FERS vs TSP: what's the difference?
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By the OnPAR Federal Retirement Education editorial team · Last updated
Related: FERS retirement income sources · How the FERS pension is calculated · TSP · FERS contribution rates
Short answer: "FERS vs TSP" isn't really either/or. FERS is the whole retirement system, and OPM says it has three parts: the Basic Benefit (your pension), Social Security, and the Thrift Savings Plan (TSP) [1]. The pension is a monthly payment for life set by a formula. The TSP is an account: what you get depends on what you and your agency put in and how it's invested. This page is education, not advice.
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At a glance
| FERS Basic Benefit (pension) | TSP | Social Security | |
|---|---|---|---|
| What it is | Lifetime annuity paid by OPM [1] | Your own retirement savings account [1] | Federal benefit from SSA based on your earnings record [5] |
| How the amount is set | Formula: 1% of high-3 per year of service (1.1% if 62+ with 20+ years) [2] | Your balance: contributions plus earnings | SSA formula on your lifetime earnings [5] |
| What you pay in | Payroll deduction (0.8%, 3.1% or 4.4%, see rates) | Optional; agency adds 1% automatically and matches up to 4% more [3] | 6.2% Social Security (OASDI) tax |
| Goes with you if you leave? | OPM: Social Security and the TSP can go with you to your next job [1] | ||
1. The pension: a formula, not a balance
OPM computes the basic annuity as 1% of your high-3 average salary for each year of creditable service, or 1.1% if you retire at 62 or older with at least 20 years [2]. It doesn't rise or fall with the markets. See how the FERS pension is calculated.
2. The TSP: your balance and how you take it out
Your TSP is what you saved plus your agency's contributions and investment earnings. In retirement, TSP lets you take money as installment payments, a life annuity, single withdrawals, or a mix [4]. See TSP withdrawal options.
3. The agency match: free money only if you contribute
Per TSP, FERS employees get an automatic 1% of basic pay each pay period whether or not they contribute. Your agency then matches dollar-for-dollar on the first 3% you contribute and 50 cents on the dollar on the next 2%. Contribute 5% and your agency puts in 5% total [3]. Stop contributing and the match stops, though the 1% continues [3].
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4. Social Security: the third leg
FERS employees pay into and earn Social Security [1]. SSA announced benefits will rise 3.6% in 2027, and the maximum earnings subject to Social Security tax rises to $192,300 [6]. If you retire before 62 on an eligible retirement, the FERS supplement may bridge the gap until Social Security.
Bottom line
You don't choose between FERS and the TSP. You get the pension automatically, you build the TSP yourself (with your agency's help), and Social Security sits on top. See all four FERS retirement income sources.
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Education only. Not affiliated with OPM or any government agency.
Official sources
- OPM: FERS Information (Basic Benefit, Social Security and TSP)
- OPM: FERS Computation (basic annuity formula)
- TSP: Contribution types (automatic 1% and matching contributions)
- TSP: Living in retirement (withdrawal options)
- SSA: Retirement benefits
- SSA: Cost-of-Living Adjustment (COLA) Information for 2027
Checked against OPM, TSP and SSA on November 4, 2026. Education only, not legal, tax or financial advice. Not affiliated with OPM, USPS or any government agency.