FERS Contribution Rates: 3 Critical Tiers That Protect Your Pension

The short answer: FERS contribution rates come in three tiers — 0.8%, 3.1% and 4.4% of basic pay — set only by when you were first hired. OPM states there is no difference in the FERS basic benefit paid across the three tiers, so the pension formula stays the same.

What are the key takeaways?

• OPM sets three FERS contribution rates by hire date: 0.8% (pre-2013), 3.1% (2013), and 4.4% (2014 and later).
• OPM states in three documents that there is no difference in the FERS basic benefit across the tiers. A narrow exception covers Members of Congress and congressional employees.
• Special category employees add half a point: 1.3%, 3.6% and 4.9% (OPM Benefits Administration Letters 13-102 and 14-102).
• Agency shares effective October 2026 are 17.9% for Regular FERS and 15.9% for RAE and FRAE (OPM BAL 26-307).
• Proposals to raise rates to 9.4% passed the House in 2025 but were not enacted (Congressional Research Service).

What are the three FERS contribution rates?

Two federal employees can sit in identical positions, at identical grades, and pay wildly different amounts toward the same pension. The gap is not performance. It is a hire date.

OPM’s Benefits Administration Letters set out the three tiers:

• FERS (Regular) — employee pays 0.8% of basic pay
• FERS-RAE (Revised Annuity Employee) — employee pays 3.1%
• FERS-FRAE (Further Revised Annuity Employee) — employee pays 4.4%

OPM’s pamphlet on FERS explains the arithmetic. The rate is 7% of basic pay minus the Social Security OASDI tax rate.

Which tier applies to you?

The dividing lines fall around two calendar years.

Regular FERS generally covers employees first hired before 2013. OPM adds a nuance worth knowing. An employee appointed on or after January 1, 2013 can still land in plain FERS. Three conditions do it, measured on December 31, 2012. The employee was already FERS-covered. Or the employee was performing creditable or potentially creditable civilian service. Or the employee had already performed five years of such service.

FERS-RAE covers appointments effective during calendar year 2013. OPM’s carve-out language is specific. OPM measures the carve-out as of December 31, 2012. The employee was not FERS-covered on that date. The employee was also not performing creditable service. Yet the employee “had performed at least five years of civilian service creditable or potentially creditable under FERS.” OPM counts service subject to CSRS or CSRS-Offset toward those five years.

FERS-FRAE covers employees first hired on or after January 1, 2014. OPM’s letter announcing it noted “an increase of 1.3 percent of salary above the percentage set for the FERS Revised Annuity Employee (RAE).”

Two laws created the split. OPM cites Section 5001 of the Middle Class Tax Relief and Job Creation Act of 2012 for RAE. Section 401 of the Bipartisan Budget Act of 2013 created FRAE.

Do higher FERS contribution rates buy a bigger pension?

They do not. This is the single most important fact in the tier system, and OPM states it plainly in three separate places.

OPM’s Benefits Administration Letter 14-102 says: “With one exception, there is no difference in the FERS basic benefit paid to FERS, FERS-RAE, and FERS-FRAE employees.” The named exception covers congressional employees and Members of Congress.

OPM’s financial statements repeat it: “There is no difference in the FERS basic benefit paid to FERS Regular, FERS-RAE, and FERS-FRAE employees.” The CSRS and FERS Handbook adds that RAE and FRAE employees “pay higher employee contributions for the FERS basic benefit than employees subject to the original FERS coverage. The amounts and benefits payable under FERS did not change.”

So the formula is untouched. OPM’s computation page describes 1 percent of high-3 average salary per year of service. The figure rises to 1.1 percent for those who retire at 62 or older with 20 years. Our post on the FERS pension multiplier at age 62 works through that difference.

One caveat belongs here. The 1 percent accrual is not universal. Law enforcement officers, firefighters and air traffic controllers accrue at 1.7 percent for their first 20 years, then 1.0 percent after that.

What do special category employees pay?

Groups with enhanced retirement benefits pay an extra half point at every tier. OPM’s pamphlet describes it simply: “If you are in one of these employee groups, you contribute an additional .5% of pay.”

• Regular FERS special category — 1.3%
• FERS-RAE special category — 3.6%
• FERS-FRAE special category — 4.9%

The categories include law enforcement officers, firefighters, air traffic controllers, customs and border protection officers, Capitol Police and Supreme Court Police. OPM notes that FERS air traffic controllers pay the additional half point, unlike their CSRS counterparts.

How much does the government contribute?

Far more than the employee does, in every tier. OPM sets agency rates through its normal cost calculations. Benefits Administration Letter 26-307 lists the rates effective the first pay period on or after October 1, 2026.

For Regular FERS non-Postal employees, the agency share is 17.9%. For both FERS-RAE and FERS-FRAE, the agency share is 15.9%. OPM’s budget justification lays out the totals: a 18.7 percent normal cost for Regular FERS, 19.0 percent for FERS-RAE, and 19.3 percent for FERS-FRAE.

Look at the ratio. A pre-2013 employee paying 0.8% sits beside an agency contribution of 17.9%. A FRAE employee paying 4.4% sits beside 15.9%. The total cost of the benefit barely moves. What shifted was who pays for it.

Are FERS contributions pre-tax or after-tax?

After-tax, which surprises people who assume the deduction works like a TSP contribution. It does not.

OPM does not print the phrase “after-tax,” but its treatment of the money points one direction. OPM states that “a portion of each annuity payment is taxable and a portion is considered a tax-free recovery of your contributions to the retirement fund.” On refunds, OPM’s handbook says the amount “representing an employee’s actual contributions is not subject to federal income tax.” Interest is taxable in the year paid.

That tax-free recovery only makes sense if the contributions were included in taxable income when withheld. TSP works the other way, and Congressional Research Service materials describe TSP employee contributions as capable of being made “on a pre-tax basis.”

Contributions are also refundable if you leave without an annuity. OPM describes the option to have “retirement contributions be returned to you in a lump sum payment (called a refund).” OPM’s pamphlet warns that taking it means losing benefits based on that service, and that there is generally no provision for redepositing refunded FERS contributions. Our post on FERS redeposit and service credit covers where that rule bites.

What counts as basic pay?

Less than most people expect. OPM’s handbook excludes bonuses, allowances, overtime, holiday pay and military pay. It also excludes lump-sum payments for accrued leave, uniform allowances, night differential for GS employees, and payment for credit hours.

Locality pay does count. So do law enforcement administratively uncontrollable overtime, capped at 25%, and firefighter standby premium pay within its own cap.

That definition feeds directly into your high-3. Our walkthrough of the FERS high-3 average salary shows how the same exclusions shape the pension calculation.

Could FERS contribution rates change?

Proposals have surfaced, and none has become law. Congressional Research Service materials describe House-passed provisions in the 119th Congress. They would have raised the rate “by 5.0 percentage points to 9.4% of pay” for new employees. The figure reached 9.9% for groups with enhanced retirement benefits. Employees could avoid the increase by electing at-will employment.

Those provisions did not survive. The enrolled text of the enacted law contains no amendment to 5 U.S.C. 8422 and no reference to Further Revised Annuity Employees. As of August 2026, the rates remain 0.8%, 3.1% and 4.4%.

What else do federal employees ask about FERS contribution rates?

Can I switch to a lower tier?
No. OPM ties coverage to hire date and prior service history, not to election.

Does paying 4.4% mean I get my money back faster?
The annuity formula does not change by tier, so a FRAE employee recovers a larger personal contribution through the same benefit. OPM’s tax-free recovery treatment reflects the larger amount contributed.

Do FERS contributions go into my TSP?
No. These deductions fund the FERS basic benefit through the Civil Service Retirement and Disability Fund. TSP contributions are separate and carry their own agency match.

What happens to my contributions if I resign at 45?
OPM describes two paths. One is a refund of contributions. The other is waiting until retirement age to apply for monthly payments, with five years of creditable service.

Does locality pay increase my contribution?
Yes, because OPM includes locality-based comparability payments in basic pay for deduction purposes.

Where can I confirm which tier I am in?
The retirement coverage code on your SF-50 reflects it. OPM’s letters map codes such as K, KR and KF to Regular FERS, FERS-RAE and FERS-FRAE.

Want help reading your own numbers?

Tier assignment is easy to misread, and it changes what you have paid rather than what you will receive. Fed Pilot runs free federal retirement workshops that cover how the pension formula, TSP and Social Security fit together for federal employees approaching retirement.

Register for a free Fed Pilot workshop and bring your SF-50.