Federal Employees’ Retirement System: Budget and Trust Fund Issues, Katelin P. Isaacs, Analyst in Income Security, March 24, 2014

“Most of the civilian federal workforce is covered by one of two retirement systems: (1) the Civil Service Retirement System (CSRS) for individuals hired before 1984 or (2) the Federal Employees’ Retirement System (FERS) for individuals hired in 1984 or later. FERS annuities are fully funded by the sum of employee and employer contributions and interest earned by the Treasury bonds held by the Civil Service Retirement and Disability Fund (CSRDF). The federal government makes supplemental payments into the CSRDF on behalf of employees covered by the CSRS because employee and agency contributions and interest earnings do not meet the full cost of the benefits earned by employees covered by that system. The Office of Personnel Management (OPM) estimated that in FY2014, obligations from the CSRDF would total $80.0 billion, of which $79.4 billion will represent annuity payments to retirees and survivors. Other outlays consist of refunds, payments to estates, and administrative expenses. Obligations from the fund are projected to increase by 3.4% to $82.7 billion in FY2015, of which $82.1 billion will represent annuity payments. OPM estimated that receipts to the CSRDF from all sources would be $95.3 billion in FY2014 and $98.5 billion in FY2015. The year-end balance of the CSRDF was projected to increase from $848.5 billion at the end of FY2014 to $861.8 billion at the end of FY2015. The total annual income of the CSRDF will increase from $94.8 billion in FY2012 to an estimated $158.8 billion in FY2025 and to $1.1 trillion in FY2090. The total expenses of the fund are projected to rise more slowly, increasing from $73.9 billion in FY2012 to an estimated $115.0 billion in FY2025 and to $715.8 billion in FY2090. Consequently, the assets held by the CSRDF also are projected to increase steadily, rising from $829.1 billion in FY2012 to an estimated $1.3 trillion in FY2025 and $13.7 trillion in FY2090. Expenditures from the CSRDF currently are about 38% as large as federal expenditures for the salaries and wages paid to federal employees. Pension expenditures are projected to decline relative to the government’s wage and salary expenses, beginning around FY2020. By FY2090, the expenditures of the CSRDF are estimated to be only about 30% as large as the government’s expenditures for wage and salary payments to employees.”