Buyout Predictor Guidelines

Monday - 4/4/2011, 6:00am EDT

For long-time feds of certain age, and for recently hired civil servants, the number one job-related question has two parts. They are:

  • Is my agency going to offer buyouts (and if so when, and for how long)) and,

  • Am I going to get one?

Buyouts represent a golden parachute for older feds. For younger employees buyouts mean job security (a big deal in these economic times), and a better chance at getting a promotion. Nobody can move up while the promotion pipeline is blocked and, if agencies are forced to cut staff, short-service staffers (if they lack veterans preference protection) are the first to go. Unless older employees take a buyout.

Those are both great questions. Anyone who can accurately predict buyouts is wasting time in their government day job. With that kind of ability said psychic should quit immediately. Then head for Las Vegas. Pawn everything you've got and convert the cash and your life-savings into poker chips. Of if you like your neighborhood (and maybe your family and the dog) you can stay home. Just go on-line, setup a credit card account and begin to day trade in the stock market. Make sure to buy low and sell high. That's it!

Handicapping buyouts is an art, not a science. And it is not for the faint-hearted even though we know certain things:

  • Buyouts in the executive branch were established in the mid-1990s at a maximum of $25,000 before deductions. After deductions, depending on your tax bracket, state of residence and other factors, the remaining amount can range from $14,000 to $18,000.

  • Despite real-sounding rumors (and wishful thinking) there is no plan to raise the amount of the buyout or to give employees extra service time credit to boost their starting annuity.

  • At one time agencies had to get approval from Congress, and later the Office of Personnel Management, to offer a buyout. Now in many cases they can offer them on their own.

  • Buyouts ( called VSIPs) are usually offered in conjunction with early retirement (called VERA). When a VERA is offered (to you) you can retire at normal age and service, or under the CSRS program as early as age 50 with 20 years service, or at any age with 25 years service. There is a 2 percent reduction in annuity for each year the retiree is under age 55 for CSRS personnel.

  • Buyouts can be made agency or department-wide. But don't count on it. In most cases buyouts are targeted to workers in areas that need to be closed or downside. That means the agency can offer buyouts to employees at a certain grade level, in specific occupational groups. They can also be geographically-specific. In past buyouts departments, like Agriculture, limited some buyouts to specific cities or regions.

  • Although it has its own buyout policy, the U.S. Postal Service is an example of targeted buyouts both by occupation and geographic location. The USPS is offering a $20,000 buyout (after deductions and spread over two years) to 7,500 workers. They must put in retirement papers, or resign this month. Seven of 74 district offices will be closed, and the buyouts will be targeted to non-bargaining unit employees. For details, click here.

To reach me: mcausey@federalnewsradio.com


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