The Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Payments (VSIP) are management tools federal agencies are authorized to use to allow employees to voluntarily retire. As a result, agencies can avoid involuntary reductions due to budget shortfalls, restructuring, downsizing, a mission change and other reasons.
Voluntary Early Retirement Authority (VERA)
Also known as an “early out” retirement, VERA temporarily lowers the retirement age and service requirements for an immediate, unreduced annuity before reaching your Minimum Retirement Age (MRA). This enables an agency to increase the number of their employees who are eligible to retire.
Your agency must apply and be approved by the OPM before offering a VERA for your position. Then you must apply and be approved for the “early out” by your agency and meet the eligibility requirements:
- Have at least 20 years of service and be at least age 50 or
- Have at least 25 years of service at any age
“If you receive a VSIP and then return to work for Uncle Sam within 5 years, you’ll likely have to re-pay the VSIP amount.”
Voluntary Separation Incentive Payments (VSIP)
Also known as a “buy out,” a VSIP is a lump sum payment of up to $25,000 (or the employee’s severance pay amount, whichever is less) that can be used as an incentive to take an early retirement.
Sometimes a VSIP is used in conjunction with a VERA but you can’t assume a VERA will always include a VSIP lump sum payment. If you receive a VSIP and then return to work for Uncle Sam within 5 years, you’ll likely have to re-pay the VSIP amount.
To be eligible for a VSIP, you must meet all of the following requirements:
- Serving in an appointment without time limit;
- Currently employed by the Executive Branch of the Federal Government for a continuous period of at least 3 years;
- Serving in a position covered by an agency VSIP plan (i.e., in the specific geographic area, organization, series and grade);
- Apply for and receive approval for a VSIP from the agency making the offer.
Health Insurance & The FERS Supplement
If you’re offered an early out and accept it you’ll get the same benefits you would receive if you met your normal MRA requirements for an immediate retirement. This means you can continue all of your FEHB coverage as long as you satisfy the 5-year rule. You’ll also be eligible for the FERS supplement however it wouldn’t start until your MRA (minimum retirement age) and it will end at age 62, which is the age you first become eligible for Social Security.
