1. What is VERA?

Voluntary Early Retirement Authority (VERA) is a management tool allowing agencies that are undergoing substantial restructuring, reshaping, downsizing, transfer of function, reduction in force (RIF), or reorganization to temporarily lower the age and service requirements in order to increase the number of employees who are eligible for retirement. The authority encourages more voluntary separations and helps the agency complete the needed organizational change with minimal disruption to the work force. By offering these short term opportunities, an agency can make it possible for employees to receive an immediate annuity years before they would otherwise be eligible for retirement benefits. VERA may be based on occupational series or grade; skills, knowledge, or other factors related to a position; organizational, geographical, nonpersonal and objective factors; or a combination of these factors.

2. Who can authorize the use of VERA?

The Chief Human Capital Officers Act of 2002 provided expanded authorities for agencies to request VERA based on the need to delayer, restructure, reshape, or downsize their workforces. An agency must request VERA and receive approval from the Office of Personnel Management (OPM) before the agency may offer early retirement to its employees. The approval from OPM will stipulate a period of time during which the option will remain available.

3. Are Senior Executive Service (SES) members and equivalent employees eligible for VERA?

SES members and equivalent employees (e.g. Senior Level (SL), Scientific and Technical (ST), are eligible for a VERA if the agency's request included the positions in its request.

4. What are the basic age and service requirements for VERA?

To be eligible for VERA, an employee must be at least age 50 with at least 20 years of creditable service or have at least 25 years of total creditable service at any age. It is important to note that if an employee covered by the Civil Service Retirement System takes a VERA, he or she will face a two percent reduction in annuity for each year he or she is under the age of 55. There is no reduction for employees covered by the Federal Employee Retirement System.

5. If I meet the age and service requirements, are there any other restrictions that could prevent me from retiring under VERA?

Yes, the VERA may only be offered to specified organizations, occupational groups and grades. Additionally, there are other exceptions:

• Employees serving under time-limited appointments;
  
  
• Employees who have not been continuously on the Department's rolls since at least 30 days before the date of its request; and
  
  
• Employees in receipt of a decision of involuntary separation for misconduct or unsatisfactory performance.

The date of the Department's request to the Office of Personnel Management for a VERA is used to determine an individual's eligibility.

7. I meet all of the eligibility requirements. When can I apply for VERA?

Applications are accepted when the Department announces a window period. Applications will be not be accepted prior to or after the announced window period.

8. What are some examples of nonpersonal and objective factors that may be used to target VERA to a particular segment of the workforce?

In addition to the factors already listed (i.e., occupational series and/or grade; skills, knowledge or other factors related to the position; as well as organizational, or geographical factors), other nonpersonal factors could include offering VERA based on the specific VERA window period(s) or receipt of a specified number of applications for retirement within that window.

9. After a VERA window is opened, can management change the number of available VERAs, the targeted positions for which it is being offered, the deadline for applying, or the date by which employees must retire if their applications are approved?

Yes. If the downsizing and/or restructuring needs change, management may subsequently revise the closing date for receipt of VERA applications or the effective date for VERA retirements, or reduce or increase the number of early retirement applications it will accept. The notice of the revised closing date or number of applications will be publicized in the same manner and to the same group(s) of employees as in the original notice.

10. If I accept VERA, when will my retirement be effective?

If you have been approved for a VERA, you will be able to separate during the VERA window or dates specified when the VERA is announced. Please consult your human resources office to receive an annuity estimate and obtain advice specific to your personal situation.

Civil Service Retirement System (CSRS) Annuity

• Commencing date of annuity - If you retire on the 1st, 2nd, or 3rd day of a month, annuity begins the following day. Otherwise, annuity begins the first day of the month following retirement.
  
  
• Calculation of annuity - Annuity is calculated based on the average high-3 salary and years and months of creditable service. Unused sick leave can be used for additional service credit. If the employee is under age 55, this calculation is reduced by one-sixth of one percent for each full month he/she is under age 55 (i.e. two percent per year).

Federal Employees Retirement System (FERS) Annuity

• Commencing date of annuity - Annuity begins the first day of the month following retirement.
  
  
• Calculation of annuity - FERS Basic Annuity is calculated based on the average high-3 salary and years and months of creditable service. Under FERS, unused sick leave can not be used for additional service credit, unless the employee is a FERS transferee with a CSRS component. A FERS transferee with a CSRS component receives credit for unused sick leave; the amount of credit will be the lesser of:

• The employee's sick leave balance as of the date of transfer to FERS; or
  
  
• The employee's sick leave balance as of the date of retirement.

There is no annuity reduction in FERS for employees who retire on an early voluntary retirement under age 55. A FERS Transferee with a CSRS Component in his/her annuity, who retires before age 55, will have the CSRS portion of the payable annuity reduced by one-sixth of one percent for each full month he/she is under age 55. No reduction will be applied to the FERS component of the annuity.

A FERS Annuity Supplement is payable to an employee who has completed at least one calendar year of FERS service when he/she reaches Minimum Retirement Age (MRA).

MRA is age 55 to 57, depending on date of birth. The annuity supplement is payable until eligibility for Social Security begins at age 62, subject to an earnings limitation.

Voluntary Separation Incentive Payments (VSIP)

Frequently Asked Questions

1. What is a VSIP?

The Voluntary Separation Incentive Payment (VSIP or buyout) authority allows agencies to offer lump sum payments to employees who are in identified surplus positions or have skills that are no longer needed in the workforce, as an incentive to separate. Under VSIP, agencies may pay up to $25,000, or an amount equal to the amount of severance pay an employee would be entitled to receive, whichever is less. Employees may separate to accept VSIP by optional retirement or by voluntary early retirement, if authorized.

VSIPs are an option for increasing voluntary attrition in agencies that are downsizing or restructuring. Besides providing an incentive for employees to voluntarily retire or resign to avoid potential reduction- in-force actions, the agency may also offer VSIP to employees in safe positions that could then provide placement opportunities for employees holding surplus positions.

2. Who can authorize the use of VSIP?

An agency must request VSIP authority and receive approval from the OPM before the agency may offer VSIP to its employees. The approval from OPM will stipulate a period of time during which the option will remain available.

3. Are Senior Executive Service (SES) members and equivalent employees eligible for VSIP?

SES members and equivalent employees (e.g. Senior Level (SL), Scientific and Technical (ST), are eligible for a VSIP if the agency's request included the positions in its request.

4. What are the basic age and service requirements for a VSIP?

The agency may specify that only retirement eligible employees, including those employees eligible for early retirement, are eligible for a VSIP. To meet the criteria of an early retirement, an employee must be at least age 50 with at least 20 years of creditable service or have at least 25 years of total creditable service at any age. It is important to note that if an employee covered by the Civil Service Retirement System takes an early retirement, he or she will face a two percent reduction in annuity for each year he or she is under the age of 55. There is no reduction for employees covered by the Federal Employees Retirement System.

5. If I meet the age and service requirements for an early or optional retirement, are there any other restrictions that could prevent me from receiving a VSIP?

Yes, a VSIP may be offered to specified organizations, occupational groups and grades. In addition, the employee must:

• Be serving under an appointment without time limitation;
  
  
• 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 offer; and
  
  
• Apply for and receive approval for a VSIP from the agency making the VSIP offer.

6. Are there any other criteria that would not allow an employee to be eligible for a VSIP?

Yes, employees in the following categories are not eligible for VSIP. Employees who:

• Are reemployed annuitants;
  
  
• Have a disability such that the individual is or would be eligible for disability retirement;
  
  
• Are in receipt of a decision notice of involuntary separation for misconduct or unacceptable performance;
  
  
• Previously received any VSIP from the Federal Government;
  
  
• During the 36-month period preceding the date of separation, performed service for which a student loan repayment benefit was paid, or is to be paid;
  
  
• During the 24-month period preceding the date of separation, performed service for which a recruitment or relocation incentive was paid, or is to be paid; or
  
  
• During the 12-month period preceding the date of separation, performed service for which a retention incentive was paid, or is to be paid. (This applies to General Schedule employees only.)

7. If I am a member of the military, am I still eligible for a VSIP?

Chapter 43 of title 38, United States Code, requires that agencies treat employees on military duty, for all practical purposes, as though they were still on the job. Further, employees are not to be disadvantaged because of their military service. An employee on active duty in the Armed Forces who would otherwise be eligible for a VSIP offer will have 30 days following restoration to the agency to accept or reject the agency's offer of VSIP.

• The restored employee has the right to accept or reject the agency's offer of VSIP, even if the authority approved by OPM has expired.

8. If I am on leave without pay will I be notified of the VSIP?

Agencies must inform employees on leave without pay, workers' compensation, details outside the agency, etc., of VSIP offers that would cover them.

9. How is the eligibility for VSIPs determined?

After the agency has received authority from OPM to offer VSIP [whether throughout the entire agency or for specific organizational unit(s)], the agency shall further limit the availability of the VSIP based on:

• One or more organizational unit(s);
  
  
• One or more occupational series or grade(s);
  
  
• One or more geographic area(s);
  
  
• Skill, knowledge, or other factors related to a position;
  
  
• Specific time periods during which eligible employees may elect to accept a VSIP offer;
  
  
• The number of VSIPs authorized by OPM; or
  
  
• Any combination of the factors listed above.

10. I meet all the eligibility requirements. When can I apply for a VSIP?

Applications are only accepted during the window period announced by management. Applications will not be accepted prior to or after the announced VSIP window.

11. How is a VSIP computed?

An agency computes a VSIP on the basis of the lesser of:

• An amount equal to the amount of severance pay the employee would be entitled to receive, as computed under 5 U.S.C. 5595(c), without adjustment for any previous payment made; or
  
  
• An amount determined by the agency head, not to exceed $25,000.

An employee who separates with a VSIP actually receives a net amount after mandatory withholding deductions, not the gross amount of the VSIP. The agency may reduce the gross amount of the VSIP for certain outstanding employee debts, including any:

• Debt the employee owes to the agency;
  
  
• Commercial garnishment (including supplemental fees or court-ordered interest);
  
  
• Alimony covered by a court order; and/or
  
  
• Child support covered by a court order.

12. Do I have to repay the VSIP if I am reemployed with the Federal government?

An Executive Branch employee who received a VSIP and accepts employment for compensation with the Government of the United States within 5 years of the date of the separation on which the VSIP is based, including work under a personal services contract or other direct contract, must repay the entire amount of the VSIP to the agency that paid it before the individual's first day of reemployment.

If the proposed employment is with an agency other than the Government Accountability Office, the United States Postal Service, or the Postal Rate Commission, the Director of the Office of Personnel Management may, at the request of the head of the agency, waive the repayment if the proposed reemployment is with an Executive agency, and

• The individual involved possesses unique abilities and is the only qualified applicant available for the position; or
  
  
• In case of emergency involving a direct threat to life or property, the individual:
  
  
  • has skills directly related to resolving the emergency; and
    
    
  • will serve on a temporary basis only as long as the individual's services are made necessary by the emergency.

If the proposed reemployment is with an organization in the Legislative Branch, the head of the organization or the appointing official may waive the repayment if the individual involved possesses unique abilities and is the only qualified applicant available for the position.

If the proposed reemployment is with the Judicial Branch, the Director of the Administrative Office of the U.S. Courts may waive the repayment if the individual involved possesses unique abilities and is the only qualified applicant available for the position.

13. I have not had my health insurance for five years? May I continue to have health coverage into retirement?

Employees retiring in conjunction with a VSIP or VERA authority must have been covered under the Federal Employees Health Benefits (FEHB) Program either: (1) for the last 5 years of their Federal civilian service in order to continue such coverage in retirement, or (2) if less than 5 years, for all service since the employee was eligible for FEHB program benefits unless these requirements are waived.

OPM will grant pre-approved waivers to employees who meet one of the following requirements:

• Have been covered under the FEHB Program continuously since the beginning date of the agency's latest statutory VSIP authority, or OPM-approved VSIP or VERA authority; and
  
  
• Retire during the statutory VSIP or OPM-approved VSIP/VERA period; and
  
  
• Receive a VSIP; or
  
  
• Take early optional retirement; or
  
  
• Take discontinued service retirement based on an involuntary separation due to RIF, directed reassignment, reclassification to a lower grade, or abolishment of position.

Employees who meet one of the three requirements do not need to request a waiver. Instead, agencies must attach a statement to the employee's retirement application noting that the employee meets the requirements for a pre-approved waiver by OPM as set forth in OPM's specific instructions to the agency.

Some employees who retire during a VSIP or VERA period may not be eligible for a pre-approved waiver. These include employees who retire on a regular optional retirement but do not qualify for a VSIP. Employees who do not qualify for a pre-approved waiver may request a waiver on a case-by-case basis by writing to OPM and asking OPM to waive the participation requirement in their case. OPM may grant waivers to some of these employees; each case will be considered on its own merits, based on criteria that are applied to all other retiring employees as outlined in the FEHB Handbook in the section entitled Annuitants and Compensators.