For years, the United States Postal Service has been working on offering early retirement to eligible employees. This decision was finally cleared by the Office of Personnel Management (OPM) under its Voluntary Early Retirement Authority (VERA) to offer Voluntary Early Retirement (VER) to the majority of non-bargaining workers throughout all branches of the Postal Service.

USPS employees who are eligible and choose to take advantage of this opportunity would be able to access their retirement funds early. This short-term deal allows employees to bypass years of waiting time and go into immediate annuity.

Here at Federal Benefits Service (FBS), we are interested in helping all federal employees, but specialize in those who are covered by the Federal Employees Retirement System (FERS).

Employees under (FERS) are eligible for a Special Retirement Supplement if they retire:

• At the Minimum Retirement Age (MRA) with 30 years of service.
• At age 60 with 20 years of service or;
• Upon involuntary or early voluntary retirement (age 50 with 20 years of service, or at any age with 25 years of service). Under the Voluntary Early Retirement (VER) or involuntary retirement, this supplement is only payable if you have reached your Minimum Retirement Age (MRA).

The major takeaway here is that federal and postal employees under Federal Employees Retirement System (FERS) are eligible for voluntary early retirement if they are at least 50 years of age, with at least 20 years of service, or any age with a minimum of 25 years of service.

Impacted workers are also eligible for USPS-sponsored retirement counseling – both group and individual.  Information should have already been mailed out to eligible individuals. The packet, along with your counseling session(s), will explain eligibility for any annuity supplement, your health insurance premiums, how your FEGLI life insurance can change, and other issues.  According to a previous grievance settlement with the APWU, local management must arrange a reasonably private space for employees who wish to receive individual counseling on the clock. Your spouse can participate in the counseling session(s). Take advantage of every opportunity to learn the specifics about your retirement benefits.

Some points to consider:

• As of now, there is no financial incentive to retire early, unlike the 2009 and 2012 VERAs, where incentives were negotiated with the APWU.
• Those who apply for the early-out will see financial/income impacts, including:
  • FERS covered employees earn 1% of salary as an annuity for each year worked (e.g. if you worked 20 years, your annuity will be 20% of your high-3 average salary). Leaving early will impact your total retirement benefits.
  • If you are under the Minimum Retirement Age (MRA), you will not receive the Social Security Supplement until you reach the MRA. Find your MRA using this OPM Chart. FERS is a three-legged stool: a modest annuity, social security, and retirement savings in TSP.  Under normal conditions, if you retire after reaching the MRA but are not yet eligible for Social Security, you receive an “annuity supplement” to provide that social security leg until you reach the age of sixty-two (62). An “early-out” is different; so, for example, if you are age 50 and your MRA is 57, you will not receive the supplement until you turn age 57.
  • Under FERS, you will not receive Cost of Living Allowances (COLAs) on your annuity until age 62.
  • With an early retirement, you can’t make additional contributions to TSP or receive employer contributions as you would with continued employment.
  • TSP withdrawal restrictions are not eased for those accepting a VERA.
  • Your life insurance coverage (FEGLI) may change. The amounts of coverage may decrease and the costs (if you continue coverage) will likely rise.
  • Your health insurance premiums will increase if you currently are covered by the Consumer Driven APWU health plan.

Also, according to the OPM, 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
2. Retire during the statutory VSIP or OPM-approved VSIP/VERA period; and
3. Receive a VSIP; or
4. Take early optional retirement (i.e., VERA); or
5. 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.

Want to learn more about your federal retirement options? Please contact us to book your complimentary benefits review today!