[BBS file "VSIPIAG1.TXT" and "VSIPIAG1.ZIP"; IAG memorandum advising agencies of Congressional approval of buyout legislation.] ================================================================= MEMORANDUM FOR DIRECTORS OF PERSONNEL FROM: LEONARD R. KLEIN (signed) March 24, 1994 ASSOCIATE DIRECTOR FOR CAREER ENTRY Subject: New Legislation on Voluntary Separation Incentive Payments and Employee Training Legislation Congress has passed legislation, recommended by the President's National Performance Review, to authorize agencies to offer incentive payments or "buyouts" to encourage employees to resign or retire voluntarily. The legislation also removes restrictions on employee training to make it easier for agencies to retrain employees. Agencies may implement the incentive payments program as soon as the President signs the legislation. This legislation is similar to the Administration's bill, which we distributed to you in October 1993. One important change, however, is that agencies may determine the length of their incentives offer "window." They are not obligated to use a 90- day period as in the earlier bill. Agencies may offer incentives through March 31, 1995. Employees who take incentives may be retained up to March 31, 1997. The eligibility criteria and amount of incentives have remained the same, but the bar on reemployment without repayment has been extended to 5 years. Funding provisions and mandated personnel reductions in the bill have also changed significantly, requiring: - Agency payment of 9 percent of the final salary of each CSRS employee who takes an incentive and voluntary early retirement during FY 94 and FY 95. - Agency payment of $80 for each CSRS and FERS employee on an agency's roll as of March 31 of each year from FY 95 through FY 98--even if incentives are not used. - Agency reduction of one position for each incentive it pays. - Reduction of total executive branch employment in each year from FY 94 through FY 99, with a governmentwide hiring freeze if new limits are not met. The legislation, a summary of its main points, and an updated version of OPM's Guide to Voluntary Separation Incentive Payments is attached. These materials also are available on two OPM electronic bulletin boards (at 912-757-3100 and 202-606-4800). On both boards, the file name for the legislation is VSIPLAW.TXT. [BBS Note- We will post this file when a copy of the legislation becomes available.] We will add the public law number once it is signed. The file name for the guide is VSIPIAG1.TXT. REPORTING INCENTIVES TO OPM The law requires OPM to report to Congress each year on the number of employees who received incentives by agency, grade, and location, and the number of waivers for reemployment without repayment of the incentive, by position and grade. Attachment 1 includes special personnel action documentation requirements (paragraph R) and Attachment 3 includes special reporting provisions for agencies to insure compliance with this statutory requirement. STREAMLINED EARLY RETIREMENT PROCEDURES Because of the magnitude of planned personnel reductions and to help agencies use the separation incentives to the greatest advantage, OPM has changed the guidelines for early retirement authority. Under the new procedures, agencies facing severe downsizing may obtain early retirement authority, to use agencywide or by component, for up to 1 year, with option to renew for a second year. See Attachment 3. ASSISTANCE FROM OPM OPM's new Federal Workforce Restructuring Office coordinates assistance to agency headquarters on all downsizing programs, including the voluntary separation incentive payments and streamlined early retirement procedures. You may contact this office at 202-606-0960 or FAX 202-606-2329. The Office is located in OPM's central office at Room 6504, 1900 E Street, N.W., Washington, DC 20415. For specific questions on preparations for processing retirement actions, please contact Eileen Kirwan in OPM's Retirement and Insurance Group on 202-606-0510. For detailed information on the training provisions in the legislation, please call our Human Resources Development Group at 202-606-1575. ATTACHMENTS Attachment 1: OPM Guide to Voluntary Separation Incentive Payments Attachment 2: Draft samples for agencies to use in communicating with employees about voluntary separation incentive payments, including announcements, interest surveys, documentation, and separation agreements. Attachment 3: New Streamlined Early Retirement Procedures Attachment 4: Instructions for using OPM's electronic bulletin boards Attachment 5: Federal Workforce Restructuring Act of 1994 and summary of main points. [BBS Note-Attachment 1 follows on next page] Attachment 1 [BBS Note-Attachment 1 will be updated when a Public Law reference number is assigned to the bill.] Guide to Voluntary Separation Incentive Payments under the Federal Workforce Restructuring Act of 1994 P.L. 103- The purpose of this guide is to assist agencies in the use of Voluntary Separation Incentive Payments, a valuable tool to help them restructure their workforce while avoiding involuntary separations. A. Legal Authorities Executive agencies--except the Department of Defense (DOD), the Central Intelligence Agency (CIA), and the General Accounting Office (GAO)--are authorized by Public Law 103- to offer Voluntary Separation Incentive Payments (Incentives) to employees who voluntarily resign or retire. DOD has separate authority under 5 U.S.C. 5597 to offer Incentives, CIA has similar authority under P.L. 103-36 and GAO under P.L. 103-69. However, DOD and CIA are covered by certain provisions of P.L. 103- , as discussed elsewhere in this Guide. Although not required, voluntary early retirement authority, used in conjunction with Incentives, can increase the number of workers who leave voluntarily. Early retirements may be authorized for employees under the Civil Service Retirement System (CSRS) by 5 U.S.C. 8336(d)(2) and for employees under the Federal Employees Retirement System (FERS) by 5 U.S.C. 8414(b)(1)(B). See Attachment 4 for more information. B. Reduction of Federal Positions P.L. 103- requires reductions in Federal employment -- The total number of funded positions in all agencies is to be reduced by one position, on a full-time equivalent basis, for each Incentive paid under P.L. 103- . DOD, CIA, and GAO are not subject to this requirement. No funds for salaries or expenses of eliminated positions may be used for any purpose other than authorized separation costs. Total employment in all executive agencies, including DOD and CIA but not GAO, is to be reduced in each fiscal year from FY 94 through FY 99. OMB will oversee compliance with reduction requirements. If reduction requirements are not met, all hiring is frozen unless the President approves a waiver because of emergency needs or critical agency mission. No increase is allowed in service contracts because of P.L. 103- except where a cost comparison shows a contract has a financial advantage. C. Additional Payments to the Retirement Fund P.L. 103- imposed two payments -- o For separations in FY 94 and FY 95, agencies paying Incentives under P.L. 103- must pay the retirement fund an amount equal to 9 percent of the final basic pay of any CSRS employee who receives an Incentive and takes a voluntary early retirement. (Final basic pay means the total amount of basic pay that would be payable to an employee for a year of service, computed using an employee's final rate of basic pay, with adjustments for less than a full-time work schedule.) Discontinued service retirements are not subject to this requirement. DOD and CIA are subject to this payment for CSRS employees separating on and after the date of enactment of PL 103- and before October 1, 1995, with an Incentive and voluntary early retirement. In FY 95 through FY 98, all executive agencies (except GAO) must pay $80 per year to the retirement fund for each employee covered by CSRS or FERS as of March 31 of each year. These payments are required regardless of whether an agency pays Incentives. D. What is an Incentive? An Incentive is a lump-sum amount an agency pays to an employee after his or her voluntary separation. The amount is equivalent to the severance pay an employee would receive up to $25,000 and is paid from funds the agency would use for the employee's salary. Use 5 USC 5595(c) to compute the amount as if an employee were eligible for severance pay, even though the employee is not required to be eligible for it. No reduction is made for any prior severance pay an employee has received. An agency has no discretion to pay other than the full amount figured under this formula. An Incentive shall not be a basis for payment, and shall not be included in the computation, of any other type of Government benefit. It shall not be taken into account in determining the amount of any severance pay to which an employee may be entitled under 5 USC 5595 based on any other separation. E. Who is Covered by Incentives? Employees covered by Incentive programs include -- o those who meet the definition of "employee" in 5 USC 2105 (which covers employees in the Senior Executive Service, competitive service, and excepted service, including the Foreign Service), and o employees of county committees established under section 8(b) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590h(b). To be eligible for an Incentive, an employee must: o Agree to resign or retire voluntarily during a period designated by the agency; o Be serving under an appointment without a time limit. Employees under appointments having a noncompetitive conversion eligibility to a career or career-conditional appointment after a set period, e.g., a VRA or Presidential Management Intern, are covered); o Have been continuously employed in Federal service for at least 12 months without a break of a single day as of the projected date of separation with an Incentive (paid leave and nonpay status are creditable); o Not be a reemployed annuitant; and o Not be eligible for disability retirement. Incentives are used with any type of voluntary separation-- resignation, regular optional retirement, or voluntary early retirement (but not disability retirement). Employees who take an Incentive are not eligible for the Alternative Form of Annuity (lump-sum payment with reduced annuity). Employees who are involuntarily separated and take a discontinued service retirement, or who retire under the mandatory retirement provisions of the retirement law, are not eligible for an Incentive. Employees on leave without pay or on detail give up any reemployment or restoration right they may have in exchange for an Incentive, for example, employees on detail to an international organization. Employees receiving injury compensation while on leave without pay (LWOP) also may accept an Incentive and relinquish a reemployment right (such individuals are not automatically eligible for disability retirement). An employee separated with a reemployment or restoration right is not eligible for an Incentive because the law requires persons to be currently employed by the agency offering the Incentive. If reemployed within 5 years, an employee must pay back the full Incentive unless OPM or another designated official waives it. (See "Special Factors for Employees to Consider" in this Guide.) F. Planning for Effective Use of Incentives Incentives provide a quick and effective method to reduce payroll costs. Because of their voluntary nature, they also are less stressful for employees than a reduction in force. However, careful planning is necessary to assure that Incentive programs do not have an adverse impact on an agency's financial situation or ability to carry out essential functions. Working within partnerships and negotiating, as appropriate, are important aspects of the planning process. Planning includes these steps: (1) Set specific targets for position and dollar/staff year savings to be achieved. (2) Estimate the number of employees who will take Incentive offers. (3) Determine timing of offers and window period. (4) Determine coverage of Incentive offers. (5) Give employees information. This guide discusses these steps. G. Setting Targets Set specific targets for position and dollar/staff year savings to be achieved. Take into account the number and amount of Incentives the agency can offer, and its funding and employment levels. Incentives are targeted at positions in locations, organizations, and/or occupations, but may not be targeted at individuals. A key problem is how to avoid offering more separation Incentives than an agency can afford, both in terms of money and in terms of lost talent. It is, therefore, critical, for agencies to establish specific targets for groups of positions with dollar and staff year savings to be achieved. Opening an offer to the first 200 takers of all types might result in losing the right numbers but the wrong employees in terms of the agency's mission. Alternatives include offering Incentives to specific occupations, components, grades, etc., possibly at staggered intervals. At the same time, an agency does not want to be so restrictive in its offers that an insufficient number of employees accept them. These targets will facilitate internal monitoring of Incentives once they have been offered. Setting targets will also enable the agency to make necessary adjustments in the program while offers are underway. H. Projecting Separations An important aspect of determining coverage for Incentive offers is to estimate how many who are eligible will take them. One approach is to survey employees in advance for non-binding (perhaps anonymous) indications of interest. Another approach is to look at the experience of agencies that already have used separation Incentives. Their experience can help other agencies project separation rates. Generally, Incentives have been more attractive to lower and mid-graded workers than to higher-graded employees. The following shows the percent of DOD and GAO employees who retired with Incentives from among those who were eligible for voluntary early and regular optional retirement and the percent of non-retirement eligibles who accepted Incentives and resigned: Early Retire. Optional Retire. Resignation DOD 32% 53% 2% GAO 16% 52% not available I. Timing Timing is very important because almost all of the savings from voluntary reductions come in the years following the year in which the buyouts are paid. The break-even date, the last date in a fiscal year on which savings offset separation costs, varies by pay level, length of service, retirement system, and other factors. (However, an agency may be able to afford separation Incentives after a break-even date if it has other available funds.) For example, the financial break-even date for a GS-14's early retirement, with an Incentive, might be in April. For a GS-7, however, it is more likely to have been the previous November (the second month of the fiscal year). The difference is because the maximum buyout is $25,000, an amount representing almost a full year's pay at GS-7, but only four month's pay at GS-14. The key financial factors are: o Savings in Pay and Benefits. In addition to salary, agencies typically pay 30% of pay for the benefits of employees in the Federal Employees Retirement System and around 14% for those in the Civil Service Retirement System. o Payment for annual leave balance. For most retirees, figure the equivalent of six weeks' pay. This assumes the retirees have the 240-hour annual leave maximum that can be carried over into a new leave year. Some members of the Senior Executive Service actually have more than a year of unused annual leave, since they have no limit on what they can carry over from year to year. For resignations, figure on a lower annual leave balance. It should be possible to come up with good estimates from agency leave records. o Dates for Paying Incentives. Incentives are paid as a lump sum in the year of separation. Severance pay is paid over time, at the same rate as salary, so it can extend into the next fiscal year. o Payment of 9% to Civil Service Retirement Fund. For CSRS early retirees who accept a buyout, agencies pay 9% of the employees' final basic pay into the retirement fund. Since this payment does not apply to regular optional retirees, the break-even point for them would be later in the fiscal year than for early retirees. Final basic pay means the total amount of basic pay that would be payable to an employee for a year of service, computed using an employee's final rate of basic pay, with adjustments for less than a full-time work schedule. Example: A GS-14, step 10, with 27 years of service, earning Washington, DC locality pay ($76,733), takes early retirement with an Incentive on March 31, 1994: Incentive Payment ($25,000) Lump Sum Leave (240 hrs) ($ 8,824) 9% to CSRS ($ 6,906) + _______ Cost to Agency for FY 94 ($40,370) Salary & Benefits Saved $43,354 (April through September) ________ NET SAVINGS FOR FY 94: $ 2,624 This example shows savings from separation on a particular date. What if the agency wants to know the latest date this same GS-14 could retire before costs would exceed savings? To calculate a break-even date, determine how long someone must be off the payroll for payroll savings to equal the costs of separation. In the example, the cost of separation is $40,370, which is the equivalent of about 24 weeks' salary and benefits. This means the agency would need the GS-14 to separate by mid-April-- 24 weeks before the end of the fiscal year. To calculate an agencywide break-even date, an agency would use average costs. J. Setting the Incentive Window After determining its break-even point, an agency needs to set a time period in which Incentives will be offered. This window may be at any time and for any period as long as employees separate no later than March 31, 1995. (An agency may make an exception and allow an employee to remain up through March 31, 1997; see "Employee Separation Dates" in this guide.) An agency may close the window early if its reduction goal has been met. An agency may set a window to occur at different times for different categories of positions in the agency. While the greatest savings to an agency would accrue with separations as early as possible in a fiscal year, an agency may have reasons for delaying or staggering the windows, for example, planning needs, adequate time to advise employees, completion of an essential agency function, etc. K. Determining Coverage of Incentive Offers An important decision an agency makes is how to control Incentive offers because these offers determine who will leave the agency. Unlike other workforce reduction techniques such as attrition or reduction in force, which often result in skill imbalances and the need for extensive retraining, agencies can more precisely target and control Incentive offers. Incentives need not be limited to positions the agency intends to abolish. Properly managed, Incentives can be used to create vacancies in jobs the agency will have to refill. These vacancies can be used to place surplus employees from other parts of the organization. It makes no sense, however, to offer Incentives to employees in critical jobs that cannot be refilled with surplus employees. The agency head or designee has considerable discretion to tailor the use of Incentives to meet restructuring goals. (The agency head may delegate authority to other agency officials to make these decisions for various agency components.) The agency may offer Incentives to all eligible employees of the agency or only to employees in designated: - organizational units, - geographic locations, - occupational categories (including grade levels), or - any combination of these factors, but may not select individual employees on a personal basis to receive Incentives. If an agency offers voluntary early retirement in conjunction with Incentives, it needs to look at the impact of retirement eligibility in determining coverage. An employee who wishes to retire must meet the requirements for retirement on the separation date, whether this is during the Incentives window or at a delayed date. (See "Employee Separation Dates" in this Guide.) Thus, in determining coverage, an agency will need to have a policy on whether to accept applications from pre-retirement eligibles who will have a delayed separation date, but meet retirement eligibility when separated. OPM will allow an employee to take an early retirement when separated with an Incentive, if the employee otherwise is covered by the early retirement authority. Agencies should be aware they have authority, if they choose to use it, to release employees from certain service agreements where the agency has paid benefits such as training, relocation costs, recruitment bonuses, etc. Generally, the regulations covering these benefits discuss waiver authority. An agency may not coerce an employee to separate with an Incentive or deny an employee an Incentive based on a factor not authorized by P.L. 103- . L. Criteria to Consider in Determining Coverage To determine the positions, locations, and/or organizational units to cover, agencies should consider: o The recommendations of the National Performance Review (NPR) to reduce supervisory layers and take other actions to improve productivity. o Which positions in a particular organization or occupation are critical to accomplishing the agency's mission and whether they would continue. o Whether replacing employees in positions in certain geographic and organizational locations would be difficult or costly. o Whether the resulting vacancies would provide an opportunity for placement of other employees in surplus positions. o Whether reassigned employees would be capable of assuming the duties of vacated positions without significant loss of productivity or the need for extensive retraining. o Whether the organization can afford the overall loss of experience and the resulting adverse effect on mission accomplishment that would result from losing employees in certain occupational series and grade levels or organizational/program components. o The results of surveys or other agency acceptance rates (see "Projecting Separations" in this Guide). Examples of the kinds of jobs excluded by agencies that have offered Incentives: o Jobs with particular skill requirements that may make them difficult to refill from within the agency; o Positions that may require extensive relocation costs to refill (e.g., essential positions in overseas areas); and o Jobs in high-cost metropolitan areas where it may be difficult to replace employees who have retired. M. Giving Employees Information Just as agencies need information to make sound choices, employees will be reluctant to decide to separate without full information. Agencies can improve results by giving employees as much information as possible as early as possible. The Q&A's at the end of this Guide may be helpful. N. Processing Applications Once an agency has announced Incentive offers, it should accept requests from all eligible employees. The agency may not select employees on a personal basis to receive offers. Incentives are not employee entitlements. Therefore, agencies are not obligated to honor all employee applications, as long as there is a fair and objective basis used to make such decisions, and employees are advised of this when they are invited to submit applications. Fair and objective application procedures are one of the most important elements of any Incentives program. Because of their high visibility, these procedures are one of the key standards by which the effectiveness of an agency program will be judged. Two possible methods for approving applications are order of receipt of application or order of separation date with the earliest dates accepted first. Regardless of the method used, it is best to tell employees of it in advance since it is a condition of approval. Because some employees may wait until the latest date possible to apply, the agency will want to be sure its method covers these eventualities. An agency can lessen the possibility of last minute applications by sending frequent, periodic reminders to employees about the Incentive offer and continuing to offer guidance. Approving applications on a first-come basis, or by the earliest separation dates, also can help. It is wise to emphasize to employees that the agency will close the window early if it meets its reduction goal prior to the end of the window. Periodically, the agency might want to tell employees how many applications it has approved. Finally, the agency may need special policies for approving applications on the last day of the window--especially if applications are accepted at more than one location. For example, this might include -- - setting the deadline as noon on the last day, - requiring that last day applications be delivered to a particular person, - not approving any delayed separation dates for last day applications, - using service computation date, or some other predetermined fair and objective method, to choose among an excess number of applications on the last day of the window, - setting up a hotline for applicants to call after normal business hours to learn whether their application was approved, and - publicizing these procedures to all employees at a date close to the end of the window. O. Employee Separation Dates To receive an Incentive, employees generally must be off the rolls before April 1, 1995. However, when an employee's services will be needed temporarily to ensure the performance of the agency's mission, an agency head may approve an exception to require the employee to complete an additional period of service ending no later than March 31, 1997. To receive an Incentive, the employee must complete the additional period of service required. An agency may not approve an exception solely for the employee's convenience or solely to enable an employee to reach retirement eligibility. Agencies may make exceptions to delay the separation date for individual positions or by categories of positions. Whenever possible, the general offer letter announcing Incentives should state which positions/occupations may have delayed separation dates since the proposed separation date could have a significant bearing on an employee's decision. Agencies generally offer voluntary early retirement in conjunction with Incentives. Normally, the window for early retirement coincides with the window for Incentives. Where an agency approves an exception to retain an employee beyond the Incentives window, OPM will allow the employee to take an early retirement when separated with an Incentive, if the employee otherwise is covered by the early retirement authority at the time of the Incentives window and meets the criteria for early retirement at the time of separation. If the employee does not meet the criteria for early retirement during the window period, he or she must meet it when separated with an Incentive. An employee who has agreed to a delayed separation date with an Incentive is not exempt from separation because of reduction in force, performance reasons, or conduct reasons prior to that agreed-upon date. An agency may not change a permanent employee to a time-limited appointment on the basis of the employee's agreement to a delayed separation date with an Incentive (employees under time-limited appointments are not eligible to receive an Incentive). An agency needs to decide whether to use a not-to-exceed (NTE) date or a specific date for delayed separations. To enable employees to make informed decisions, an agency would be wise to give complete information to employees on the policies it adopts. The following are examples of situations an agency might encounter and possible policies it might adopt (in developing its Incentives program) to deal with these situations: - Traditionally, the use of an NTE date means an agency, at its discretion, may separate an employee at any time up to the NTE date. Such an early separation would be processed as a resignation or retirement with an Incentive, in accordance with the agreement the employee signed--even if the employee does not want to leave early. - If an agency needed to conduct a reduction in force (RIF) prior to an NTE date, it might separate an employee (with Incentive) prior to the RIF or let the employee choose whether to separate with Incentive prior to the RIF or stay and compete in the RIF. If an employee competes but is not separated in the RIF, he or she would be separated later with an Incentive in accordance with their agreement. - If an agency gave an employee a specific separation date but needed to conduct a RIF prior to that date, it might let the employee choose to separate (with Incentive) prior to the RIF. Otherwise, the employee would compete in the RIF. If not separated in the RIF, he or she would be separated later with an Incentive on the specific date in accordance with their agreement. - Once an employee has agreed to an NTE date or specific date, an agency might extend the date further, with the employee's concurrence, but not later than March 31, 1997. - An agency would separate an employee only on an agreed-upon specific date, unless the employee agreed to a new date. While the delayed separation date gives an agency flexibility, the potential for complications is great. Among the factors to consider in delaying a separation date are the following: - A high number of exceptions and long delays in separations may reduce an agency's ability to meet its anticipated reduction goal by a particular date. It might have to increase the projected number of voluntary separations to achieve the same savings it would realize from requiring all separations to occur during the window. - There is the possibility that employees may attempt to withdraw their resignations or retirements before the effective date, even though they have agreed to a separation date. To avoid the disruption to the agency's ability to meet its reduction goal, the agency should offer the Incentive in the form of an agreement. The agreement language would state that in return for the benefit of receiving a separation incentive, the employee agrees to resign (or retire) during the window period or at a later date designated by the agency. The agreement should also contain language that the employee has freely and knowledgeably entered the agreement. Preferably, both the employee and an agency official would sign the agreement. A decision by the Merit Systems Protection Board, (MSPB), McClain v. U.S. Postal Service, 40 M.S.P.R. 66 (1989) held that a signed and executed settlement agreement constituted the employee's resignation from the agency. Unless the agency offers the separation incentive in agreement form, third parties have held that employees may later withdraw their agreed-upon resignations or retirements before they are effected unless the agency can demonstrate that such a withdrawal would cause undue disruption to the agency's mission. Although the agency would likely prevail if the employee later challenged the separation as involuntary, it is preferable to avoid the possibility of appeals by the offer of Incentives as voluntarily entered agreements. P. Personnel Office Functions In addition to its participation in agency decisions on the open window period, coverage, and other policy aspects of Incentives, the personnel office plays a major role in seeing that the program succeeds. Agencies negotiate or consult, as appropriate, with unions representing affected employees. Agencies must give employees complete information and keep them informed. Initially, many agencies send a general memorandum to all employees notifying them of the availability of Incentives, how requests will be handled, and the positions excluded from eligibility. The memo usually provides a personnel office or other contact point where employees can pick up the information and forms they will need, and may also announce a group session to discuss the offers and related matters. Employees who are still interested can be given the opportunity for personal counseling and, if eligible for retirement, an annuity computation by personnel office staff. Some agencies also send individual letters to those eligible for voluntary early retirement to provide them with similar information. An agency may want to consider the use of a hotline to respond to employee inquiries. Once applications for Incentives have been accepted, the personnel and payroll offices will need adequate time to process the Incentives, retirements, and resignations. The proper and speedy processing of retirement applications is always a serious concern of retiring employees, and it becomes even more so in a situation where large numbers have retired. Thus, agencies should provide for adequate staff to assure that applications and supporting documentation are quickly processed and sent to OPM. Q. Special Factors for Employees to Consider Agencies must insure employees understand that their decision to leave with an Incentive is entirely voluntary. Employees may not be coerced to resign or retire. Agencies paying Incentives under P.L. 103- should include in their applications for Incentives a statement telling employees they must repay the full Incentive if employed in the Federal government under any type of appointment or under a personal services contract within 5 years after separation with an Incentive. The head of an agency may request that repayment be waived for an individual who has unique abilities, is the only qualified applicant available for the position, and will be employed under Federal appointment. This waiver authority rests with OPM for employment in executive agencies, with the Director of the Administrative Office of the U. S. Courts for judicial branch positions, and the head of the organization or appointing official for a legislative branch position. Repayment for employment under a personal services contract may NOT be waived. DOD and CIA employees were not previously subject to this repayment requirement. However, under P.L. 103- , the above repayment and waiver provisions apply to DOD and CIA employees separating with Incentives on and after the date of enactment of P.L. 103- . Employees should be advised that since voluntary early retirement is considered voluntary, any subsequent reemployment with the Federal Government can occur only as a reemployed annuitant. Also, an individual who accepts an Incentive is not eligible for any programs aimed at employees who are involuntarily separated, such as placement assistance programs for displaced employees. A primary consideration for employees in deciding whether to choose early retirement is the reduction for age in annuities under CSRS. A basic annuity is reduced by 2% for each year (1/6 of 1 percent for each full month) an employee is under age 55 at the time of retirement. Under FERS there is no age reduction for voluntary early retirement but if an employee who elected FERS is entitled to a CSRS component, the CSRS component will be reduced using the CSRS rules. An employee under FERS who is not eligible for voluntary early retirement is eligible for an immediate annuity if he or she has 10 years of service and has reached the minimum retirement age (55 if born before 1948, and gradually increasing to 57). This type of benefit is referred to as "MRA+10" and is subject to an age reduction if the employee is under 62. An employee who has decided to retire should consider the effective date of annuities. For employees who retire voluntarily under CSRS after the third of the month, their annuity does not begin until the first of the next month. Most CSRS employees thus want to retire by the third of the month. Under FERS, all voluntary retirements begin on the first of the month after separation, except that an "MRA+10" benefit may be delayed to age 62, at the retiree's option. Employees also should be cautioned that to carry over health and life insurance into retirement, an employee must have been enrolled in the programs for at least 5 years prior to retirement, or since their first opportunity to enroll. (The recent life insurance open season does not constitute a "first opportunity" that would allow those who did not meet the 5-year requirement to carry life insurance coverage into retirement.) To inform employees, agencies may want to use the Q&A's at the end of this Guide. R. Documenting Personnel Actions The SF 50, Notification of Personnel Action, documenting an employee's separation is used to record receipt of an Incentive. Use blocks 5A-F to document the employee's resignation or retirement. o For voluntary early retirements, use NOA "303 Retirement-Special Option." o For CSRS employees, use Authority Codes "VYJ/5 U.S.C. 8336(d)(2) RIF" and "AZM/CSP, VERA No. and date." o For FERS employees, use Authority Codes "USM/P.L. 99-335" and "AZM/CSP, VERA No. and date." o For regular optional retirements, follow the instructions in chapter 30 of The Guide to Processing Personnel Actions. o For resignations, see chapter 31 of the Guide to Processing Personnel Actions. Use blocks 6A-D of the same SF 50 to record receipt of the Incentive. Use NOA "825 Separation Incentive" and Authority Code "Z2R/P.L. 103- ." Enter the amount of the Incentive in block 20 and leave blocks 16-19 and 21 blank. S. Reporting Results to OPM P.L. 103- requires OPM to report to Congress on agency use of Incentives. OPM also requires agencies to report on their use of voluntary early retirement authority. OPM has developed a consolidated reporting form for both programs. See Attachment 4 for the format and report due dates. [BBS Note-Attachment 2 begins on next page.] Attachment 2 Questions and Answers on Voluntary Separation Incentive Payments under the Federal Workforce Restructuring Act of 1994 P.L. 103- Agencies should tailor these sample questions to fit agency circumstances. The goal is to give employees enough specific information for them to make informed decisions. 1. What are Voluntary Separation Incentive Payments? Why are Federal agencies offering them? Agencies are offering the incentive payments to employees who resign or retire. The Administration is committed to reducing the size of the Federal workforce. If employees voluntarily leave Federal service, there will be less need for reductions in force. 2. Does the new law change eligibility for retirement? No. You can take regular optional retirement if you are 55 with at least 30 years of service; age 60 with 20 years of service; or age 62 with 5 years. If your agency offers early retirement, you must be at least 50 with 20 years of service or have 25 years of service at any age. 3. Who is eligible to apply for an incentive payment under the new law? Employees are eligible if they voluntarily resign or retire under conditions established by their agency and meet other requirements in P.L. 103- . You can apply if you: o have 12 months of continuous service, o are not eligible for disability retirement, o are not a reemployed annuitant, o have an appointment without a time limit, and o are not in a position your agency has excluded. 4. What does an "appointment without time limitation" mean? An employee on an appointment with a time limit works only until a specified date and then goes off the rolls. The employing agency sets the ending date when it hires the individual and/or when it extends the appointment. For example, temporary and term employees serve with a time limit, so they are not eligible for an incentive payment. Career and career-conditional employees and permanent employees in the excepted service have no limit so they are eligible. 5. What does "continuous service" mean? To be eligible for an incentive payment, you must have 12 months of continuous service with no breaks. Going off the rolls for even 1 day is a break in service and would disqualify you for an incentive payment. 6. I retired from the military but am now a civilian employee. Can I apply for a separation incentive? Yes, if you are otherwise eligible. The agency will figure the incentive payment only on the basis of your civilian service. 7. When is the earliest I can leave with an incentive payment? When is the latest? This agency has set a window from (insert date) to (insert date). The agency may also delay your separation with an incentive payment to no later than March 31, 1997, if your job is essential for continuing operations. (See questions 16-18.) 8. If I meet all the requirements, do I automatically get an incentive payment if I leave? What if my agency gets more requests for incentive payments than are necessary to meet its reduced staffing targets. How will it decide which requests to approve? You are eligible to apply for an incentive payment if you meet all the requirements set by the law and your agency. Agencies may exclude certain jobs or units from the incentive payment offer. (See this agency's list attached.) In handling applications, the agency must use a fair and objective method to determine the order in which applications will be approved. This agency will make decisions in the following way: (describe method) 9. How much will I get if I take an incentive payment? An incentive payment is the amount of severance pay you would get, or $25,000, whichever is less. Severance pay is figured as if you would get it; you don't have to be eligible for severance pay. (Severance pay is normally only for people who separate involuntarily. Leaving Federal service with an incentive payment is a voluntary action.) The amount of severance pay would be 1 week's basic pay for each of the first 10 years of your civilian service, plus 2 weeks' basic pay for each year over 10 years. An age adjustment allowance of 10% is added for each year you are over 40. (No credit is given for military service unless the service interrupted otherwise creditable civilian service.) 10. When will I receive my incentive payment? Will it be all at once (lump sum) or monthly? Is it taxable? The agency will send you the incentive payment as soon as possible after the date of your separation but cannot guarantee a specific date. First, the agency must resolve any leave errors, salary offsets, and employee debts to the Government. It is also subject to garnishment for alimony and child support. The incentive payment is taxable. You will receive it as a lump sum (less Federal income tax withholding, applicable State and local taxes, and FICA/Medicare taxes). 11. Do I have to make a commitment to leave if I accept an incentive payment? Yes. Your agency will ask you to sign an agreement saying that in exchange for an incentive payment you agree to resign or retire on a specific date. If employees could change their minds, the agency might not be able to meet its downsizing goal. 12. What does the incentive payment agreement say? The agreement says that you agree to leave by a certain date in return for the incentive payment. It also says that if you accept an incentive payment, you will not be eligible for reemployment with the Federal government, in either a temporary or permanent status, for 5 years following the effective date of your separation--unless you repay the full amount of the incentive payment. This requirement applies to personal services contracts also. Waivers are allowed only in rare cases. 13. What rights and benefits would I be giving up to take an incentive payment to retire or resign rather than a RIF separation? Placement assistance; o Taking a job in Government within next 5 years without paying back the incentive payment; o Full amount of severance pay (if eligible); o Discontinued Service Retirement (if eligible); and the option of a lump-sum refund of retirement contributions (available only if the employee leaves the agency's rolls by the close of business on September 29, 1994). 14. May I take a Discontinued Service Retirement, the lump-sum refund of retirement contributions, and an incentive payment? No. Incentives are paid to employees who leave voluntarily. The lump-sum refund is available only to employees who have a critical medical condition or are separated involuntarily no later than September 30, 1994. Discontinued Service Retirement is based on an involuntary separation. 15. If I leave with an incentive payment, can I take a job in another Federal agency? Am I eligible for placement assistance? If you retire or resign with an incentive payment, you may not take a job with the Federal government for 5 years following the day of your separation--unless you pay back the full amount of the incentive payment. This prohibition covers any kind of employment (for example, permanent, temporary, expert, consultant, reemployed annuitant) as well as personal services contracts. Repayment may be waived, but only in those rare cases where an individual is the only qualified applicant for a job and the agency head requests the waiver from OPM. If OPM waives the repayment and you are reemployed, you may not move out of that position--unless you repay the incentive payment or unless OPM approves another waiver. You are not entitled to placement assistance because employees volunteer to leave Federal service with an incentive payment. Placement assistance is for employees who are involuntarily separated. 16. Can the agency delay my separation until after the "window" and still give me an incentive payment when I leave? Generally, to receive an incentive payment, the effective date of your resignation or retirement must be during the agency's window period. However, the agency may extend individuals in certain positions or whole groups of positions for any period up through March 31, 1997, to continue essential operations. 17. How will the agency decide which employees to delay? (insert agency's own description of jobs/categories for which separation will be delayed) 18. Can I turn down my agency's request that I stay on for an additional period and leave now and still get the incentive payment? Agencies may approve the incentive payment for certain employees contingent on their staying to finish essential activities. If you are such an employee, you could still resign at any time, or take early retirement during the early retirement window, or take regular retirement if you are eligible, but you would not get the incentive payment if you left before the date the agency set. 19. Leaving Federal service with the incentive payment is supposed to be voluntary. If I'm eligible but don't choose to leave, can my agency retaliate by moving me to another position? Incentives are for voluntary separations. Coercion is prohibited. However, after the window closes, an agency may find it necessary to move some remaining employees to other positions. Also, later restructuring could mean the agency would have to reassign or even separate employees. To take these actions agencies would have to follow requirements of law, regulation, and applicable negotiated procedures. Early Retirement 20. Who is eligible for early retirement? OPM has authorized the agency to offer early retirement to eligible employees. The agency has excluded employees in certain jobs that are critical to the agency's operation. (See list attached.) The agency may change this list before the early retirement window closes. Unless you are excluded because your job is on the above list, you are eligible for early retirement as follows: o If you are under the Civil Service Retirement System (CSRS), you must have served in a position covered by the CSRS for at least l year out of the 2 years immediately before retirement. If you are under FERS, this rule does not apply. o You must be at least 50 with 20 years of service or have 25 years of service at any age. o You must be serving under other than a temporary appointment; o You must have been on the agency's rolls as of (insert date) and you served continuously since that date without a break in service. 21. What does the early retirement "window" mean? Each agency sets a window, or period of time, during which eligible employees can take early retirement. Normally, this coincides with the window during which buyouts will be offered. If you want to retire early, you would separate during this time period, in other words, from (insert date) and no later than (insert date). You must turn in your application as soon as possible to make sure you can retire during the window. If your agency offers you an incentive payment contingent on your staying beyond the window to finish essential work, you do not have to retire during the window, but you must apply during the window period. 22. Can anyone who is eligible and who applies for early retirement be assured of retiring early? Just as it does with buyouts, the agency may set a limit on the number of early retirements it offers. (The agency must pay the retirement fund 9% of the final salary of each employee who retires early under CSRS.) This number should take care of all the employees who want to retire early and whose jobs are not essential to the agency's continued operations. If the agency receives more applications than it needs, the agency must use a fair objective method to make decisions, for example, order of separation date, order of receipt of completed applications, seniority, etc.). (describe method agency will use) 23. If I take early retirement, is my annuity reduced? o CSRS employees who retire under the voluntary early retirement authority will have a reduction in their annuity of 2 percent per year for each year they are under age 55. (The reduction is 1/6 of 1 percent for each full month.) This is a permanent reduction in annuity. o Employees with only FERS service will not have their annuities reduced. Employees with both CSRS and FERS service will have a reduction only for the CSRS portion of their service. Special rules apply to the calculation of annuities of employees who have part-time service after 1986. The personnel office can give you more details. 24. If I take early retirement, what happens to my unused sick leave? o CSRS employees will receive service credit for any unused sick leave in determining their annuity (but they must meet eligibility requirements for retirement before the sick leave is added.) o FERS employees do not receive credit. Employees who were previously under CSRS but who transferred to FERS will receive credit for either the amount of sick leave at the time of the transfer to FERS, or at the time of retirement--whichever is less. 25. Can I continue health and life insurance into retirement? If you retire on an immediate annuity and if you have been enrolled (or covered as a family member) in a plan (not necessarily the same plan) under the Federal Employees Health Benefits program from: (a) the 5 years of service immediately preceding retirement; or (b) from service since your first opportunity to enroll; or (c) continuously for the full period or periods of service beginning with the enrollment which became effective no later than December 31, 1964. Also, your annuity must be sufficient to cover your share of the premiums. 26. What forms do I need to apply for early retirement with an incentive payment and where do I get them? The personnel office (insert room number, phone number, and staff names) has the materials ready. You will sign: (1) an application for retirement (2) an incentive payment agreement. [BBS Note-Attachment 2 is continued on next page.] ELEMENTS OF A MODEL PROGRAM Some tips on carrying out a smooth and efficient program: --Carefully plan and prepare. Involve unions early in the process. Prepare personnel office to handle increased workload. o Determine agency components/occupations/grades affected by downsizing and reduction targets. o Project costs and savings and determine number of Incentives to be offered. o Identify employees eligible for optional and voluntary early retirements. o Survey employee interest in buy outs. o Establish management procedure for approving extensions of separation dates past the end of the Incentive period. o Set a time line for the window. o Decide on policies/procedures for people who change their minds about leaving. o Involve payroll and develop expedited payment procedures. --Provide employees with plenty of information--and keep it current. o Especially important: - What their annuity computation will be. - When Incentives will be available. - Who is eligible. - What conditions are attached. - When employees may expect payment. o Set up an employee hotline number. This will give employees one-stop shopping for answers about the program. o Have extensive benefits counseling available to employees and spouses. [BBS Note-Attachment 3 begins on next page.] Attachment 3 Voluntary Separation Incentive Payments o Sample Documents for Agency Use U.S. OFFICE OF PERSONNEL MANAGEMENT Federal Workforce Restructuring Office March 1994 These samples may help agencies prepare for using voluntary separation incentive payments: Sample 1: Letter Announcing Incentive Program to Employees Sample 1A: Enclosure: Positions Designated for Exclusion or Extension Sample 2A: Application to Resign with VSIP Sample 2B: Application to Retire with VSIP Sample 3: Voluntary Separation Incentive Payment Resignation Survey Sample 4: Voluntary Separation Incentive Payment Retirement Survey Sample 5: Memo from Agency to Extend Employee Beyond Closure Date of Incentive Window Sample 6: Employee Acceptance of Agency Incentive Offer with Extended Separation Date Sample 7: Employee Declination of Agency Incentive Offer with Extended Separation Date [BBS Note-Attachment 3 continues on next page.] SAMPLE 1 LETTER ANNOUNCING INCENTIVE PROGRAM TO EMPLOYEES MEMORANDUM FOR ALL EMPLOYEES Subject: VOLUNTARY SEPARATION INCENTIVE PAYMENTS This memorandum announces an opportunity for employees to apply for voluntary separation incentive payments. New Legislation Under the Federal Workforce Restructuring Act of 1994 (P.L. 103- ), agencies are authorized to offer separation incentive payments to regular and early retirees and employees who resign. In conjunction with this law, the U.S. Office of Personnel Management has approved a voluntary early retirement authority for this agency. These programs are intended to assist in the reduction of the size of the Federal workforce while avoiding involuntary separations through reductions in force (RIF). Our Agency's Program We will authorize payments of voluntary separation incentives to a maximum of (insert number) eligible employees who leave the agency during (insert dates of window). The special incentive will be paid on the following basis: (insert description of fair and objective method the agency will use to determine the order in which applications will be approved.) Eligibility You are eligible to apply for a separation incentive payment if: 1. You serve under other than a time limited appointment; 2. You occupy a position or occupation which has not been excluded from eligibility by this agency (see Enclosure); 3. You separate from the Federal service by resignation, early retirement, or regular retirement (except disability retirement) no later than the end of the window period which will begin on (insert date) and end on (insert date). If necessary, this agency can delay separations of employees receiving incentive payments up to March 31, 1997, to ensure the performance of the agency's mission (see Enclosure); 4. By the time you separate, you must have been continuously employed in the Federal government for at least 12 months. Early retirement eligibles must also have been continuously on the rolls of this agency from (insert date). Amount of Payment The amount of the separation incentive payment is not discretionary. It is an amount equal to the employee's calculated severance pay entitlement or $25,000, whichever is less. Separation incentive payments are based upon the standard severance pay calculation. However, incentive payments are limited, by law, not to exceed $25,000. Severance pay equals one week basic pay for each of the first ten years of creditable federal service plus two weeks of basic pay for each year of creditable service over 10 years. In addition, an age factor applies which increases the amount by 10% for every year your age exceeds 40 years. Separation Agreements Employees who apply for separation incentive payments must sign an agreement that the decision to resign or retire under these circumstances is entirely voluntary and that they agree to repay the incentive if they are reemployed by, or enter into a personal service contract with, the Federal government within 5 years of the date of the separation on which the separation pay is based. If an employee is selected to receive the voluntary separation incentive payment, these agreements will serve as a commitment to resign or retire during the window period. If employees are not selected to receive a separation incentive, they will not be bound by this commitment. Delayed Separation for Employees in Critical Positions Decisions on delaying the separation of employees for an additional period after the end of the incentive "window" are at the discretion of the agency and may be affected by changes in workload and mission requirements. Positions covered by a delayed separation are listed in the Enclosure. If you are selected for a delayed departure, your eligibility for retirement and the amount of the incentive you receive will be based on your salary and retirement eligibility as of the date you actually leave the agency. Restrictions on Reemployment Employees who accept incentive payments have restrictions placed on future employment with the Federal Government. An employee who accepts separation incentive pay may not accept reemployment with the Federal government, by appointment or personal services contract, for a period of 5 years after the date of separation unless the employee repays the entire amount of the incentive to the agency that paid the incentive. Waivers are allowed for appointments where an employee has unique abilities and is the only applicant for the job. Waivers are not allowed for personal services contracts. Additional Information and Counseling I want to emphasize that applying for a separation incentive payment is entirely voluntary on your part. To help you make this important decision, we have set up a special hotline to give you more information. TDD services and sign interpretive services are also available. Personnel specialists can provide you with computations of your separation payment and, if eligible, your retirement annuity. Formal counseling sessions are also available for you and your spouse and can be scheduled by contacting the personnel office in Room _____ Application Procedures In order to be considered for a voluntary separation incentive payment, you must complete an application available from your personnel office. If the personnel office has not received your application by (insert time) on (insert date), you will not be considered for a voluntary separation incentive payment. If you will be out of town and unable to complete and deliver the application, please call the personnel office for instructions (insert telephone number). Signed Agency Head [BBS Note-Attachment 3 continues on next page.] SAMPLE 1A ENCLOSURE TO LETTER ANNOUNCING INCENTIVE PROGRAM TO EMPLOYEES POSITIONS DESIGNATED FOR EXCLUSION OR EXTENSION The occupations, positions, series, and grades for which incentives are authorized include the vast majority of jobs within the agency. However, because of critical workload needs, some positions and components have been excluded from eligibility or will require the employee's separation to be extended in order for the employee to receive a voluntary separation incentive payment. A. POSITIONS EXCLUDED FROM VOLUNTARY SEPARATION INCENTIVE PAYMENTS The occupations/grade levels for which the incentives will not be offered are: [BBS Note: These are only sample positions.] Schedule C positions Cost Analysts (1102, 1515) Computer Scientists in grades GS-5 to 9 Positions covered by special salary rates Positions in the Congressional Liaison Office B. POSITIONS COVERED BY A DELAYED SEPARATION DATE To ensure the performance of the agency's mission, the separation of employees in the following occupations who apply for voluntary separation incentive payments may be delayed for up to 2 years: Personnel Office Staff involved in downsizing activities (Note to agencies: the exclusions identified above are examples only. Under the law, agencies have broad flexibility to determine the positions it will exclude from incentive offers, based on the agency's needs.) [BBS Note-Attachment 3 continues on next page.] SAMPLE 2A APPLICATION TO RESIGN WITH VSIP The application to participate in the voluntary separation incentive program will be available from your personnel office, or you may submit the following typewritten statement if you are resigning. I HEREBY REQUEST TO RESIGN WITH A VOLUNTARY SEPARATION INCENTIVE PAYMENT EFFECTIVE (DATE) . MY DECISION TO RESIGN IS ENTIRELY VOLUNTARY AND HAS NOT BEEN COERCED. I UNDERSTAND THAT IF I VOLUNTEER TO SEPARATE FROM MY CURRENT EMPLOYMENT AND RECEIVE A VOLUNTARY SEPARATION INCENTIVE PAYMENT, I WILL BE RESPONSIBLE FOR REPAYING THE ENTIRE INCENTIVE PAYMENT TO THE AGENCY AWARDING IT IF I AM REEMPLOYED BY THE FEDERAL GOVERNMENT IN THE NEXT FIVE YEARS, EITHER BY APPOINTMENT OR PERSONAL SERVICES CONTRACT. I FURTHER UNDERSTAND THAT, IF I AM SELECTED TO RECEIVE A SEPARATION INCENTIVE, THIS STATEMENT SERVES AS MY COMMITMENT TO RESIGN. IF NOT SELECTED TO RECEIVE THE SEPARATION INCENTIVE, I UNDERSTAND THAT I WILL BE NOTIFIED AND THAT I WILL NOT BE BOUND BY MY ELECTION TO RESIGN. __________________________________________________ Signature Date [BBS Note-Attachment 3 continues on next page.] SAMPLE 2B APPLICATION TO RETIRE WITH VSIP The application to participate in the voluntary separation incentive program will be available from your personnel office, or you may submit the following typewritten statement if you are retiring (under either regular or early retirement). I HAVE MET THE AGE AND SERVICE REQUIREMENT FOR EARLY OR REGULAR RETIREMENT. I HEREBY REQUEST TO RETIRE WITH A VOLUNTARY SEPARATION INCENTIVE PAYMENT EFFECTIVE (DATE) . MY DECISION TO RETIRE IS ENTIRELY VOLUNTARY AND HAS NOT BEEN COERCED. I UNDERSTAND THAT IF I VOLUNTEER TO SEPARATE FROM MY CURRENT EMPLOYMENT AND RECEIVE A VOLUNTARY SEPARATION INCENTIVE PAYMENT, I WILL BE RESPONSIBLE FOR REPAYING THE ENTIRE INCENTIVE PAYMENT TO THE AGENCY AWARDING IT IF I AM REEMPLOYED BY THE FEDERAL GOVERNMENT IN THE NEXT FIVE YEARS, EITHER BY APPOINTMENT OR PERSONAL SERVICES CONTRACT. I FURTHER UNDERSTAND THAT, IF I AM SELECTED TO RECEIVE A SEPARATION INCENTIVE, THIS STATEMENT SERVES AS MY COMMITMENT TO RETIRE. IF NOT SELECTED TO RECEIVE THE SEPARATION INCENTIVE, I UNDERSTAND THAT I WILL BE NOTIFIED AND THAT I WILL NOT BE BOUND BY MY ELECTION TO RETIRE. _______________________________________________________ Signature Date [BBS Note-Attachment 3 continues on next page.] SAMPLE 3 VOLUNTARY SEPARATION INCENTIVE PAYMENT RESIGNATION SURVEY John J. Employee, Personnel Staffing Specialist, GS-212/12, U.S. OPM Potential Separation Incentive Pay Estimate: $25,000** Service Computation Date: 08/15/1974 Completing this form is purely optional and in no way obligates you to elect resignation. Please check the following as applicable: _____If offered, I am interested in applying for resignation with separation incentive pay. _____I am not interested in applying for resignation at this time. Note: A resignation Separation Benefits Briefing is scheduled to be held on (enter date). The following topics will be discussed: o Federal Employee's Group Life Insurance o Annual and Sick Leave o Federal Employee's Health Benefits o Thrift Saving Plan o Civil Service Retirement System (CSRS) o Federal Employee's Retirement System (FERS) ** If you had active military duty preceding your civil service appointment, your actual separation incentive amount may be lower than the estimate provided above. [BBS Note-Attachment 3 continues on next page.] SAMPLE 4 VOLUNTARY SEPARATION INCENTIVE PAYMENT RETIREMENT SURVEY Jane Employee, Personnel Staffing Specialist, GS-212/12, U.S. OPM Potential Separation Incentive Pay Estimate:($25,000) Early Retirement Eligibility: 03/06/90 Voluntary Retirement Eligibility:08/06/98 Service Computation Date: 03/06/65 Note: The above information is provided to assist you in responding to this survey. It contains estimates based on information currently available. Specific review of your personnel history will be necessary to determine exact entitlement and dates. See your retirement counselor or call xxx-xxxxx for details. Completing this form is purely optional and in no way obligates you to elect retirement. Please check the following as applicable: _____If offered, I am interested in applying for retirement with a separation incentive payment. _____I am not interested in retirement at this time. _____I have questions regarding the following: [BBS Note-Attachment 3 continues on next page.] SAMPLE 5 MEMO FROM AGENCY TO EXTEND EMPLOYEE BEYOND CLOSURE DATE OF INCENTIVE WINDOW MEMORANDUM TO (NAME) Subject: Approval of Voluntary Separation Incentive Payment with Extended Separation Date We have approved your application for a voluntary separation incentive payment based on your (retirement/resignation). Because your services will be required past the closing date of this authority, your separation is now scheduled to occur on or before (DATE) . Under the Federal Workforce Restructuring Act of 1994 (P.L. 103- ), an agency may delay the separation of employees receiving incentive payments when the employee is needed to ensure performance of the agency's mission. It is possible that circumstances may change to permit separation earlier than the above date. If so, you will be notified of a revised separation date. If you remain employed with the agency until this time, upon separation, you will receive a separation incentive payment and be eligible for early (or optional) retirement based on your age and length of service at the time of your separation. You have the right to tender your separation at any time you choose. However, if you decline to remain on board until the extended separation date, you will not be entitled to a voluntary separation incentive payment. Please complete the appropriate attached form to confirm your decision. Return the form to Room 100 by (DATE) . S/ Agency Head [BBS Note-Attachment 3 continues on next page.] SAMPLE 6 EMPLOYEE ACCEPTANCE OF AGENCY INCENTIVE OFFER WITH EXTENDED SEPARATION DATE ACCEPTANCE THIS SERVES AS WRITTEN CONFIRMATION OF MY DECISION REGARDING THE OFFER OF A BUYOUT WITH AN EXTENDED SEPARATION DATE. I AGREE TO THE AGENCY'S OFFER TO EXTEND MY SEPARATION DATE TO NTE (DATE). MY DECISION IS ENTIRELY VOLUNTARY AND HAS NOT BEEN COERCED. I UNDERSTAND THAT THIS SERVES AS MY COMMITMENT TO FULFILL THE CONDITIONS OF THE VOLUNTARY SEPARATION INCENTIVE PROGRAM. I FURTHER UNDERSTAND THAT IF I DO NOT FULFILL THE CONDITIONS OF THE AGREEMENT, I WILL NOT BE ELIGIBLE FOR A VOLUNTARY EARLY SEPARATION INCENTIVE PAYMENT. ___________________________________ ___________ Signature Date [BBS Note-Attachment 3 continues on next page.] SAMPLE 7 EMPLOYEE DECLINATION OF AGENCY INCENTIVE OFFER WITH EXTENDED SEPARATION DATE DECLINATION THIS SERVES AS WRITTEN CONFIRMATION OF MY DECISION REGARDING THE OFFER OF A BUYOUT WITH AN EXTENDED SEPARATION DATE. I HEREBY DECLINE THE AGENCY'S OFFER OF A VOLUNTARY SEPARATION INCENTIVE PAYMENT UNDER AN EXTENDED SEPARATION DATE. MY DECISION IS ENTIRELY VOLUNTARY AND HAS NOT BEEN COERCED. I UNDERSTAND THAT BY DECLINING THIS OFFER, I RELINQUISH ALL CLAIMS TO A VOLUNTARY SEPARATION INCENTIVE PAYMENT. ___________________________________ ___________ Signature Date [BBS Note-Attachment 4 follows on next page.] Attachment 4 NEW STREAMLINED VOLUNTARY EARLY RETIREMENT PROCEDURES A. NEW STREAMLINED PROCEDURES 1. OPM is offering expanded voluntary early retirement authority to all agencies faced with an excess of personnel. (This expanded voluntary early retirement option is summarized in Section B-2 of FPM Supplement 351-1.) These streamlined procedures provide agencies with maximum flexibility in using voluntary early retirement to minimize the number of employees reached for involuntary separation because of organizational changes such as restructuring, fiscal shortfalls, etc. Also, the expanded voluntary early retirement authority allows agencies maximum opportunity to encourage attrition through the use of buyouts. 2. What the expanded early retirement authority means: o Agency headquarters can now request early retirement authority on as broad or narrow a basis as the agency chooses. Early out offers could be made on an agencywide basis or, at the agency's discretion, authorized for individual components, locations or occupational series and grades, for specific window period(s) set by the agency. o All percentage criteria for determining whether a particular downsizing situation qualifies for voluntary early retirement are eliminated. o An agency will receive voluntary early retirement authority for up to a year with the option of requesting another expanded authority if the agency finds it still has surplus employees. B. ELIGIBILITY OF EMPLOYEES TO RETIRE EARLY 1. In order to be eligible to retire under a voluntary early retirement authority, by the date of separation, an employee must: a. have completed at least 20 years of creditable service and be at least age 50; or completed at least 25 years of creditable service regardless of age; b. have served in a position covered by the Civil Service Retirement System for at least 1 year out of the 2 years immediately before retirement (this requirement does not apply to employees covered by the Federal Employees Retirement System); c. be serving under a nontemporary appointment; and d. have been on the agency's rolls at least 30 days before the agency's request to OPM for voluntary early retirement authority, and remained continuously (i.e., without a break in service) on the agency's rolls since that time. C. VOLUNTARY BASIS OF EARLY RETIREMENTS Each agency that is issued voluntary early retirement authority must ensure that employees are not coerced into retiring early. The agency must issue a statement to each employee affirming that early retirement is, in fact, voluntary. Also, if agency management becomes aware of any coercion of employees into early retirement, the agency should take appropriate corrective action. D. USE OF THE EXPANDED VOLUNTARY EARLY RETIREMENT AUTHORITY 1. An agency may determine coverage of early retirement authority and may restrict a voluntary early retirement authority by organizational components, job series, grade levels, or other basis. These restrictions can be set when the agency requests the authority from OPM, or on the agency's own initiative after OPM approval. 2. The agency may establish early retirement windows for designated components, locations, programs, etc., during the extended window period approved for the agency. 3. The agency may adopt any fair and objective method for approving applications if it must limit the number of voluntary early retirements. 4. As covered in OPM's approval letter for an expanded authority, it is essential that agencies keep OPM informed of any changes in the coverage or timing of early retirement offers. This will enable OPM to better prepare for the timely processing of an expected increase in early retirements. We encourage agencies to provide OPM with monthly summaries of where voluntary early retirements will be offered, the window period for an eligible component, and the number of employees expected to retire. E. SUBMITTING REQUESTS TO OPM 1. Agencies should submit requests for voluntary early retirement authority to: Office of Personnel Management Federal Workforce Restructuring Office Room 6504 1900 E Street, NW Washington, DC 20415 Phone 202-606-0960; Fax 202-606-2329 2. An agency's request for voluntary early retirement must be signed by the head of the agency or a specific designee. 3. Please see the attached sample request for voluntary early retirement authority. Each request must contain the following information: a. Identification of the agency for which the authority is requested. b. Reasons why the voluntary early retirement authority is needed, including an overview of the agency's personnel and budgetary situation that will result in an excess of personnel. c. The window period for voluntary early retirements. OPM may approve voluntary early retirement authority for up to a year. When it expires, the agency may request another expanded authority if it still has surplus employees. Under the expanded voluntary early retirement option, an agency may use a single authority to offer voluntary early retirement agencywide during the extended window period. The agency may establish early retirement windows for designated components, locations, programs, etc., during the extended window period. d. The total number of nontemporary employees in the agency. e. The total number of nontemporary employees in the agency who are, or will be, excess during a time period explained by the agency (e.g., the current fiscal year, the next two fiscal years, etc.). f. The total number of nontemporary employees in the agency who are eligible for voluntary early retirement. g. The total number of nontemporary employees in the agency who are expected to retire early during the period covered by the request. 4. The name, title, telephone number, and fax number of an agency contact person for the authority. F. REPORTS TO OPM ON USE OF EACH AUTHORITY 1. Agencies are expected to provide OPM with interim and final reports on each voluntary early retirement authorization. These reports are sent (or faxed) to the same address from which agencies request the authority (see paragraph E-1 above). 2. P.L. 103- requires annual reports to Congress on the use of Voluntary Separation Incentive Payments (VSIP). For the convenience of agencies, OPM has combined the reporting requirements for VSIPs with agency reports on the use of voluntary early retirement authority. Status reports from all agencies receiving early retirement authority are due on the following basis: a. An interim report is due 30 days after the end of each quarter following approval of the authority. b. A final report is due 60 days following the closure date of the authority. 3. Each report to OPM on a voluntary early retirement authorization must contain the following information: a. The number of voluntary early retirements with VSIPs and the average age, average grade, and average VSIP amount of such retirees, with the number of such retirees by grade/pay level, duty station city/state, and amount of VSIP. b. The number of voluntary early retirements without VSIPs and the average age and average grade of such retirees, with the number of such retirees by grade/pay level and duty station city/state. c. The number of optional retirements with VSIPs during the window period of the early retirement authority and the average age, average grade, and average VSIP amount of such retirees, with the number of such retirees by grade/pay level, duty station city/state, and amount of VSIP. d. The number of resignations with VSIPs during the window period of the early retirement authority and the average age, average grade, and average VSIP amount of such employees, with the number of such resignations by grade/pay level, duty station city/state, and amount of VSIP. e. The total number of employees who left through other options during the window period of the authority, by type and by total (i.e., other retirements and resignations in which VSIPs were not offered, transfers, etc). Please see the attached report format. [BBS Note-Attachment 4 continues on next page.] SAMPLE REQUEST TO OPM FOR EXPANDED VOLUNTARY EARLY RETIREMENT AUTHORITY As a result of recent legislation, the Department of______________ must undergo a major reorganization in which ______ of ______ employees will excess over the next two fiscal years. A summary of the agency's restructuring plan is attached. Voluntary early retirement, used in conjunction with any available Voluntary Separation Incentive Payments (VSIP), will help the Department reduce the number of excess employees. This voluntary early retirement authority is requested for all series and grades in the Department. The Department may further limit this authority to meet management's needs. Voluntary early retirement authority is requested for the period from (insert date) through (insert date). The current number of nontemporary employees in the Department is (insert number). The estimated number of nontemporary employees in the Department who will be excess by the end of FY 1995 is (insert number). The number of nontemporary employees in the Department who are eligible for voluntary early retirement is (insert number). The number of nontemporary employees in the Department who are expected to accept voluntary early retirement is (insert number). The Department's point of contact for this voluntary early retirement request is (insert name), (insert title) (insert telephone number), (insert fax number). [BBS Note-Attachment 4 continues on next page.] REPORT TO OPM ON USE OF VOLUNTARY SEPARATION INCENTIVES AND VOLUNTARY EARLY RETIREMENT AUTHORITY P.L. 103- requires reports to Congress on use of voluntary separation incentive payments (VSIP). OPM has combined this reporting requirement with agency reports on the use of voluntary early retirement authority (VERA) in the format specified below. These reports are due 30 days after the end of each quarter following approval of the VERA, with a final report due 60 days after the final closure of the VERA authority. Please complete the following report and send to the Office of Personnel Management, Federal Workforce Restructuring Office, Room 6504, 1900 E Street, NW, Washington, DC 20415. You may fax the report to 202-606-2329. Voluntary Early Retirement Authority Number______________ Cumulative Data as of ________ Agency: _____________________________________________ Component/Location:_____________________________________________ (1) Number of voluntary early retirements with VSIP paid: (a) Total early retirees with VSIP:________ (b) Average age of early retirees with VSIP:________ (c) Average grade of early retirees with VSIP:________ (d) Average amount of VSIP: ________ (e) List number of early retirees by grade/pay level, duty station city/state, and amount of VSIP: (2) Number of voluntary early retirements, during this authority, without VSIP: (a) Total early retirees without VSIP:________ (b) Average age of early retirees without VSIP:________ (c) Average grade of early retirees without VSIP:________ (d) List number of early retirees by grade/pay level and duty station city/state: (3) Number of optional retirements with VSIP paid: (a) Total optional retirements with VSIP:________ (b) Average age of optional retirees with VSIP:________ (c) Average grade of optional retirees with VSIP:________ (d) Average amount of VSIP: ________ (e) List number of optional retirees by grade/pay level, duty station city/state, and amount of VSIP: (4) Number of resignations with VSIP paid: (a) Total resignations with VSIP: ________ (b) Average age of resignees with VSIP:________ (c) Average grade of resignees with VSIP:________ (d) Average amount of VSIP: ________ (e) List number of resignees by grade/pay level, duty station city/state, and amount of VSIP: (5) Other attrition that occurred without VSIP: Total separations: ________ Other retirements: ________ Other resignations: ________ Other transfers: ________ Other: ________ (6) Number of employees offered a VSIP to be carried over past the closing date of the window period for this authority-- Please list by type (quit, VERA, optional retirement, etc.) and total. [BBS Note-Attachment 5 begins on next page.] Attachment 5 [BBS Note-Attachment 5 will be updated to include a copy of the approved bill when a copy is available.] KEY FEATURES OF INCENTIVES PROGRAM FEDERAL WORKFORCE RESTRUCTURING ACT OF 1994 March 24, 1994 To avoid or minimize involuntary separations due to restructuring, executive branch agencies may pay voluntary separation incentive payments (VSIP) to employees in any component, occupation, and/or location up through March 31, 1995, and delay employee separations up to March 31, 1997, to ensure performance of the agency's mission. To receive a VSIP offer, an employee must-- - be serving under appointment without time limit, - have 12 months of continuous service, and - not be a reemployed annuitant or eligible for disability retirement. The VSIP amount is the lesser of $25,000 or an employee's severance pay entitlement. An employee must repay the full VSIP if employed by the government, by appointment or personal services contract, within 5 years after separation. At agency request, repayment may be waived by OPM or other official where an individual with unique abilities is the only qualified candidate for appointment to a position. Agencies must pay to the retirement fund-- - 9% of the final basic pay of each employee who takes an Incentive AND voluntary early retirement under the Civil Service Retirement System (CSRS) during FY94 and FY95. - $80 per year for each employee on an agency's rolls under CSRS or FERS (Federal Employees Retirement System) as of March 31 of FY95, FY96, FY97, and FY98--regardless of whether an agency uses VSIPs. Agencies must reduce employment levels: - Agencies must abolish one funded position for each VSIP paid. - Total executive branch employment must reach specific levels in each year from FY94 through FY99. Office of Management and Budget will monitor employment levels and freeze governmentwide hiring if lower levels are not met. No funds appropriated for salaries and expenses of eliminated positions may be used for any purpose other than authorized separation costs. Agencies may not increase service contracts as a result of VSIP programs, unless such contracts give the government a financial advantage. OPM must report to Congress each fiscal year on the number of VSIPs paid by agency, grade, and location, and the number of waivers approved for reemployment without repayment of VSIPs. Although DOD and CIA have separate VSIP authority, this act covered them under the above provisions dealing with employee repayment of VSIPs on reemployment, agency payments to the retirement fund, and reductions in total executive branch employment. [BBS Note-End of file.]