Federal employees are entitled to a pension under one of two retirement systems; either CSRS (Civil Service Retirement System) or FERS (Federal Employees Retirement System). CSRS is a pension system that was established for federal employees who were employed by the federal government prior to 1984. FERS was established for federal employees who began employment after 1983.

There is a major difference between the pension under CSRS and the pension under FERS and that is that FERS participants contribute to, and receive separately, Social Security while CSRS participants do not. Social Security benefits are not a marital asset and therefore are not divisible in divorce. That creates an inequity when dividing a CSRS pension because the pension includes, in effect, the equivalent of their Social Security benefit. Coincidentally, the difference in the employee contribution made by a federal employee to CSRS and the employee contribution made by a federal employee to FERS employee is 6.2%. That is the amount that FERS employees and anyone in the private sector contributes to Social Security.

The CSRS pension is routinely valued in divorce without regard to the fact that the CSRS employee has a larger pension because they contributed an extra 6.2% to the CSRS system instead of to Social Security. Often their ENTIRE pension is considered a marital asset while the other spouse’s Social Security benefit is not considered a martial asset. Therefore, it is important to separate out the Social Security component of a CSRS pension. Most attorneys are not aware of this inequity and even if they are, they don’t have the knowledge or expertise required to make this computation. That is why hiring a Certified Divorce Financial Analyst to property value all marital assets, including pensions, is so important.