Bill would give all workers federal-level retirement benefits

Many federal employees ask me when they will be eligible for “full retirement.” I prefer the phrase “financially ready for retirement,” the point when income from all retirement sources covers your expenses and you have reserves for emergencies.

That income might come from a mix of a federal pension, Social Security, other defined benefits such as a military or private sector pension, and personal savings in the Thrift Savings Plan (TSP) or an IRA. In the private sector, many workers must prepare for retirement without a defined benefit plan, relying on Social Security and personal savings alone. For both groups, working longer can allow benefits and savings to grow.

Defined benefit vs. defined contribution

Pension plans typically fall into two categories:

• Defined benefit plans calculate benefits using a formula based on salary and years of service. The FERS Basic Retirement Benefit is one example.

• Defined contribution plans do not use a formula but are funded by employer and employee contributions, with benefits based on account growth. The TSP is a defined contribution plan.

Sanders’ “Pensions for All Act”

On July 17, Sen. Bernie Sanders, I-Vt., introduced the “Pensions for All Act” (S. 2335). The bill would require all employers to offer a retirement program with benefits equivalent to FERS or allow employees to participate in FERS.

Sanders called the current system “rigged” and said corporations that do not provide a traditional pension should allow their workers the same type of pension members of Congress receive.

Private sector pension decline

In 1975, 88% of private sector workers with a workplace retirement plan were covered by a defined benefit pension. By 2005, that number had dropped to 33%. In March 2023, 58% of private industry union workers and 7% of nonunion workers participated in such plans.

Smaller employers have especially low participation rates — just 4% of workers at establishments with fewer than 50 employees in 2023 had defined benefit coverage, compared with 27% of workers at establishments with 500 or more employees.

A century of federal retirement

Federal civilian retirement benefits began in 1920, when the first civil service retirement law took effect. Within two months, more than 5,000 employees retired, some over age 90. The law set a mandatory retirement age of 70 for most employees, or 62 for those in strenuous jobs.

Modern retirement eligibility — 55 with 30 years of service — dates to 1942. Law enforcement and investigative employees gained the option to retire at 50 with 20 years in 1948.

Over time, the Civil Service Retirement System (CSRS) added benefits such as cost-of-living adjustments and survivor annuities. But because CSRS excluded Social Security, critics said it created “golden handcuffs” that discouraged midcareer departures.

By 1984, CSRS had a $500 billion unfunded liability. Congress created the Federal Employees Retirement System (FERS), which combines Social Security, a smaller federal pension, and TSP savings.

Early retirement options

The Deferred Resignation Program, introduced in 2025, expanded eligibility for Voluntary Early Retirement Authority (VERA) and Discontinued Service Retirement (DSR). Both require either age 50 with 20 years of service or any age with 25 years.

While the minimum retirement age under FERS is 55 to 57, many employees wait until 62 — and even then, Social Security benefits are reduced to about 70% of the full amount.

The road ahead

It’s unclear whether federal and private sector retirement benefits will merge. The goal of Sanders’ bill is to strengthen retirement security for all workers. But Social Security faces a more urgent challenge: its trust fund is projected to run out by 2034, potentially triggering a 20% cut in benefits.

For many Americans, both federal and private sector, that could make achieving “full retirement” even harder.