Fed "early out" prompted by COVID-19 pandemic?

[OfficeSpace]

Should Federal Government agencies follow Boeing's lead and offer early retirement opportunities under the Office of Personnel Management (OPM) Voluntary Early Retirement Authority (VERA), with or without Voluntary Separation Incentive Payments (VSIP), particularly for eligible employees deemed non-essential and currently on administrative leave with full pay?

Federal Government agencies draw from a Congressionally limited budget to compensate their workforce. For many agencies, the distribution of employees across General Schedule (GS) pay grades or bands is far from optimal, as the predicted "retirement tsunami" never materialized despite a decade-long bull market. Instead, attrition disproportionately involved desirable and motivated workers ineligible for retirement that agencies became unable to retain due to more attractive opportunities in the booming private sector.

Now that the market has plunged into viral bear territory with arguably a long road to recovery, even fewer employees eligible for retirement are likely to follow through before their nest eggs and confidence levels recover, perpetuating the situation as they consume payroll that otherwise could be allocated to recruit and retain fresh talent at lower grades / bands eager to contribute as public servants but struggling to find employment.

Is this not an ideal opportunity for agencies to leverage VERA for its intended purpose?

 

[jazz4cash]

Absolutely. I’m certain that is just one component of the Federal Pandemic Emergency Response Strategic Plan.

 

[goingtotravel]

For most civilian agencies the VERA payout is less than $17,000 max after taxes. If you were not retired yet and your TSP (expected to be 33%-50% of your post-retirement income) just took a nosedive would you retire for a promise of $17,000? If anything I suspect people who were thinking about retiring will hang on for a few more years in hopes of seeing their TSP accounts go back up and/or to build a cushion.

DH and I were both going to retire in the next year and although we could still swing it we are reconsidering staying longer to build back a bigger cushion in our investment accounts. I haven't heard of anyone in my agency waiting for a VERA offer to get out now.

 

[OfficeSpace]

I understand, but for many the critical factor is FEHB rather than VSIP.

Some at my agency who are immunocompromised and/or providing exclusive care to others who are immunocompromised are eager to get out now (VERA, some form of early Disability Retirement, etc.), as even once the curve flattens enough for local hospitals to accommodate the anticipated patient load, returning to the office could expose them and loved ones to unacceptable risk of contracting a disease from which they may be unable to recover successfully.

 

[goingtotravel]

Ahhh, I understand where you are coming from. We are in that situation ourselves but both of our agencies have indicated we are teleworking for a long time. I am full time remote already and DH is covered by the ADA and FMLA so hopefully that will be enough to keep us employed for a while if we choose. I realize not everyone is that fortunate. My guess is that there may be VERA authority granted but not until the CR for FY2021 is passed (I would say budget for 2021 but I know better).

 

[clobber]

Now that the market has plunged into viral bear territory with arguably a long road to recovery

You said "arguably" so I might as well.

The market, as measured by the S&P 500, is literally at the same level it was on October 2, 2019. I was very pleased with my retirement account balances at that time, why are we so disappointed with them now?

 

[OfficeSpace]

That argument is taking place in the Do you think Dow 18,000 was the bottom? thread!

 

[clobber]

That argument is taking place in the Do you think Dow 18,000 was the bottom? thread!

Yes, but I did intend to tie this to "early out" them of this thread. Meaning - what is the difference between now and October 2019 for an early out? Why are, "fewer employees eligible for retirement are likely to follow through?" Yes their accounts are down from 2-3 months ago, but they are not down from 5-6 months ago.

 

[OfficeSpace]

Confidence?

 

[clobber]

Confidence?

Probably, like how people think 50 degrees is cold when Fall arrives, but it is considered warm in the Spring.

 

[OfficeSpace]

If only the markets were as predictable as the seasons!

 

[OfficeSpace]

The Defense Contract Management Agency (DCMA) just announced early outs under VERA with VSIP. COVID-19 was not mentioned as a reason, but "officials cautioned it is only the “first step.” Interested employees will have to decide quickly — applications are due April 27."

 

[OfficeSpace]

“TSA will notify VERA-eligible employees in writing in the near future,” an agency spokesman said in an email to Federal News Network. “We expect that details will be shared with the workforce sometime next month.”