Federal Employee Benefits
Retirement & Health Benefits for Federal Workers
Quick Facts
Trust Fund Assets
$1.2 Trillion
FY 2025 Receipts
$217 Billion
FY 2025 Outlays
$196 Billion
Active Employees
2.4 Million
How Federal Employee Benefits Are Funded
Federal employee benefits are funded through multiple sources:
- Employee contributions: Federal workers contribute a percentage of salary to retirement (0.8-4.4% depending on hire date)
- Agency contributions: Federal agencies contribute matching amounts to retirement funds
- Health insurance premiums: Employees and retirees pay portion of health insurance premiums (typically 25-30%)
- Government subsidy: Taxpayers fund 70-75% of health insurance premiums and portions of retirement benefits
- Trust fund investments: Retirement funds invested in special Treasury securities earning interest
Note: These are earned benefits that federal employees contribute to throughout their careers, similar to private sector 401(k) and health insurance benefits.
What Federal Employee Benefits Include
Federal Employees Retirement System (FERS)
Three-tier retirement system for federal employees hired after 1984: (1) Basic Benefit Plan - defined benefit pension based on salary and years of service, (2) Social Security benefits, and (3) Thrift Savings Plan (TSP) - similar to a 401(k) with government matching up to 5%. Covers 2.4 million active employees.
Civil Service Retirement System (CSRS)
Legacy defined benefit pension plan for federal employees hired before 1984. More generous than FERS but employees don't participate in Social Security. Pays retirement benefits to 2.8 million annuitants (retirees and survivors). Being phased out as CSRS employees retire.
Federal Employees Health Benefits (FEHB)
Health insurance program covering over 8.2 million federal employees, retirees, and family members. One of the largest employer-sponsored health insurance programs in the world. Employees choose from multiple private insurance plans. Government pays approximately 72% of premiums on average. FY 2025: $72 billion in receipts and outlays.
Federal Employees Group Life Insurance (FEGLI)
Optional life insurance for federal employees and retirees covering 4.4 million people. Government subsidizes basic coverage (pays 1/3 of premium). Employees can purchase additional coverage at their own expense. FY 2025: $6.3 billion receipts, $4.6 billion outlays.
Thrift Savings Plan (TSP)
Federal government's 401(k)-style retirement savings plan with over $850 billion in assets. Government automatically contributes 1% of salary and matches employee contributions up to 5%. Offers low-cost index funds and lifecycle funds. One of the largest defined contribution plans in the world.
FY 2025 Trust Funds Status
2.8M annuitants, 2.4M active employees
8.2M enrollees (employees, retirees, families)
4.4M covered employees and retirees
Who Are Federal Employees?
Federal civilian employees work across numerous agencies and roles:
- Veterans Affairs: Doctors, nurses, VA hospital staff serving veterans
- Defense Department: Civilian engineers, analysts, support staff (not military)
- Homeland Security: TSA agents, Border Patrol, Coast Guard civilians, FEMA staff
- Justice Department: FBI agents, federal prosecutors, prison staff
- Treasury/IRS: Tax examiners, financial regulators
- Agriculture: Food inspectors, forest rangers, agricultural scientists
- NASA: Scientists, engineers, mission specialists
- National Parks: Park rangers and staff at 400+ national parks
- Social Security: Claims specialists processing benefits
- Postal Service: Letter carriers, postal clerks (separate retirement system)
Recent Policy Debates
Congressional proposals for 2025 have included potential changes affecting federal employee benefits:
- Increasing employee contributions to retirement funds
- Changing retirement benefit calculations (e.g., using "High-5" instead of "High-3" salary years)
- Eliminating FERS annuity supplements for early retirees
- Adjusting health insurance premium cost-sharing ratios
- Modifying cost-of-living adjustments (COLAs) for retirees
These proposals aim to reduce federal spending but face opposition from federal employee unions who argue workers already contribute significantly to their earned benefits.