In the months leading up to the election, things were unusually quiet on the personnel front. And employees kept asking me if there were going to be any early retirement opportunities or buyouts before the end of the year. I told them that they were highly unlikely because no agency could predict which way the cat was going to jump until the new president is installed and a budget presented to the Congress early in the new year.
Now that the election is over, it’s a foolish employee who doesn’t try to recall what Mr. Trump talked about when running for office, and think about what that would mean for their agency in general and their job in particular.
As always, following a presidential election, there will be winners and losers. Therefore, this is a good time to get you thinking about two authorities that an affected agency can use to either reduce the size of its workforce or reshape it while, at the same time, reducing the impact on its employees: the Voluntary Early Retirement Authorities (VERA) and the Voluntary Separation Incentive Program (VSIP).
Neither early outs nor buyouts are employee entitlements. An agency is only allowed to offer them when they will permit it to meet its specific staffing needs. Therefore, unless an agency is undergoing a major downsizing, offers will be targeted at those positions, grades, occupations and geographic areas where changes are needed.
VERAs allow employees with the right combination of age and service to retire early: at age 50 with 20 years of service or at any age with 25 years of service. However, there are different rules that apply to CSRS and FERS employees who meet the age and service criteria.
Under CSRS, your annuity will be reduced by 1/6 percent for every month you are under age 55. That’s 2 percent per year. On the other hand, you will be able to receive annual cost-of-living-adjustments (COLAs) on your annuity, regardless of the age at which you retire. If you will have a CSRS component in your FERS annuity, it will be subject to CSRS rules
Under FERS, the usual 5 percent per year penalty for retiring before age 62 (60 if you have 20 years of service) will be waived. You’ll also be eligible for a special retirement supplement (SRS) that approximates the Social Security benefit you earned while a FERS employee; however, unless you are a law enforcement officer, firefighter or air traffic controller, the SRS won’t begin until you reach your minimum retirement age (MRA). In either case, your annuity won’t be increased by COLAs until you reach age 62. FYI: COLAs are never paid on the SRS.
A VSIP – or buyout – can be offered to any employee, not just someone who meets the age and service requirements for a VERA. Instead, to be eligible for a buyout, an employee’s position must be specifically flagged for elimination in the agency’s strategic plan. The amount of the buyout must be equal to the lesser of the employee’s severance pay calculation, $25,000, or an amount determined by the agency head.
Usually the two are offered together but there’s no formal requirement for that.