Helping Federal Employees and Annuitants Understand Their Benefits


Voluntary Early Retirement Authority (VERA)

Early Retirement VERA & VSIP Incentives


Many agencies are applying for Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Payments (VSIP) buyout authority for select groups of employees. The list is growing and includes; the Department of the Interior, EPA, and State Department.

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 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 retirement.

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VERA & VSIP Overview

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 twenty 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 situation:

  1. How to be Financially Prepared When You Retire
  2. How to be Emotionally and Physically Prepared When You Retire


Voluntary Early Retirement Authority (VERA)

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.

Covered Employees

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 service, OR
    • 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 agency request);
  • 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.

CSRS Annuity

  • 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).

FERS Annuity

  • 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

  1. Retire during the statutory VSIP or OPM-approved VSIP/VERA period; and
  2. Receive a VSIP; or
  3. 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.

Discretionary Authority

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.


Other Helpful Resources

  • 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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