Early retirement: A good option if handled right
- By Bureaucratus
- Nov 22, 1998
On May 1, 1998, President Clinton enacted a law that allows agencies to offer voluntary early retirements under special provisions through Sept. 30, 1999. Under this law, the Office of Personnel Management will consider requests for voluntary early-retirement authority from agencies with severe downsizing or major restructuring plans.
I love the way OPM describes the legislation. An OPM statement said the law "did not amend [previous] voluntary early-retirement statutes," but it "allows OPM and agencies to apply the early-retirement program as if the voluntary early-retirement laws had been amended." Got that?
Basically, the new law allows agency headquarters to request voluntary early-retirement authority for the entire period of a major reduction in force, a major reorganization or a major transfer of function, or through Sept. 30, 1999, which-ever period is shorter.
Agencies must obtain OPM approval to use voluntary early retirements. Approval is based on an OPM determination that the agency is undergoing changes in which a significant percentage of its work force will be subject to separation or downgrading.
The purpose of early-retirement authority is to thin an agency's ranks and avoid major upheavals. Early-retirement authority reduces the basic age and service requirements to apply to employees with 20 years of federal service at age 50 or employees of any age with 25 years of federal service. Normally, an employee is eligible to retire from federal service when she has at least 30 years of federal service at age 55; or at least 20 years of service at age 60; or at least five years of service at age 62.
Any employee who was not on the agency's rolls at least 31 days before the agency requested early retirement is ineligible. Also ineligible are employees on term appointments and employees who have received a removal notice for misconduct or poor performance.
After an agency receives OPM approval, it can make early-retirement offers on an agencywide basis or limit early-retirement offers to one or more organizational units, locations, or occupational series and grades. Agencies may offer early retirements for the duration of the time approved by OPM or during specific windows set by the agency within that time.
Such latitude was designed to enable agencies to fine-tune their early-retirement programs to meet their needs. From a management point of view, the flexibility is very desirable. But employees will probably complain, particularly if only federal workers in certain occupational series' and grades are offered deals.
In April 1994, OPM created an automatic procedure that permits employees who take early retirement to obtain a waiver of the five-year participation requirement for continuing their coverage under the Federal Employees Health Benefits Program (FEHBP) as retirees. Employees who accept a buyout offer and retire are eligible for this waiver. Employees in agencies with buyout authority who accept an early retirement offer without a buyout are also eligible. But employees who have not been continuously covered by FEHBP since Oct. 1, 1996, are not covered by the automatic waiver.
It's nice that OPM is enabling agencies to achieve their downsizing requirements in a humane fashion. The only concern I have is with how agencies use their early-retirement authority.
Agencies must make judicious use of early retirements. By failing to manage offers carefully, agencies can create disruptions in their work forces. Agencies should use early retirements prudently. It is doubtful all agencies will.
-- Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.