Posted on Tuesday, 26th July 2011 by

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When I attained 25 years service at age 44 I felt a great sense of relief. I knew that with 25 years of creditable service I would at least be eligible for an early retirement and I could apply for a VERA and VSIP if offered. 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 was a little apprehensive when I first applied and my wife had major reservations because my annuity would have been a fraction of what it would have been at age 55.

First and foremost, look before you leap if offered a VERA. Determine if you can afford to retire and determine what you will do to occupy your time after you leave. I applied knowing that I had another full time job waiting for me with my publishing business.

Many agencies applied for and received early out authority recently for select groups of employees. The list is growing and includes the USPS, Department of Agriculture, Department of Energy, 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.

VERA and VSIP programs allow federal agencies 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 provide more cost savings than RIF’s because younger employees subject to layoffs generally receive lower pay and benefits than the senior employees that would be eligible for early retirement.

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 of up to $25,000 is offered for you to do so. 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, thoroughly understand the program and its impact on your finances, benefits, annuity, and retirement before applying.

If you apply and your VERA is approved you must leave by the date specified. This tends to play havoc with plans to sell back the maximum amount of accrued annual leave or the ability to round out your sick leave to an even month by the date of departure. Also, pay close attention to the CSRS penalty that may apply. If the CSRS 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).  There isn’t a penalty for FERS service.

The FERS Social Security Supplement applies under VERA for those who are at their MRA when they retire up to age 62. However, if the retiree goes back to work the Social Security earnings limit applies and for each dollar earned over $14,160 in 2011 your supplement is reduced by $1.00.

Those employees under the special 20 year retirement system, LEO, FF, ATC and NWC, can apply for a VERA if offered. If you don’t have 20 years vested in the special 20 year retirement system they will not receive the enhanced retirement benefits. With less than 20 years in the covered services their annuity would be based on the regular retirement formula. Many under LEO, FF, ATC and NWC have regular federal civil service time as well. For example, if an air traffic controller (ATC) is age 53 and has 24 years of creditable service for retirement, but only completed 17 years of ATC covered service, the controller’s retirement would be based on the regular retirement formula because he hadn’t completed 20 years under the ATC system.

So close but so far away… A site visitor’s agency was offering early outs however he was just a few months shy of the required 25 years of service. He wanted to apply his accrued annual leave to his service date to qualify. Unfortunately, annual leave can only be used with RIFs or a discontinued service retirement when an employee is involuntarily separated or has a redirected reassignment outside of their commuting area.

Military credits can be used to qualify for a VERA… You need a minimum of 5 years of civilian service to be eligible for a civilian retirement annuity.  However, after the 5 years is met, the military service is creditable towards years of service for all the other voluntary retirement eligibility requirements: MRA +10; MRA +30; 60 years old with 20 years of service; and the  VERA requirements – age 50 with 20 years of service or any age with 25 years of service. Review all eligibility requriements for FERS and CSRS retirement.

One major consideration, especially for those leaving in their 40s and 50s, is what you will do when you retire. Most will look for other employment and it is important to stay active and involved. Go to our Jobs Center to find employers that are specifically looking for retired feds with experience. Many companies seek out retired federal workers because of their extensive experience in many areas. Explore your options before you sign on the dotted line, especially since you will more than likely need supplemental income with an early retirement. Our job listings consolidate national listings for all occupations and in all sectors. Search for occupations of interest.

Complete details for VERA and VSIP programs:

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Learn more about your benefitsemployment, travel, and financial planning issues on our site and visit our Blog frequently at http://fedretire.net to read all forum articles.

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our articles are not intended nor should they be considered investment advice. Our reply is time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

Last 5 posts by Dennis Damp

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    Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, EMPLOYMENT OPTIONS, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, UNCATEGORIZED | Comments (1)


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    One Response to “Is a Voluntary Early Retirement (VERA) in Your Future?”

    1. Leigh Trail Says:

      Dennis, thank you for this informative article. I hope you can clarify something. You said “I was a little apprehensive when I first applied..because my annuity would have been a fraction of what it would have been at age 55.” On the other hand, it says this in the VERA section: “There is no annuity reduction in FERS for employees who retire on an early voluntary retirement under age 55.” To me it appears that your statement and their statement conflict? Could you please clarify for me. Thanks very much.