Creating a Combined Approach to Retirement Security
One of the most well-known transformations of a pension system occurred when President Ronald Reagan signed the Federal Employees’ Retirement System Act into law on June 6, 1986. This law moved federal employees from the Civil Service Retirement System (CSRS), to a retirement system that integrated Social Security, a DB pension, and a DC savings plan.
This issue brief reviews this new system, known as the Federal Employees’ Retirement System (FERS). More specifically, this issue brief explores its impact on the funding of benefits and the adequacy of retirement income benefits for federal employees over the last twenty-five years. Developed in conjunction with a change that mandated new federal employees participate in Social Security, the 1986 law provides federal employees with retirement income from three components rather than the one annuity payment from CSRS.