A buyout offer you cannot refuse!

Friday - 5/2/2014, 2:00am EDT

When a federal agency offers buyouts and early retirement to long-time employees, two groups benefit:

  • The generally older, long-service people who take the buyout and retire. For those ready, willing and anxious to go, the $25,000 buyout — even after it is reduced by taxes and other deductions — is a lot better than a sharp stick in the eye. The buyout can help them cover expenses until their interim (smaller) annuity payment is adjusted and they start getting the monthly payments they expected.

  • Younger and mid-career employees who may have decided to go also benefit when older, higher-grade workers leave. That can open the way for training and promotion. This will be especially true when the phased-retirement program (still in the works) is approved. That will probably be later this year, just in time for the prime time to offer buyouts (October, November, December).

    Despite legislation that would give white-collar civil servants a 3.3 percent raise next January, most Congress-watchers say feds will be lucky to get the 1 percent proposed by the President for 2015. That would be a repeat of the 1 percent workers got this year after three years without any pay increase.

    For the past four years, the only way federal workers could move up the pay ladder was either by getting a within-grade (3 percent) step increase, or a promotion. The WIGs are based on length-of-service and performance ratings. Promotions are the other way to get a raise, but with the squeeze on agency budgets and tough outside job market, the retirement rate is flat and promotions are hard to come by. This is especially true in places like the IRS which, while our biggest money-collector, is constantly asked to do more with less — as in fewer people.

    Some retirement-eligible feds say they are waiting for a buyout offer until they put in their retirement papers. Others say the 1990s style buyouts, which were targeted at mid- to low-income males in the Defense Department, are hopelessly out of date in a 21st-century government. For a quick history of birth of the buyout, click here.

    So what would a 21st century offer-you-can't-refuse buyout look like? How much money are we talking to separate you from your job? Here's a comment from someone who has crunched the numbers:

    When buyouts were first offered in the 1990s, $25K was a sufficient amount to ponder and accept because it was a significant amount compared to the current salary. Using the inflation factor, that amount would equal $62,500 today and would cause most to rub their chin and deal with internal conflict as to "Do I or don't I?" Using that same inflation factor in reverse, comparing one's current salary to the offered buyout is equivalent to making that retirement decision as if one was offered $10K. After taxes, $7,500. Hardly worth giving up a six-digit salary for is it? If I was offered 50 percent of a year's salary to retire, I would probably do it. If the mental midgets that make the buyout proposal offer me $25K, or what amounts to less than three months' salary, forget it. — Bill at GPO
    Does that amount work for you?

    While many downsizing private-sector outfits offer generous, prorated buyouts to long-time employees, Uncle Sam's Voluntary Separation Incentive Program remains lodged in the 1990s.


    NEARLY USELESS FACTOID

    Compiled by Jack Moore

    Between 1860 and 1916 — the height of the British Empire — uniform regulations for British Army troops required every soldier to wear a mustache.

    (Source: Today I Found Out)


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