Can I Earn A Military Pension And A Civil-Service Pension


A reader asks:

I served 14 years of active duty and six years in the National Guard. I received my 20-year letter.

I began working for the postal service and “bought back” my 14 years of active duty towards my postal service retirement. For example I have 12 years actual with the postal service but 26 years on the books due to the buy back option.

My question is, how does this affect my retirement through the National Guard when I reach age 60? Will I receive retirement pay for only my six years served in National Guard, or for the full 20 years of military service?

I guess what I am asking if it was “beneficial” for me to buy back my military time. Do I lose the six years of National Guard time if I buy back my 14 years of active duty time? I suppose I am a little confused as to what happens to the six years for National Guard time since the time spent in the Guard after the buy back would be less than 20 years.


This is a great question on a very confusing issue. (If there’s anything more complicated than retiring from the military, it’s retiring from federal civil service.) Federal law entitles military veterans who become federal civil service employees to receive credit for their military service by “buying back” their active duty time. The money they pay to the Federal Employees Retirement System pension fund for each year of their active-duty time gives them an additional year of credit toward their FERS pension.

For veterans entering federal civil service after active duty, the military service credit deposit is a fantastic way to boost the civil service pension. When our reader left active duty after 14 years, they were not eligible for a military pension. The only way to receive some sort of retirement benefit for those years of active duty is to transfer to the Reserves or National Guard… or start a bridge career with the federal civil service.

In this case, the reader paid a meaningful sum of money (out of their own savings) to be credited with an additional 14 years of time for their civil-service pension. In most cases, that investment is a great move! They’re eligible for a larger pension (because they paid for it) and they receive additional credit toward two more civil-service seniority benefits.

[Note: this reader made a smart choice. If you’re a military veteran in the federal civil service, it’s almost always a good idea to buy your military service credit deposit. Read the comprehensive guide to the military service credit deposit, and scrape up the money to boost your retirement. You can’t get this return from the stock market or in real estate. If you’re already retired from active duty and you’re in the federal civil service, you can still get a couple of free deals on your federal Service Computation Date.]

Now the reader has a good deal on federal civil-service retirement. But what happens when they continue to drill with the National Guard and then qualify for that pension as well?

The issue behind the reader’s National Guard retirement question is the type of military service:

  1. less than 20 years of active duty without qualifying for an active-duty pension, or
  2. 20 years (or more) of active duty resulting in an active-duty pension, or
  3. a combination of active duty and more years in the Reserve or National Guard, resulting in a Reserve/Guard pension at age 60.

1. In the first case, the veteran could buy back that time toward a federal civil service pension with the military service credit deposit.

2. In the second case, federal laws against “double dipping” would require the military retiree to waive their military retirement pay if they buy the civil service’s military service credit deposit. This is a bad financial move.  Military retirees could still request two other civil-service benefits which are based on their active-duty service, and those benefits are worth applying for.

3. Federal law makes an exception! The federal civil service employee can still make a military service credit deposit for their years of active duty, and they can also receive a Reserve/Guard pension. They’ve earned that Reserve/Guard pension on their own and they haven’t bought it as a credit, even though they took the credit for their active-duty service.

I realize that this looks too good to be true. (A great deal from both the military and the federal civil service?!?) A Reserve/Guard retirement is handled under Chapter 1223 of federal law (10 U.S.C. 12731). The details of the civil-service exception are in Chapter 22 of the CSRS/FERS Handbook. Here’s the quote from Chapter 22 section 22A4.1-1 of the CSRS/FERS Handbook. The specific rule from the “Receipt of Military Retired Pay” section is in the third bullet point:

In determining eligibility for CSRS retirement or in estimating the amount of annuity for an employee (special rules for survivors of employees who die in service are covered in Chapter 70), who receives military retired or retainer pay, do not give credit for any military service at the date of separation for civilian retirement unless one of the following is true.

2. The employee is receiving military retired pay that was awarded:
On account of a service-connected disability incurred in combat with an enemy of the United States; or

On account of a service-connected disability caused by an instrumentality of war and incurred in the line of duty during a period of war; or
Under the provisions of 10 U.S.C. 12731-12739 (Chapter 1223) which grants retired pay to members of reserve components of the armed forces on the basis of age and service (active and reserve).

For those who’ve noted that the section refers to the old CSRS pension system, not the current FERS pension, it’s covered under section 22B1.1-1.C “Applicable CSRS Provisions”:

The following sections and parts of subchapter 22A apply to FERS employees:
Part 22A4: Receipt of Military Retired Pay .

Bottom line: if you serve in the Reserve or National Guard and also work in the federal civil service, then you can take your military service credit deposit and still receive your full Reserve/Guard pension. You’ve earned both of them!

Related articles:
Retiring From The Reserves And National Guard
Calculating a Reserve/National Guard Retirement
The Military Wallet podcast with Ryan Guina and Eddie Wills: Military Service Credit Deposit
The Comprehensive Military Service Credit Deposit Guide
The Guide To A Military Service Credit Deposit When You’re Retired from Active Duty
The Federal Civil Service CSRS/FERS Handbook
Direct link to CSRS/FERS Handbook Chapter 22: Creditable Military Service

WHAT I DO: I help you reach financial independence. For free.

I retired in 2002 after 20 years in the Navy’s submarine force. I wrote “The Military Guide to Financial Independence and Retirement” to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

  1. Reply
    Mark S. January 17, 2018 at 1:05 PM

    Great article!!! I do have another question though. I’m also Federal Service and currently on ADSW as a naval reservist. I already set up a military deposit for my previous AD and am going to make an adjustment to continue crediting my current ADSW. Question I have though is how does the current Blended Retirement System figure in to all this?

  2. Reply
    Wayne January 11, 2018 at 9:39 PM

    Can his 14 years of active duty still be used towards guard/reserve retirement.

    • Reply
      Doug Nordman January 14, 2018 at 5:51 AM

      Yes, Wayne, and it’s only six good years of Reserve/Guard drills away from qualifying for that pension!

  3. Reply
    Chris November 2, 2016 at 10:22 AM

    Am I confused? You seem to imply that you cannot receive a military and a civil service pension? Now, I know for a fact that you can receive a military pension and a civil service paycheck because I have many friends currently doing so. I always assumed that they would receive both pensions as well. Is that not true? Keep in mind that these are active duty retirees had to start from scratch in the civil service after they retired from active duty.

    • Reply
      Doug Nordman November 3, 2016 at 5:29 PM

      I’m not implying that at all, Chris. The post is about the sizes of those pensions and how a military pension is affected by taking the FERS military service credit deposit.

      The military service credit deposit is a bad deal for active-duty military retirees (although they should still take the adjustment to their federal Service Computation Date). I don’t know any active-duty military retirees who have applied for the military service credit deposit because it would halt their active-duty pension while they were in the federal civil service. Instead, active-duty military retirees should choose to continue to receive their active-duty pension and should not buy into the military service credit deposit. The result is that their FERS pension is based only upon their years of federal civil service. Review bullet #2 in the post.

      The FERS military service credit deposit is a great deal for Reserve and National Guard retirees. The reason that FERS retirees should still buy their Reserve/Guard military service credit deposit is because there’s a specific exemption in the FERS regulations allowing them to do so while still receiving their full Reserve/Guard pension. As a result they still receive their Reserve/Guard pension (beginning at age 60 or perhaps a little earlier) and they receive a larger FERS pension. Review bullet #3 above.

  4. Reply
    peter gregory August 13, 2016 at 9:40 AM

    Military or civil service, historically the most attractive features of both systems has been the automatic COLA or yearly inflation adjustments. But what if “inflation” or COLA is an economic condition of the past. 2017 will mark the 2nd year in row, 4 out of the last 7, where no COLA will be provided to either SS or the traditional military retirement system. One can argue the govt, and Fed is still using outdated or ineffective CPI measures, that still stress finished goods and commodities over services. Case in point is 2 types of services retirees continue to consume more and more, heath care and housing/rent where year over year “inflation” still advances at 5-7% year over year.

    Many feel that like Japan of the last 30 years, the developed West may be in a prolonged period of dis-inflation, or deflation. Where almost a decade of zero interest rate policy, negative bond yields, falling productivity spell an extended period of stagnation. And if it is true there is a mismatch or at least mis-measurement of true inflation, then the value of the traditional military, civil service pension erodes year after year, and over 4 to 5 decades of a military retirement, the actual value or income security year over year is greatly diminished. And if that is the case the only real alternative in retirement security is to save more, lots more. Which brings another issue, how does one make money in a negative interest rate, yield environment, where the individual retiree or saver goes further out on the risk curve. Those economic periods usually end very badly. Interesting times indeed.

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