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FERS had a "displacement" when it was set up. The FERS system is actually designed to pay out exactly what CSRS would pay out, but it has the extra "thrift savings" matching plan. What you are doing there is front loading your retirement by putting a certain amount into an investment trust, which is matched to a degree by the government.

You can put in more, but that's the same as the old CSRS system folks get to do as well ~ but they don't get matching funds.

The result is you pay just as much for your retirement as CSRS folks did (and still do), but part of it is in an investment trust which you can manipulate to a certain degree, or BORROW FROM.

Supposedly funds are transferred out of the agency operating budget to OPM to be placed in US bonds to cover the other half of your retirement.

When you take a good look at the federal payout to CSRS retirees you quickly find that nearly 100% of the payout is coming from ONLY the funds paid in by the employees. It'll be the same with FERS. Part of the trick is that over the long run putting federal retirement money into federal bonds is fairly advantageous.

BTW, the FERS folks also pay into Social Security. Presumably they will receive Social Security in the future ~ which is highly doubtful. An argument can be made that as a consequence FERS retirement is far more costly and pays less than the old CSRS system.

Way back when I wrote an elaborate program to estimate the difference between staying in CSRS or transferring to FERS. Turned out that at my age and years of service the only way I could lose would be for the rate of inflation to rise to untold heights thus accentuating the COLA differential ~ FERS was initially set up at 1/2 CSRS COLA, then adjusted to 1% less, and now is the same.

Remarkably few CSRS covered people transferred to FERS.

I transferred.