Normally, an employee is eligible to retire from federal service when the employee has at least 30 years of service and is at least age 55 under the Civil Service Retirement System or 56 and eight months in 2024 (note: this age is rising by two months a year until it will reach 57) under the Federal Employees Retirement System; has at least 20 years of service and is at least age 60; or has at least five years of service and is at least age 62.

However, the Office of Personnel Management may allow agencies to temporarily lower the age and service requirements in order to increase the number of employees who are eligible for retirement, thus encouraging more voluntary separations via early retirement.

Under an early retirement authority, the basic age and service requirements are reduced to 20 years of federal service at age 50 or 25 years of service, regardless of age. By offering these short term opportunities, employees can receive an immediate annuity years before they would otherwise be eligible.

Note: Under Public Law 108-136, the Defense Department has permanent authority to offer early retirements without first seeking OPM approval. However, other policies regarding the offering of early outs generally apply.

An employee’s decision to separate under an early retirement offer is entirely voluntary.

Each agency with an approved voluntary early retirement authority must ensure that employees are not coerced into retiring early. The agency should issue a statement to each employee affirming that early retirement is, in fact, voluntary. Also, if agency management becomes aware that any employee is coerced into early retirement, the agency must take appropriate corrective action.

General policies on early retirement

An agency may request a voluntary early retirement authority in which particular organizational units, geographic areas, occupational series and levels, grades, time periods, or any combination of those factors are specified in the request. If OPM grants such authority, the agency cannot expand the authority beyond the approved coverage without additional approval from OPM.

Note: Offers of early retirement commonly are paired with buyout (voluntary separation incentive payment) offers, since both address similar situations. However, there is no formal requirement that an individual being offered one also be offered the other, or that both types of incentives be offered at all.

Scope of offers

If the authority is approved, offers may be made on an agency-wide basis or, at the discretion of the agency, may be based on one or more organizational units, locations, or occupational series and grades, during the duration of the OPM approved authority or during specific window period(s) as set by the agency within the OPM approved authority.

If an agency with an agency-wide authority wishes to limit early retirement offers to specific organizational units, it may do so after OPM approves the authority. The agency does not have to obtain any additional authority to manage the authority on that basis. Such authority will be conveyed in the approval letter from OPM to the agency.

The agency determines which components, occupations, grades, series or positions will be excluded from or included in early retirement offers.
Broadly, an agency may use early retirements only to the extent necessary to achieve reductions in the workforce that result from factors such as lack of funds, shortage of work, reorganizations, skills imbalances, or closures and to minimize the number of employees reached for involuntary separation or demotion because of organizational changes such as reorganizations, budget reductions, reductions in force, and shifts in staffing needs.

In general, agencies are not required to provide and employees are not entitled to receive an offer of voluntary early retirement. Ineligible employees generally include those who have not been on the agency’s rolls since at least 31 days before the request was made, employees on time-limited appointment, and employees in receipt of a removal notice for misconduct or performance reasons.

Should the agency find that the basis under which it requested and received voluntary early retirement authority from OPM no longer exists, the agency must suspend its use of early retirement authority.

OPM may terminate an agency’s authority if OPM determines that the agency is no longer undergoing the major reorganization, major reduction-in-force, or major transfer of function that formed the basis for OPM’s approval of the authority. OPM may also take steps to amend, limit, or terminate an authority in order to ensure that early retirement programs are operated in a manner consistent with applicable laws, regulations or program policies.

Early retirement offers cannot be expanded by the agency beyond the scope of the authority approved by OPM.

Early retirement window periods

Agencies may establish a specific window period or periods within the OPM approved authority period in which voluntary early retirements are available to employees without delegated authority from OPM. Window periods established by the agency may be applicable to the entire authority, or only to employees in specific organizational units, occupational series or levels, or geographic areas.

The agency may limit voluntary early retirement offers during window periods within the OPM approved time period by:

  • an established opening and closing date which is announced to employees at the time of the initial offer; or
  • receipt of a specified number of applications for retirement, provided that, at the time of the initial offer, the agency notified employees that the agency retained the right to limit voluntary early retirements on that basis.

The agency may subsequently establish a revised closing date, or a revised number of applications, only when changes in the conditions that served as the basis for the approval of the voluntary early retirement authority have occurred.

The revised closing date, or number of applications, may be applicable to the entire authority, or only to employees in specific organizational units, occupational series or levels, or geographic areas. In such cases, the agency must notify the employees that the conditions of the early retirement offer have changed.

After announcing a time period during which employees may retire early, the agency can terminate the offer before the closing date of the announced time period upon receipt of a specified number of applications for early retirement.

In order to terminate the offer early, the agency must notify employees at the time of offer that the agency retains the right to limit early retirement window periods by an established closing date or by receipt of a specified number of applications for retirement. The agency should also advise employees that, subject to changes in the staffing or budgeting situation on which the authority was based, the agency may need to further limit offers after offers are announced.

Use of annual leave in early retirement

Public Law 104-208 provides that an employee who is being involuntarily separated from an agency due to reduction-in-force or because of the employee’s decision to decline relocation (including transfer of function) may elect to use annual leave and remain on the agency’s rolls after the effective date the employee would otherwise have been separated in order to establish initial eligibility for immediate retirement, including discontinued service or voluntary early retirement. The same option is also available to acquire eligibility to continue health benefits into retirement as described below.

The agency may not retain an employee past the date that the employee first becomes eligible for immediate retirement or for continuation of health benefits into retirement.

All accumulated and accrued annual leave may be credited to help the employee reach eligibility.

FEHB eligibility

As a rule, you may only continue your enrollment in the FEHB if you have been enrolled for five years (or from your earliest opportunity to enroll) before you retire. However, OPM will grant pre-approved waivers of the five-year rule to employees who have been:

  • covered under the FEHB program continuously since the beginning date of the agency’s latest statutory buyout authority, or OPM-approved buyout or early retirement authority and retire during the statutory buyout or OPM-approved buyout/early out period; and
  • receive a buyout, take early optional retirement or take discontinued service retirement based on an involuntary separation due to RIF, directed reassignment, reclassification to a lower grade, or abolishment of position.

Certain special rules apply to Defense Department employees under which waivers are automatically granted to those continuously covered by FEHB since the prior October 1 and who meet those conditions.

If you do not qualify for an automatic waiver of the five-year requirement, you might qualify for a waiver under OPM’s authority to waive the requirement when it would be against equity and good conscience not to do so. However, few waivers on those grounds are granted. Contact the Office of Personnel Management, Retirement Benefits Branch, 1900 E St., NW, Washington, D.C. 20415-3532.

Early-Out Authority for Workforce Restructuring

Public Law 107-296 authorized the permanent extension, revision and expansion of authority for the use of voluntary early retirement across the executive and judicial branches of the federal government for the purposes of workforce restructuring.

The goal is to grant agencies the authority to reduce high-grade, managerial, or supervisory positions, correct skill imbalances, or reduce operating costs without position loss, without linking their use to eliminating full time equivalent positions, the use of involuntary separations, or changes to lower grade.

Offers can be targeted on the basis of organizational unit, occupational series or level, geographic location, specific periods, skills, knowledge, or other job related factors, or a combination of these factors, but not performance. A determination of which employees are within the scope of an offer of early retirement would be made only on the basis of consistent and well-documented application of relevant criteria.

An agency that uses early retirements for workforce restructuring is required to submit to OPM a detailed plan describing the use of the authority and how the agency’s workforce would be restructured (the Defense Department is exempt from this requirement). An agency plan cannot be implemented without the approval of OPM, which can modify the plan before approving it.

The plan must specify the time period during which the authority would be used, as well as the number of employees for which it would be used, although there is not a cap on the number of employees to whom early retirements can be offered.

Early-Out Authority for Downsizing

Before offering early retirements for downsizing, an agency must request and receive authority from OPM (the Defense Department is exempt from this requirement). Early retirements may be requested by the agency and approved by OPM on as broad or narrow a basis as is necessary.

Agency headquarters may request voluntary early retirement authority for the entire period of the major reduction-in-force, major reorganization, or major transfer of function, or through a specified date. Agencies are urged to use early retirements judiciously based on the agency’s need to downsize and to limit approvals based on the agency’s need to continue performing its mission.

In order to receive an agency-wide authority, the agency must demonstrate that the reorganization, reduction-in-force, or transfer of function will affect employees throughout the agency.

If OPM approves an agency request to offer voluntary early retirements agency-wide, the agency may offer voluntary early retirements to employees in all agency organizational units or may make offers based on specific organizational unit(s), geographic area(s), occupational series or level(s), or any similar non-personal and objective factors during a single window period or in multiple windows based on any combination of factors listed above.

The agency may decide the coverage of the authority provided it does not exceed the authority approved by OPM.