What’s a VERA without a VSIP?

Note: This story originally mentioned the Federal Deposit Insurance Corporation’s early retirement and buyout offers, which the agency made to employees in early March. Federal News Network has since learned those workforce changes were withdrawn on March 16 due to the pandemic.  

We’ve seen a handful of agencies offer early retirements in recent months. And for many of these organizations, there’s been a common theme to the offers.

There’s no money. It’s just a quick ticket to retirement.

Knee-deep in IT modernization initiatives, the Agriculture Department made early retirement offers to IT specialists and others within its Office of the Chief Information Officer. USDA’s OCIO needs fresh talent with emerging skills, and after consolidating its data centers and networks, it makes sense that the department doesn’t need quite as many people to manage IT.

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Under a Voluntary Early Retirement Authority (VERA), federal employees are eligible only if they have 20 years of service at age 50 or 25 years of service at any age. Eligible employees are allowed to voluntarily retire and earn an immediate annuity.

Perhaps hopeful (or fearful) their own organization was brewing up comparable plans to USDA, some readers asked if we knew of any other agencies who were making a similar offer.

The Transportation Security Administration announced in May it would offer early retirements to eligible employees, again with no buyout.

Early retirements were also part of the slew of workforce changes the Postal Service had initially planned. USPS made no mention of buyouts, only early retirements.

There may be others, but by my count, only two agencies come to mind as having offered a chunk of change with their early-retirement call this year.

The Defense Contract Management Agency implemented a Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Pay (VSIP) earlier this spring, citing shortfalls in both its operations and maintenance budget as one reason for the early-out and early retirement offer.

The Federal Deposit Insurance Corporation offered VERA/VSIP options to a whopping 20% of its workforce back on March 5. It feels like ages since we reported the news, but the FDIC offered incentives worth six month’s salary, or even a year’s pay for some employees.

The agency later with withdrew those early retirement and buyout offers in mid-March during the height of the pandemic.

Some FDIC salaries top out at $273,400, including locality pay. An FDIC corporate manager, for example, can make anywhere from $117,254-to-$195,445. That would have been quite the incentive payment, and it probably seems like a dream compared to the $25,000 max VSIP still in place from the early aughts.

That’s right, the maximum Voluntary Incentive Payment hasn’t budged in nearly 20 years, and there are no signs it will any time soon.

Congress made a halfhearted attempt to raise the maximum to $40,000 with the annual defense authorization bill, but the provision went nowhere once Congress realized it actually had to appropriate more money to pay for a better buyout deal.

The Office of Personnel Management also suggested raising the maximum incentive payment in recent years, but again, the proposal went nowhere.

So it’s been at least two years since Congress or the administration made an attempt at raising the statutory VSIP max, and I’m willing to bet $40,000 buyouts aren’t coming any time soon.

So where does that leave you?

Some of you told us two years ago a $25,000 buyout just wasn’t appealing, especially after taxes.

There are, of course, implications for taking a VERA, especially if you’re looking to hang on to your federal health insurance in retirement.

But what about now? Are you still eyeing an early retirement even if it comes with nothing — just early access to your annuity?

Nearly Useless Factoid

By David Thornton

Supai, Arizona, a small community within the Grand Canyon, is the only place in the U.S. that still gets its mail delivered by mule.

Source: Smithsonian Insider