Reg Jones Expert's View

Two of the most frequently asked questions I get from employees are these: "Is my agency going to offer early outs?" and "Will my agency be offering buyouts?" My answer is always the same. "You’ll probably know before I do." That’s because I’m not in the decision making loop.


Although I can’t predict what’s going to happen at any particular agency or when, what I can do is explain the two authorities that make early retirements and buyouts possible and how they work.

The Voluntary Retirement Authority (VERA)

The VERA’s purpose is to help agencies carry out personnel or workload changes with the minimum of disruption. The usual reasons for offering early retirements are a reduction-in-force, reorganization, transfer of function and, more rarely, a furlough. That’s when a shortage of funds requires an agency to put some or all of its employees in a non-duty/no-pay status for an extended time.

As a rule, VERAs are offered only to employees in those occupations, grade levels, units and/or geographic areas that need to be thinned out to meet an agency’s needs, not yours. In other words, just because you want to retire early doesn’t mean that you’ll be able to do that. You can only accept a VERA if it’s offered to you. And even if you are offered one, just remember that it is limited to a specific period, a period that can be shortened if the agency meets its reduction goal before that.

To be eligible to accept a VERA, you must be at least age 50 with at least 20 years of service or any age in you have 25 or more. If you are a FERS employee, the age reduction penalty is waived. If you are a CSRS employee, you annuity will be reduced by 1/6 percent for each month you are under age 55 (or 2 percent per year).

As a CSRS retiree, you will be entitled to receive annual cost-of-living-adjustments (COLAs) on your annuity regardless of the age at which you retire. If you are a FERS retiree, you won’t receive your first COLA until you reach age 62. However, you will be able to receive the special retirement supplement when you reach your minimum retirement age (MRA). The SRS approximates the amount of Social Security benefit you earned while a FERS employee.

The amount of the payment is equal to the lesser of your severance pay calculation, $25,000, or an amount determined by the agency head.

The Voluntary Separation Incentive Payment (VSIP)

Like a VERA, a VSIP is designed to avoid involuntary separations resulting from RIFs, reorganizations, and transfers-of-function. Unlike a VERA, if you are offered a VSIP, you can accept it, even if you aren’t eligible to retire.

To be eligible for a VSIP, you must be serving in an appointment without time limit, have been employed by the federal government for at least three years, be in a targeted position, and get an okay from your agency to accept the offer.

You won’t be eligible for a VSIP if you are:

• a reemployed annuitant

• an employee with a disability such that you are or would be eligible for disability retirement

• someone who

– has previously received a VSIP

– was paid, or is to be paid, a student loan benefit within 36 months of separation

– received, or will receive, a recruitment or relocation incentive, within 24 months of separation

– received, or will receive, a retention incentive within 12 months of separation

Now that I’ve gotten all that out of the way, you want to know how much money you’d be entitled to if you accept a VSIP. Well, your buyout would be the lesser of:

• the amount of severance pay you’d be entitled to, or

• an amount determined by your agency head, not to exceed $25,000.