Federal Employee's CSRS & FERS Federal Civil Service Retirement
& Financial Planning Resources
VSIP & VERA Menu
Many agencies have applied for and received early out authority for
select groups of employees. The list is growing and includes; USPS,
Department of Agriculture, Government Printing Office (GPO), the
Smithsonian Institute, Department of Defense, and the list keeps growing in
light of the fiscal crisis that we find ourselves in.
These programs allow federal employees in organizations that are
reorganizing or downsizing to offer early outs rather than lay employees off
through a Reduction in Force (RIF). Agencies find it far easier to offer
early outs to those who wish to leave than to lay federal employees off.
Early outs have a larger budget impact over time than RIF's because
younger employees, that would be subject to layoffs, generally receive lower
pay and benefits than the senior employees that would be eligible for early
Agencies often offer Voluntary Early Retirement Authority (VERA) to
employees without a Voluntary Separation Incentive Payment (VSIP). In this
case you can retire early and receive benefits however no incentive payment
is offered for you to do so. My agency, the FAA, received VERA authority in
the mid 1990s during a major reorganization and I applied for the option and
was denied. My position was not included in the initial offer. I worked
another 10 years to full retirement with 35 years service in 2005. To apply
for an early out employees must be at least age 50 with 20 years of service
or any age with 25 years of creditable service.
If you are offered an early out with or without a buyout you need to
thoroughly understand the program and its impact on your benefits, pay, and
retirement. A detailed discussion is provided for each program with links to
source data for further research.
CAUTION: Look before you leap. Determine if you
can afford to retire and determine what you will do to occupy your time
after you leave. Download these free reports to assess your personal
How to be
Financially Prepared When You Retire
2) How to be
Physically Prepared When You Retire
Voluntary Early Retirement Authority (VERA) allows agencies that are
undergoing substantial restructuring, reduction in force, reshaping, downsizing, transfer of
function, or reorganization to temporarily lower the age and service
requirements in order to increase the number of employees who are eligible
for retirement. VERA may be based on occupational series or grade; skills,
knowledge, or other factors related to a position; organizational,
geographical, nonpersonal and objective factors; or a combination of these
factors. The authority encourages more voluntary separations and
helps the agency complete the needed organizational change with minimal
disruption to the work force. By offering these short term opportunities, an
agency can make it possible for employees to receive an immediate annuity
years before they would otherwise be eligible.
An agency must request VERA and receive approval from the Office of
Personnel Management (OPM) before the agency may offer early retirement to
its employees. The approval from OPM will stipulate a period of time during
which the option will remain available. Agencies such as the Department of
Defense that have been granted agency-specific VERA are not required to seek
OPM approval for their use of this option.
Each agency using VERA must determine and publicize the maximum
number of local VERA approvals and the anticipated number of opportunity
periods (windows) required. Positions may be targeted by occupational series
or grade; skills, knowledge, or other factors related to the position;
organizational, geographical, nonpersonal and objective factors; or any
combination of these factors.? In the event that approved nonpersonal
factors other than service computation date are used to determine
eligibility, these factors must be included in the announcement.? You may
apply for a VERA if you are eligible and your position is in the targeted
group of positions.
Voluntary Early Retirement offers apply to employees covered under both
the Civil Service Retirement System (CSRS) and the Federal Employees
Retirement System (FERS). When an agency has received VERA approval from
OPM, an employee who meets the general eligibility requirements may be
eligible to retire early. The employee must:
- Meet the minimum age and service requirements -
- At least age 50 with at least 20 years creditable Federal
- Any age with at least 25 years creditable Federal service;
- Have served in a position covered by the OPM authorization for the
minimum time specified by OPM (usually 30 days prior to the date of the
- Serve in a position covered by the agency's VERA plan; and
- Separate by the close of the early-out period.
Impact on Annuity with Early Retirement
Employees considering an early retirement must consult with their human
resources office and follow agency procedures to receive an annuity estimate
and obtain advice specific to their personal situation.
- Commencing date of annuity - If the employee retires on the 1st,
2nd, or 3rd day of a month, annuity begins the following day. Otherwise,
annuity begins the first day of the month following retirement.
- Calculation of annuity - Annuity is calculated based on the average
high-3 salary and years and months of creditable service. Unused sick
leave can be used for additional service credit. If the employee is
under age 55, this calculation is reduced by one-sixth of one percent
for each full month he/she is under age 55 (i.e. 2% per year).
- Commencing date of annuity - Annuity begins the first day of the
month following retirement.
- Calculation of annuity - FERS Basic Annuity is calculated based on
the average high-3 salary and years and months of creditable service.
Under FERS, unused sick leave can now be used for additional service
credit at a 50% credit through 2013 with full credit starting in 2014.
There is no annuity reduction in FERS for employees who retire on an
early voluntary retirement under age 55. A FERS Transferee with a CSRS
Component in his/her annuity, who retires before age 55, will have the CSRS
portion of the payable annuity reduced by one-sixth of one percent for each
full month he/she is under age 55. No reduction will be applied to the FERS
component of the annuity.
A FERS Annuity Supplement is payable to an employee who has completed at
least one calendar year of FERS service when he/she reaches Minimum
Retirement Age (MRA). MRA is age 55 to 57, depending on date of birth. The
annuity supplement is payable until eligibility for Social Security begins
at age 62, subject to an earnings limitation.
Effect of Early Retirement on Benefits
Health Benefits: Employees retiring in conjunction with a
VERA or Voluntary Separation Incentive Payment (VSIP) authority must have
been covered under the FEHB Program (1) for the last 5 years of their
Federal civilian service in order to continue such coverage in retirement,
or (2) if less than 5 years, for all service since the employee was eligible
for these benefits unless these requirements are waived.
OPM will grant pre-approved waivers to employees who have been:
Covered under the FEHB Program continuously since the beginning date
of the agency's latest statutory VSIP authority, or OPM-approved VSIP or
VERA authority; and
- Retire during the statutory VSIP or OPM-approved VSIP/VERA period;
- Receive a VSIP; or
- Take early optional retirement (i.e., VERA); or
Take discontinued service retirement based on an involuntary separation
due to RIF, directed reassignment, reclassification to a lower grade, or
abolishment of position.
Coverage as an annuitant is identical to coverage as an employee, but
premiums are not paid on a pre-tax basis.
Life Insurance: Federal Employees Group Life Insurance can be continued
through the retirement system provided the employee has carried the
coverage for at least five years prior to retirement. Value and cost
depend on elections made at retirement.
As with any incentive, when approved by OPM, this authority is used at
the discretion of the agency. Each agency must develop a VERA plan to
explain why the authority is needed, how it will be implemented, and
which employees will be eligible.
Employment After Voluntary Early Retirement
Non-Federal employment: Employees who take voluntary early retirement
are not subject to any restrictions regarding their annuity, should they
subsequently accept non-Federal employment.
- EXCEPTION: Employees covered
under FERS who qualify for the annuity supplement could have the
supplement reduced or discontinued due to an earnings limitation.
Federal employment: If an annuitant (i.e., a retired Federal employee)
is hired under a Federal appointment, the annuitant is then considered a
"reemployed annuitant." This means the annuity will continue, and the
new Federal salary will be offset by the annuity, unless the employing
agency seeks and is granted a waiver of the salary offset by OPM. If the
reemployed annuitant works full time for at least one year, the
annuitant may apply for a supplemental annuity. If the reemployed
annuitant works full time for at least five years, the annuitant may
then choose either a supplemental annuity or a re-computed annuity.
5 U.S.C. 8336(d)(2)(D) for CSRS
5 U.S.C. 8414(b)(1)(B) for FERS
5 CFR Part 831.114 for CSRS
5 CFR Part 842.213 for FERS
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