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Resources | Guide to Early-Out Retirement Offers for Federal and Postal Employees
Guide to Early-Out Retirement Offers for Federal and Postal Employees
What is a Voluntary Early Out?
Voluntary Early Retirement Authority (VERA) allows agencies
that are undergoing substantial restructuring, reshaping, downsizing, transfer
of function, 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.
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. Agencies such as the Department of Defense that have been
granted agency-specific VERA are not required to seek OPM approval for their use
of this option. What is the employee coverage in
an early out?
Voluntary Early Retirement offers apply to employees covered under both the
Retirement System (CSRS) and the Federal Employees
Retirement System (FERS) . When an agency has received VERA approval from
OPM, an employee who meets the general eligibility requirements may be eligible
to retire early. The employee must:
- Meet the minimum age and service requirements -
- At least age 50 with at least 20 years creditable Federal service, OR
- Any age with at least 25 years creditable Federal service;
- Have served in a position covered by the OPM authorization for the minimum
time specified by OPM (usually 30 days prior to the date of the agency request);
- Serve in a position covered by the agency's VERA plan; and
- Separate by the close of the early-out period.
What is the effect on your annuity if you take an
early retirement option?
Employees considering an early retirement must consult with their human
resources office and follow agency procedures to receive an annuity estimate and
obtain advice specific to their personal situation. You may
also want to consider using a federal retirement calculator which will assist
you in performing "what if" calculations to help you decide whether to take
- Commencing date of annuity - If the employee retires 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. 2% per year).
- Commencing date of annuity - Annuity begins the first day of the month
- 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
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. Effect of
Early Retirement on Benefits
Health Benefits: Employees retiring in conjunction with a
VERA or Voluntary Separation Incentive Payment (VSIP) authority must have been
covered under the FEHB Program (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 these
benefits unless these requirements are waived.
OPM will grant pre-approved waivers to employees who 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
- Retire during the statutory VSIP or OPM-approved VSIP/VERA period;
- Receive a VSIP; or
- Take early optional retirement (i.e., VERA); or
- Take discontinued service retirement based on an involuntary separation due
to RIF, directed reassignment, reclassification to a lower grade, or abolishment
Coverage as an annuitant is identical to coverage as an employee, but
premiums are not paid on a pre-tax basis.
Life Insurance: Federal Employees Group Life Insurance can
be continued through the retirement system provided the employee has carried the
coverage for at least five years prior to retirement. Value and cost depend on
elections made at retirement.
Source: OPM opm . gov / employ / vera / vera01 .