Working after federal retirement: the reemployed annuitant salary offset
It sounds like the best of both worlds — collect your federal pension and a federal paycheck. For most retirees who go back, it doesn’t work that way. The law says your annuity keeps flowing, but your new salary is reduced by that same annuity amount, so your combined cash usually just equals the job’s pay. The one route that lets you truly stack both — the dual compensation waiver — got harder in 2026, when the streamlined agency-head authority expired. And if you’re under 62, returning to work can quietly erase your FERS supplement. This guide walks through exactly how the money works, with an estimator.
1. The default rule: salary offset
Here’s the rule that surprises people. When a FERS or CSRS retiree returns to a federal position, the law requires that the new salary be offset by the amount of the annuity allocable to the time worked. The agency pays you the reduced salary and remits the offset amount to OPM for the retirement fund.
(annuity is still paid to you separately, in full)
Net it out and your total cash is roughly the position’s salary — the annuity simply backfills part of the paycheck rather than adding on top. If you work part-time, the offset is prorated. This is the default for essentially every regular reemployment; the only escape is a waiver.
2. Your annuity keeps coming
The good news: under FERS, returning to work does not terminate your annuity. For a normal or involuntary FERS retirement, the annuity continues in full — the only routine exception is a disability retiree whom OPM has found recovered or restored to earning capacity, or certain judicial appointments. So you don’t lose your pension by going back; you just don’t get to stack the full salary on top of it without a waiver.
Your annuity also keeps receiving its annual COLA while you’re reemployed, and your agency must update the offset each year as the annuity grows. One administrative note worth flagging: it’s on you to give HR your updated OPM COLA notices so the offset stays accurate.
3. The dual compensation waiver
The only way to collect both your full salary and your full annuity is a dual compensation waiver (DCW). Federal law provides it on a case-by-case basis: the OPM Director can waive the offset when an agency head shows exceptional difficulty recruiting or retaining a qualified employee for the position (plus a separate emergency authority).
A faster route used to exist. Section 1122 of the NDAA for FY 2010 let individual agency heads grant offset waivers directly, subject to hourly caps. That authority expired December 31, 2024 and was not extended. As of 2026, every dual compensation waiver must go through OPM under the permanent authority. Assume the offset applies unless OPM specifically approves a waiver for your position.
One trade-off: time worked under a DCW generally does not count toward a supplemental or redetermined annuity. You get the stacked cash now, but you don’t build additional pension from those years.
4. The supplement earnings trap
If you retired before 62 and collect the FERS annuity supplement, going back to work — federal or private — can erase it. The supplement is subject to an annual earnings test: $1 of supplement is lost for every $2 of earnings above $24,480 in 2026.
The cruel detail: the earnings figure is your gross salary before the offset, not the reduced amount you take home. So if the position pays $80,000 and your annuity is $30,000, OPM counts the full $80,000 against the supplement — which, at that level, wipes it out entirely. A dual compensation waiver does not shield the supplement from this test. The lone exception is special-provision retirees, who are exempt from the test until they reach MRA.
5. Estimate your reemployed income
Enter the position’s salary, your current annual annuity, your annual supplement (enter 0 if you’re 62+ or don’t receive it), and whether you have a waiver. The estimator shows your real combined income — and how the earnings test hits the supplement.
Reemployed annuitant income estimator
Models the salary offset and the 2026 supplement earnings test ($24,480 limit). Estimate only; special-provision retirees are exempt from the test until MRA.
6. FEHB, FEGLI & TSP
Reemployment reshuffles your benefits, and the moves are easy to miss:
- FEHB: if your annuity continues and the new position conveys eligibility, your premiums are typically withheld from salary instead of your annuity — which gives you the pre-tax premium conversion, a real savings.
- FEGLI: the coverage you carry as a retiree is suspended and replaced with employee coverage if the position is FEGLI-eligible.
- FEDVIP: contact BENEFEDS to switch premiums to pre-tax payroll deduction; retirees pay with after-tax dollars, employees pre-tax.
- TSP: as a reemployed employee you can contribute to the TSP again (and receive agency match under FERS), since you hold an employee position.
7. Supplemental & redetermined annuities
Work long enough and you can grow your pension. After one year of continuous full-time reemployment (or the part-time equivalent), you may earn a supplemental annuity — an add-on computed from the new service, credited at 1.0% of your average reemployment salary per year. After five years, you may elect a redetermined annuity, a complete recomputation of your benefit.
Two caveats: intermittent service doesn’t count toward either, and — as noted — time under a dual compensation waiver generally doesn’t count either. So the waiver gives you cash now but forgoes pension growth; ordinary offset reemployment is slower on cash but builds the supplemental/redetermined benefit.
8. Private work vs. federal reemployment
If your goal is simply to earn more in retirement, private-sector work is often cleaner. There’s no salary offset — your pension and your private paycheck are entirely separate, and you keep both in full. The only federal-rule interaction is the supplement earnings test (if you’re under 62 with a supplement), which applies to private earnings the same way.
Federal reemployment makes sense when you want the position (mission, clearance, a path to a supplemental annuity) more than the money, or when a waiver is on the table. If it’s purely about income, private work usually nets more, because there’s no offset eating your salary. Run both before you decide.
9. Frequently asked questions
Can I collect my federal pension and a federal salary at the same time?
Usually only on paper. When a FERS or CSRS retiree returns to federal service, the annuity continues to be paid in full, but the new salary is reduced (offset) by the amount of annuity allocable to the period worked, and that offset amount is sent back to OPM. The practical result is that your combined cash is roughly the salary of the position, not the salary plus the pension. You truly stack both only if you receive a dual compensation waiver, which is now granted case by case through OPM for hard-to-fill positions.
What happened to the NDAA dual compensation waiver authority?
The streamlined waiver path created by Section 1122 of the National Defense Authorization Act for FY 2010, which let individual agency heads grant salary-offset waivers directly with hourly caps, expired on December 31, 2024 and was not extended. As of 2026 that direct agency-head route is gone, and all dual compensation waivers must go through OPM under the permanent statutory authority, which is reserved for positions with exceptional recruiting or retention difficulty. Plan on the offset applying unless OPM specifically approves a waiver for your position.
Does returning to work reduce my FERS supplement?
It can wipe it out. If you are under 62 and receiving the FERS annuity supplement, an annual earnings test reduces it by one dollar for every two dollars of earnings above the limit, which is $24,480 for 2026. The earnings figure is your gross salary before the annuity offset, so even though the agency pays you a reduced amount, OPM counts the full salary. At anything close to a full-time federal salary, the supplement is usually eliminated. A dual compensation waiver does not protect the supplement from this test.
Can I earn an additional annuity by working after retirement?
Yes, if your annuity continues and you work long enough. After one year of continuous full-time reemployment (or the part-time equivalent) you may qualify for a supplemental annuity added to your existing pension. After five years you may elect a redetermined annuity, a fresh computation of your entire benefit. However, time worked under a dual compensation waiver generally does not count toward a supplemental or redetermined annuity, and intermittent service does not count at all.
What happens to my FEHB and FEGLI when I’m reemployed?
If your annuity continues, your FEHB coverage as a retiree continues, but if your new position conveys FEHB eligibility your premiums are usually withheld from salary instead so you get the pre-tax premium conversion. FEGLI you carry as a retiree is suspended and you receive employee coverage if the position is eligible. For FEDVIP dental and vision, you should contact BENEFEDS to have premiums taken from pay pre-tax rather than from your after-tax annuity. These coordination steps are easy to miss and can quietly cost you money if you don’t act.
- OPM, BAL 25-103 — Understanding the Impact of Reemployment
- FEDweek, Reemployed Annuitant Under FERS and CSRS
- LegalClarity, reemployed annuitant rules, pay, and waivers
- NARFE, reemployed annuitant salary offset
- MyFederalRetirement, reemployment in federal service (FERS)
- OPM, CSRS/FERS Handbook Chapter 100 — Reemployed Annuitants