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Home | Resources | Guide to Early-Out Retirement Offers for Federal and Postal Employees

Guide to Early-Out Retirement Offers for Federal and Postal Employees

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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 Civil Service 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:

  1. 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;
  2. 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);

  3. Serve in a position covered by the agency's VERA plan; and
  4. 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 an early-out.  

CSRS Annuity

  • 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).

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.

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:

  1. 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
  2. Take early optional retirement (i.e., VERA); or
  3. Take discontinued service retirement based on an involuntary separation due to RIF, directed reassignment, reclassification to a lower grade, or abolishment of position.

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 . asp



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