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Mondays, 10:00 a.m.
Presenters from the National Institute of Transition Planning, the federal leader in retirement planning seminars, take your calls and emails every Monday. Each week, the show focuses on a specific area of retirement planning from financial security, taxes, federal benefits and estate planning, to life after retirement and the latest rumors. Email your questions or call the show live at 202-465-3080.
What is a VERA and VSIP?
Monday - 8/29/2011, 6:05pm EDT
By Jolie Lee
Federal News Radio
As agencies prepare for budget cutbacks, voluntary buyouts and early outs are valuable tools to reduce costs, said NITP federal benefits specialist Bob Braunstein.
With these incentives, "an agency doesn't have to do costly RIFs (reduction in force) and other nasty things associated with realignments, restructuring and cost-cutting," said Braunstein, a career fed who took an early retirement 14 years ago.
He added, "I do believe you're going to start seeing more of these authorities requested by agencies."
Types of incentives
Voluntary early retirement authority (VERA)
To accept a VERA or early retirement, a federal employee must meet the eligibility requirements:
- Be at least age 50 with at least 20 years creditable federal service, OR
- Be any age with at least 25 years creditable federal service.
Voluntary separation incentive pay (VSIP)
The authority allows agencies to offer up to $25,000 in a lump sum as an incentive for voluntary separation.
According to OPM, the eligibility requirements are:
- Be serving in an appointment without time limit;
- Be currently employed by the executive branch of the federal government for a continuous period of at least 3 years;
- Be serving in a position covered by an agency VSIP plan (i.e., in the specific geographic area, organization, series and grade);
- Apply for and receive approval for a VSIP from the agency making the VSIP offer; and
- Not be included in any of the ineligibility categories listed below.
Agencies may also offer a VSIP with an early retirement.
Braunstein said feds who are considering taking a VERA do not have to think of it as retirement.
"If you're going out early, you can line up other things to do," he said. "The question is how competent and how confident are you to do that."
Agencies may also use a discontinued service requirement — an involuntary early retirement that has the same service and age requirements as a VERA.
These incentivized separations reduce costs but may result in a "brain drain" of employees with a lot of experience working in government. One way agencies can avoid losing that institutional knowledge is hiring former feds who work for contractors.
For Braunstein, retiring early was empowering and allowed him to reinvent his career.
"It gave me the opportunity to negotiate better salary packages, vacation packages and, most importantly, it enabled me to pick and choose the places I went to work," he said.