Government agencies looking to downsize or restructure their workforce may offer eligible employees early retirement under Voluntary Early Retirement Authority (VERA).
Effects on Your FERS Annuity
The FERS annuity begins on the first day of the month following retirement. Your FERS Basic Annuity is calculated based on the average of the highest three years of salary and total years and months of creditable service. All unused sick leave can be applied to your creditable service.
FERS employees who retire early (before age 55) are not subject to a reduction in their annuity. Employees with at least one year of FERS service are eligible for the FERS Annuity Supplement upon reaching their Minimum Retirement Age (MRA), which ranges from age 55 to 57, depending on their birthdate. The supplement will continue until you become eligible for Social Security benefits at age 62, subject to an earnings limitation.
Impact of Early Retirement on Benefits
Employees retiring under Voluntary Early Retirement Authority (VERA) or a Voluntary Separation Incentive Payment (VSIP) must meet specific health benefits eligibility requirements to continue coverage into retirement. To retain Federal Employees Health Benefits (FEHB) coverage, employees must have been enrolled in FEHB for at least the last five years of their Federal service, or continuously since first becoming eligible for the benefits, unless an exception applies.
Employees can continue their Federal Employees Group Life Insurance (FEGLI) after retirement, provided they have maintained coverage for at least five years prior to retirement. The value and cost of coverage depend on the employee’s election at the time of retirement.
Post-Retirement Employment
Employees who retire voluntarily under early retirement are not restricted from taking non-Federal employment, but FERS employees receiving the annuity supplement could have their supplement reduced or discontinued if they exceed the earnings limit.
If a retired Federal employee (annuitant) is re-employed by the Federal government, they are considered a “reemployed annuitant.” In this case, their annuity will continue, but the reemployment salary will be offset by the annuity amount unless a waiver is granted by OPM. If the reemployed annuitant works full-time for at least one year, they may apply for a supplemental annuity. After working full-time for five years, the annuitant can choose either a supplemental annuity or a re-computed annuity based on their new federal service.
Reach out to a Federal Retirement Consultant® who can help you navigate your unique federal benefits and make sure you’re prepared for the future.
