2027 Deposit Interest Rate Rises to 4.5% for Service Credit Payments

Treasury has certified the interest rate on federal retirement service credit payments for calendar year 2027. It is 4.5 percent, up from 4.25 percent in 2026. The increase changes no eligibility rule. It changes what an unpaid balance costs while it sits.

The short answer: The 2027 deposit interest rate is 4.5 percent, up from 4.25 percent in 2026. Treasury sets this rate each calendar year. It applies to FERS and CSRS deposits, redeposits, post-1956 military service payments, and CSRS voluntary contributions.

Status as of October 27, 2026. This post covers a developing matter and is not updated continuously.

What Are the Key Takeaways?

• The 2027 rate on federal retirement deposits and redeposits is 4.5 percent, up from 4.25 percent this year, per Treasury’s certified rates (FEDweek, October 20, 2026).
• The same figure applies to payments for post-1956 military service and to CSRS voluntary contribution accounts.
• OPM charges this interest at a variable rate set by Treasury every year, compounded annually (OPM, Service Credit).
• On a FERS redeposit bill, OPM computes interest once each year as of December 31 on whatever balance is unpaid then.
• Nothing about who may make a deposit or redeposit changed. The 1.3 percent FERS deposit rate and the SF 3108 application are unchanged.

What is the 2027 deposit interest rate, and what does it apply to?

The 2027 deposit interest rate is 4.5 percent. Treasury certifies this figure annually and publishes it in its certified interest rates dataset. FEDweek reported the 2027 figure on October 20, 2026.

The rate reaches four kinds of payment. First, deposits for creditable civilian service where no retirement deductions came out of your pay. Second, redeposits, which repay a refund taken at a break in service. Third, payments capturing credit for post-1956 military service. Fourth, interest on CSRS voluntary contribution accounts, which FERS employees cannot use.

This is a calendar-year rate, not a rate fixed to your bill. A balance that stretches across years picks up each year’s rate in turn.

How is interest charged on a deposit or redeposit balance?

The mechanics differ by service type.

For a FERS deposit covering pre-1989 service with no deductions withheld, the amount due is normally 1.3 percent of basic pay for that service, plus interest. OPM charges interest from the midpoint of the service period and compounds it annually. It runs to the date the deposit is paid in full or the annuity begins, whichever comes first.

For a FERS redeposit, OPM charges interest through December 31 of the year before the bill is issued. If full payment arrives by December 31 of the year the bill is issued, no additional interest is charged. If it does not, OPM computes interest once each year as of December 31 on the unpaid balance.

That annual computation date is why a calendar-year rate matters. A balance still outstanding at the end of 2027 is measured against 4.5 percent, not the rate in force when the bill was issued.

What does the move from 4.25 to 4.5 percent cost on a real balance?

Work it on round numbers. Take an unpaid redeposit balance of $18,000 at a December 31 computation date:

• At 4.25 percent, the year’s interest is $765.
• At 4.5 percent, it is $810.
• The quarter-point move costs $45 on that balance, in that one year.

On a $45,000 balance the same arithmetic gives $1,912.50 against $2,025, a difference of $112.50. Neither figure is dramatic on its own. The part that compounds is.

Interest joins the balance each year, so the next year’s computation runs on the larger figure. A balance left alone grows on its own growth. The 2027 rate is one year of that sequence, a quarter point steeper than the year before.

Does the higher rate change who can make a deposit or redeposit?

No. The eligibility rules sit in statute and regulation, not in the annual rate. None of them moved.

Under FERS you can still pay for creditable civilian service performed before 1989 with no deductions withheld, for refunded service, and for Peace Corps or VISTA service. With narrow exceptions, FERS non-contributory service on or after January 1, 1989 remains ineligible. The application is still Standard Form 3108. OPM asks that it come in alongside the retirement application for anyone within six months of retiring.

The consequence of leaving a FERS redeposit unpaid is also unchanged. The service counts toward retirement eligibility but not toward the annuity computation. That reduces both your annuity and any survivor annuity. Our guide to the FERS redeposit walks through that trade-off, and the military basic pay deposit post covers the military side.

Frequently Asked Questions

Is the 2027 deposit interest rate locked in for the life of my balance?
No. Treasury certifies a new rate for each calendar year. OPM applies the rate in force for the year being computed.

Does the 4.5 percent figure apply to military service deposits too?
Yes. FEDweek reports that it reaches payments capturing credit for military service time. The deposit amount is separate, generally 3 percent of military basic pay for service from 2001 onward.

How often does OPM add interest to a redeposit balance?
Once a year. On a redeposit bill, OPM computes interest as of December 31 on the balance unpaid at that time.

Does a higher rate mean the deposit itself costs more?
The principal does not change: a FERS deposit is still normally 1.3 percent of basic pay for the service. What changes is the interest layered on top.

Where does the official rate table live?
OPM links the variable rate table from its CSRS and FERS service credit pages. Treasury publishes the certified rates annually.

Where Can Federal Employees Learn More?

Service credit arithmetic is one place where a small annual number quietly changes a lifetime annuity. Fed Pilot runs free federal retirement benefits workshops covering deposits, redeposits and the rest of the FERS picture. Register for an upcoming session.