Going back to work for the government
If you retire and later return to a federal job, you usually keep your annuity and take a reduced salary instead. Your pay is cut by the amount of annuity you receive for the period you work. Stay long enough and the new service can add to your pension.
6 min read · By RetireCiv Editorial · Updated July 19, 2026
Does your annuity stop if you go back to work?
Usually not, and the direction of the reduction is the part people get backwards. Your annuity continues while you work, and your pay is reduced by the amount of annuity paid for that period.
That distinction has real consequences. Because the pension keeps flowing, your total income is roughly what the job pays, and the government effectively funds part of your salary out of the annuity you had already earned.
Part-time work scales the reduction rather than escaping it. Work half time and the offset is adjusted proportionately, so the arrangement is not a loophole for reducing the cut.
Two things sit outside the offset entirely. Your pay is not reduced for a period where you elected injury compensation instead of annuity, and a lump-sum annual leave payment on separation is not touched by it.
Do I lose my pension if I return to federal service?
Generally no. Your annuity keeps being paid, and your salary from the new job is reduced by the amount of annuity covering the period you work. So the money you lose comes out of the paycheck rather than the pension. Certain appointments stop the annuity instead, so confirm with the hiring agency which arrangement applies.
Does the offset shrink if I work part time?
It is adjusted proportionately rather than removed. Working half time means roughly half the reduction, because the offset tracks the annuity attributable to the period you actually worked. Part-time reemployment is not a way to avoid the offset, though it does change how much of the new salary you keep.
Does contractor work count?
No, and this is the cleanest way around the whole problem. Work for a government contractor is not reemployment in federal service, so none of the offset rules apply to it.
A retiree working for a contractor keeps the full annuity and the full contractor salary. Nothing is reduced and nothing is reported against the pension, because you are not a federal employee.
This is why so many federal retirees end up on the contractor side doing recognizably similar work. The pay arrangement is simply better, whatever else is true about the two paths.
One caution if you retired before 62. Contractor income is still earned income, so it counts against the SRS earnings test even though it has no effect on your basic annuity.
Can I work for a federal contractor without affecting my annuity?
Yes. Contractor employment is not federal reemployment, so the salary offset rules do not reach it. You receive your full annuity and your full contractor salary. If you are under 62 and receiving the Special Retirement Supplement, that supplement is still subject to its own earnings test, which contractor wages do count toward.
Can reemployment increase your pension?
Yes, in one of two ways, and which one depends entirely on how long you stay. Short stints add nothing. Past certain thresholds, the new service starts counting.
A supplemental annuity is the first tier. It requires a final period of reemployment of at least one year of continuous full-time service, or the part-time equivalent, and it is added on top of the annuity you already receive.
A redetermined annuity is the larger prize and the harder one. Five years of continuous full-time service, or the part-time equivalent, lets you elect a completely recomputed annuity that replaces your existing one.
Intermittent work counts toward neither. If your appointment has no regular schedule, the time cannot establish eligibility for a supplemental annuity and cannot be used in computing one.
What your reemployment earns you
| Length of reemployment | What you earn |
|---|---|
| Less than 1 year | Nothing added to your pension |
| At least 1 year | A supplemental annuity, added on top |
| At least 5 years | The option of a redetermined annuity, replacing the old one |
What is a supplemental annuity?
It is an additional annuity added on top of the one you already receive, earned by working at least one year of continuous full-time service as a reemployed annuitant. Part-time work qualifies if it adds up to the equivalent of a full-time year. Your original annuity is unchanged; the supplement sits alongside it.
What is a redetermined annuity?
It is a complete recomputation of your pension that replaces your existing annuity rather than adding to it. You can elect one after at least five years of continuous full-time service, or the part-time equivalent, as a reemployed annuitant. Because it is recomputed under the law in effect when you separate again, it reflects your whole career including the new service.
Why might five years still not be enough?
Because a redetermined annuity has a second condition that catches people. Serving the five years is necessary and not sufficient. You must also independently meet the minimum requirements for a new retirement.
OPM illustrates this with a case worth remembering. Someone who retired early under VERA at 48 with 25 years, then returned and worked five full-time years, is still not eligible, because at 54 they do not meet age 55 with 30 years.
The trap falls hardest on exactly the people most likely to be reemployed. Early retirees left before reaching ordinary eligibility, which is what makes them available to come back, and is also what makes the second condition bite.
If a redetermined annuity is the goal, work backwards from the eligibility rules rather than counting only the five years. Our lesson on minimum retirement age covers the age and service combinations you would need to satisfy.
I worked five years as a reemployed annuitant. Why can I not elect a redetermined annuity?
Almost certainly because you do not yet meet the requirements for a new retirement in your own right. The five years of continuous service is only the first of two conditions. You also have to satisfy an age and service combination that would let you retire fresh. Early retirees frequently clear the first hurdle and fail the second.
Should I choose a supplemental or a redetermined annuity?
They are not usually a free choice, since a redetermined annuity requires five years plus separate retirement eligibility. Where both are available, the tradeoff is between adding a supplement to an older annuity and recomputing the whole benefit under current law with your full service. Which comes out ahead depends on your salary history and the rules in effect when you separate, so ask OPM for both figures.
When can you keep the full salary?
Through a dual compensation waiver, which lets an agency hire a retiree without the salary offset. The annuity continues and the salary arrives intact.
Waivers exist because agencies sometimes need a specific person badly enough to pay full price. They are typically used for hard-to-fill roles, emergencies, and short-term needs where the offset would deter the only qualified candidate.
You cannot request one for yourself. The authority sits with the agency, which decides whether a position qualifies, so this is something offered to you rather than something you apply for.
There is a real cost buried in it. If you are reemployed under a waiver, no further retirement benefits are payable, meaning neither a supplemental nor a redetermined annuity. Waived time builds nothing toward a larger pension, however long you stay. To see how a return to work would change your overall picture, run your free readiness score.
What is a dual compensation waiver?
It is an agency authority to employ a retiree without reducing their salary by the amount of their annuity. The retiree receives both in full. Agencies use waivers for hard-to-fill positions, emergencies, and short-term needs. The decision belongs to the agency, so it is not something an individual can apply for directly.
Does time worked under a waiver count toward a supplemental annuity?
No, and it does not count toward a redetermined annuity either. When you are reemployed under a dual compensation waiver, no further retirement benefits are payable at all from that service. A waiver trades a larger paycheck now for zero additional pension credit. If your aim in returning to work is to increase your annuity rather than your income, a waived appointment defeats it entirely.