There are some federal employees out there who are covered by one of the wackier retirement systems the government has to offer: CSRS-Offset. Despite their small number, these employees generate the largest number of questions. And it's no wonder. Their retirement coverage is a hybrid. In fact, it's a cart that preceded a horse. Let me explain.

The problem began with a change in the Social Security law. All new employees entering the government after December 31, 1983, were required to be covered by Social Security and CSRS. The same rule applied to CSRS employees who were rehired after a break in CSRS coverage of over one year. In a word, this was the cart. The horse finally arrived on January 1, 1987, when the FERS retirement system went on line.

After that date, everyone first entering the government was covered by FERS. To take care of the hybrid employees who had been sitting in limbo, the CSRS Offset category was created. Those who were hired before January 1, 1984 and had at least five years of creditable civilian service by January 1, 1987, were put in CSRS Offset unless they elected to transfer to FERS.

As for former CSRS employees who were returning to work, special rules were established for them. If they had a break in service that exceeded one year and ended after 1983 and had five years of creditable civilian service as on January 1, 1987, they were given a choice of becoming CSRS Offset employees or transferring to FERS.

So, how does being CSRS Offset employees affect their retirement? First, if they are retired and become eligible for a Social Security benefit at age 62 (or later if they retire after that date), their CSRS annuity is reduced by the amount they will be receiving from Social Security based on that CSRS Offset service.

Same dollars, two different sources.

Because they are covered by Social Security, they are exempt from the effects of the Government Pension Offset. And, although they are not exempt from the Windfall Elimination Provision, it has no affect on their CSRS Offset pension. The WEP does apply to any Social Security benefit they may have earned from Social Security-covered employment outside the federal service, but only if their total years of substantial earnings under Social Security are fewer than 30.