees must consider survivor elections and estate planning carefully.

3. Inflation: While COLAs provide protection, the cost of goods and services can still outpace income growth in certain years.

Planning Considerations for the Few Remaining CSRS Employees

If you are still an active employee under CSRS in 2025, your decisions carry long-term weight:

• Review survivor benefit options carefully before retirement.

• Explore whether Social Security eligibility applies to you, especially with the end of WEP.

• Coordinate FEHB and Medicare enrollment to avoid unnecessary gaps or penalties.

• Consider supplemental savings or annuities to account for unexpected expenses.

How CSRS Shapes Retirement Thinking Beyond Its Population

Even though CSRS is nearly phased out, its influence extends beyond those directly covered:

• Benchmarks for Generosity: CSRS serves as a point of comparison for newer systems.

• Retirement Security Discussions: Policymakers, unions, and analysts often invoke CSRS when discussing retirement adequacy.

• Cultural Memory: Among public sector employees, CSRS represents an era of stability and security in retirement planning.

Looking Ahead

By the early 2030s, CSRS will exist almost entirely in retirement benefits already being paid out. For you as a retiree or near-retiree, the value lies in understanding how to maximize what remains of the system. For policymakers, CSRS remains a historical lesson in balancing employee security with fiscal responsibility.

Keeping Your Retirement Secure

As you weigh your retirement options under CSRS, your key focus should remain on protecting your income and healthcare access. Coordinating with Social Security where possible, electing survivor benefits wisely, and managing healthcare costs are essential steps. Even though CSRS is nearly extinct, it still provides substantial advantages that can help you sustain financial stability in retirement.

Why Your Next Step Matters

The decline of CSRS underscores the importance of personalized planning. Retirement today is more complex than when CSRS was dominant. To make the most of your benefits, consider seeking expert guidance. Get in touch with a licensed agent listed on this website to evaluate your options and ensure your retirement remains as secure as possible.