Even if your retirement target date is years away, longtime federal employees should have a “Plan B” in case their agency makes a surprise take-the-money-and-run offer this year.
Dozens of agencies will be fine-tuning, which could include downsizing some functions, expanding others and balancing their work forces because of mission changes or a surge in retirements.
Thanks to a kind of buyout option that went into effect last year, paying employees to leave has become easier, cheaper and less painful to federal offices.
Unlike the old-style buyouts oriented toward trimming the Defense Department, which required congressional approval on an agency-by-agency basis, the new-style buyouts are available to any agency and require the approval of only the Office of Personnel Management.
And they can be authorized because agencies are “reshaping” their work forces, even if that means that they plan to expand.
The new reshaping buyouts don’t require agencies to kick in extra money to the retirement fund, or lose a slot for each buyout taker. Best of all, buyout takers who have badly needed skills — especially in the antiterrorism field — can be rehired without repaying their buyouts. If rehired, they still can collect their full retirement benefit as well as their full federal salary.
Previously, most buyouts were time-limited, required agencies to pay a big chunk of money into the civil service retirement fund and meant that the buyout taker’s position was eliminated.
Most of the agency-specific buyouts barred agencies from rehiring employees — either as re-employed annuitants or as direct contract workers — until they repaid any buyout. In short, the buyouts, which were not a good after-deductions deal for employees, had little value but cost the taxpayers a bundle and agencies precious slots.
Outfits such as the Department of Homeland Security plan to take advantage of the benefits of the reshaping buyouts. The Internal Revenue Service has announced a major reorganization, with new emphasis on enforcement and less on handling paper tax returns. The Federal Aviation Administration has a new “flight plan” to modernize and restructure.
The National Aeronautics and Space Administration — thanks to the near-flawless Mars mission — has a new lease on life and is expected to grow and change.
So what is Plan B?
The key is deciding how much your annuity — which is pegged to inflation — would be if you left sooner than expected, and how well you could live on that. Also, you need to check the size of your Thrift Savings Plan, your projected Social Security benefits and your eligibility for health insurance for life. Feds normally must have any one of the federal health plans for the five years before retirement.
Most retirement-eligible feds are under the old Civil Service Retirement System. The normal age for retiring on unreduced benefits — pegged to length of service and salary — is 55 after 30 years of service or with as little as five years of service if 62 or older.
But under Voluntary Early Retirement Authority, VERA, workers can leave at any age if they have at least 25 years of federal/military service or are age 50 with 20 years of service. Employees are hit with a 2 percent reduction for each year before age 55, but that’s not as tough as the normal private-sector reduction of 5 percent for each year before age 65.
Going through the Plan B checklist, with help from your agency’s human resources office and/or outside experts, is a good idea anytime. But this year it is a must for many feds.
• Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcausey@federalnewsradio.@com.
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