FDIC to offer buyouts, early retirements for 20% of its workforce

The Federal Deposit Insurance Corporation will offer buyouts to about 20% of its workforce in the coming weeks, the agency announced Thursday.

Around 1,200 eligible employees will receive Voluntary Early Retirement Authority (VERA) or Voluntary Separation Incentive Payment (VSIP) notices.

Buyouts are not a reduction-in-force or cost-cutting measure, FDIC officials said, and the moves primarily stem from a series of organizational reviews intended to streamline supervisory layers and address challenges associated with a rapidly aging workforce.

“Today’s announcement is part of a deliberate strategy to further reduce layers of management, acquire new skillsets and allow the agency to proactively address succession planning prior to any crisis or emergency situation,” Jelena McWilliams, FDIC chairwoman, said in a statement. “This program will enhance our agility, preparedness and technological transformation.”

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The FDIC has about 5,800 employees, and 42% of them are at or near retirement age, the agency said Thursday. The situation is especially dire for FDIC management, where 60% of the agency’s senior executives and 58% of managers are retirement-eligible.

Mid-level and senior staff who agree to leave the agency will receive incentive payments worth up to six months of their salaries, the agency said. A small percentage of employees in administrative and clerical positions in the field will receive a full year’s salary, as well as career management, retraining and other services, the agency said.

The incentive payments are significantly higher than what most federal employees are familiar with. Under law, most agencies can offer incentive payments worth up to $25,000 for Title 5 employees, but financial regulatory agencies like the FDIC compensate their workforce differently than appropriated agencies.

Operationally sensitive positions, such as the FDIC examination workforce, are not eligible for buyouts, the agency said.

Eligible employees must apply for VERA/VSIP. The application period opens March 12 and will run through April 10, according to the agency.

FDIC employees approved for an early retirement or buyout will be notified May 4, and employees may begin to leave the agency by May 9 at the earliest.

The goal is to have separating employees leave or retire by June 6, though the agency may delay departures for some depending on mission or knowledge transfer needs.

The agency’s VERA/VSIP authority runs through 2021, but it will offer these buyouts only once, FDIC officials said.

The National Treasury Employees Union, which represents frontline FDIC employees across the country, said 600 of its bargaining unit employees are eligible for a buyout or early retirement.

It learned of the FDIC’s plans Monday and signed a memorandum of understanding with the agency, which describes the details of the VERA/VSIPs.

“While this option is certainly better than a reduction-in-force, we are concerned about employees having enough time to properly assess their options and fully prepare for this decision,” Tony Reardon, NTEU national president, said Thursday.

Some FDIC field offices to close, consolidate

The FDIC will also close, consolidate and relocate several field offices as part of an ongoing effort to modernize its operations, the agency said.

Five field offices and one area office will eventually close its doors, the FDIC said. Another field office will relocate, and two or three field offices in close proximity to each other will be consolidated, the agency said.

Field offices will close in Tulsa, Oklahoma; Gainesville, Florida; Hopkinsville and Elizabethtown, Kentucky; Memphis, Tennessee; and Cincinnati, Ohio, and will be tied to the expiration of building leases in 2020 and 2021.

Offices in both Boston and Los Angeles will consolidate with other facilities in the region.

“NTEU intends to bargain over the impact on those employees to prevent involuntary relocation to another FDIC office and allow them to continue to examine banks that remain in their areas,” Reardon said of the field office closures. “We also intend to closely examine the FDIC’s justification for these decisions, and our union will raise concerns if we feel the moves are unwarranted or harmful to FDIC’s ability to accomplish its mission.”

The plans to offer buyouts and close some field offices stem from a series of organizational and functional reviews, which McWilliams began when she joined the agency back in 2018.

Those reviews began as an attempt to better understand the changing nature of the financial industry and evolved as the FDIC better understood the risks of an aging workforce.

It’s unclear whether FDIC will backfill all vacant positions, but each office and operational component has a plan to hire new talent with the skills they need, the agency said.

The agency said it didn’t have a target for how many eligible FDIC employees might accept the buyout offers.

About 20% of FDIC employees who received similar buyout or early-out notices have accepted past offers, though the agency said those workforce reshaping initiatives were truly an effort to downsize, not reskill and eliminate supervisory layers.

The FDIC’s retirement-eligible workforce was a recent point of concern for the agency’s inspector general.

“Although historical FDIC projections show that employees may not retire on their eligibility date, this wave of potential retirements could deplete the FDIC’s institutional experience and knowledge, especially during a crisis,” the IG said in a February report. “Without proper succession planning strategies, these retirements can also result in leadership gaps.”

The agency also noted a steady rise in the number of leaders and managers, which have grown at more than twice the rate of the FDIC’s total workforce in the last 15 years.

These numbers have created an “imbalance” within the agency and have presented succession planning and other workforce challenges, FDIC said.