Expert's View

Over the last weeks, I’ve written about the rules governing the retirement benefits of those employees who retire early under the Voluntary Early Retirement Authority, those who aren’t eligible to retire when they leave but will be eligible for a deferred annuity at a later date, and those who retire under the MRA+10 provision but delay the receipt of their annuity to reduce or avoid the age penalty. Now I want to talk about an incentive that is sometimes offered to encourage employees to leave or retire: the Voluntary Separation Incentive Payment.

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. In other words, you can take the money and run.

To be eligible for a VSIP, also called a buyout, 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 position targeted by your agency, 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, or

* 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 the big question is this: 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.

That $25,000 figure has been the cap since the VSIP became law two decades ago. Some have asked if it will ever be raised because the value of the payment has diminished in value since then. Based on everything I’ve heard, that answer is no. As long as fish keep biting on the $25,000 bait, neither the administration nor the Congress have any incentive to change it.