The Social Security Administration, one of the government’s biggest, best-known operations, is offering older, long-time employees the chance to take early retirement.
SSA is well-known to most Americans, and with 60,000 employees, SSA is one of the largest federal agencies. By some estimates, nearly half of the agency’s workers would be eligible for early-retirement.
The early-out, one of the first this year in government, could open up the promotion pipeline for younger, mid-career employees and jump-start early retirement offers in other agencies too.
SSA’s early-out is for employees who are at least 50-years-old with 20 years of federal/military service, or to anyone with 25 years of service regardless of age.
Workers who want the early-outs must notify SSA by May 9 and be off the payroll by July 31, 2014. The administration worked out details of the early-out with the American Federation of Government Employees union. Witold Skwierczynski, president of AFGE’s National Council of Field Operations Locals, said that while the union sees the early retirement option as important to individual employees, it is concerned that SSA, which lost 11,000 workers in the past three years, should be increasing employment not cutting the workforce.
For CSRS employees there will be an annuity reduction of 2 percent for each year they are under age 55. While that seems harsh to feds, in the private sector the reduction is often 5 percent for each year under age 65.
Early retirement offers (VERAs in government-ese) rarely get many takers unless they include a buyout (VSIP) too. The buyouts, which are not part of Social Security’s offer, are worth up to $25,000 before deductions. Since the mid-1990s the government has offered buyouts. Most of them were made during the Clinton administration as part of a government downsizing effort which resulted, among other things, in the privatization of functions previously done in house.
The U.S. Postal Service has offered a series of less generous buyouts (some spread over two years) to its craft employees.
Many stressed, fed-up workers at places like the Internal Revenue Service (who each year are told to do more with less) are asking when/if an early-out/buyout offer will come their way.
The advantage of early retirement (as opposed to deferred retirement) is that workers can begin drawing retirement benefits immediately and remain eligible for coverage under the Federal Employees Health Benefits Program. The FEHBP is one of the jewels in the government’s benefits crown.
Retired feds get the same benefits and coverage, and pay the same premiums as younger, healthier workers in the same FEHBP. They can participate in the regular November/December open season, and also make changes in plans if they move, marry or lose a spouse through divorce or death.