Retirement-eligible? Know your RIF options

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In my last two columns, I described the procedures agencies are required to use when they conduct a reduction in force. In this column, I’ll focus on the options available to employees who are eligible to retire when facing a RIF.

Immediate retirement

If you have the right combination of age and service, you’ll be able to retire on an immediate annuity, even if you aren’t directly targeted by a RIF. Here are the rules, which are different for personnel under the Civil Service Retirement System and the Federal Employees Retirement System.

The immediate retirement rules are different for special category employees, such as law enforcement officers, firefighters and air traffic controllers. If you are covered by CSRS, you can retire at age 50 with 20 years of service; if you are covered by FERS, you can retire at age 50 with 20 years of service or at any age with 25.

Early retirement

If you aren’t eligible for immediate retirement, a general RIF notice won’t qualify you for early retirement. You’ll need a specific notice, which must identify your position as one that will be affected and that you will be separated from it on a specific date.

Rather than issue specific RIF notices, your agency may first authorize early retirements under Voluntary Early Retirement Authority or encourage retirements by offering buyouts to employees occupying certain positions under the Voluntary Separation Incentive Program.

Note: If offered a VSIP, you don’t need to be eligible to retire. You only need to be willing to leave and do so.

Whether offered a VERA, a VSIP or both, you’ll be eligible for early retirement if you meet the age and service requirements, which are the same for CSRS and FERS.

Special retirement supplement

If you are a FERS retiree, you’ll receive a special retirement supplement if you retire after your MRA with 30 years of service, at age 60 with 20 years, or on early voluntary or involuntary retirement beginning at your MRA. If you are a special category retiree, you will receive the SRS regardless of your age.

The SRS approximates the amount of the Social Security benefit you earned while covered by FERS. It is paid until age 62 when you become eligible for a Social Security benefit. The amount you receive in your SRS is fixed. It won’t be increased by any cost-of-living adjustments while you are receiving it. However, it will be reduced or suspended if you’ve reached your MRA and have earnings from wages or self-employment that exceed the annual Social Security earnings limit. In 2013, that limit is $15,120.

COLAs on retirement annuities

The rules governing COLAs for CSRS and FERS retirees are different. If you are a CSRS retiree, you are entitled to receive them annually regardless of the age at which you retire. The same is true if you are a special category retiree under FERS. On the other hand, if you are a regular FERS retiree, you won’t receive one until you reach age 62.

FYI: When the consumer price index is 2 percent or less, FERS retirees receive the same COLA as their CSRS counterparts. However, between 2 and 3 percent, they receive 2 percent, and at 3 percent or more, they receive the CPI minus 1 percent.

Deferred retirement

Even if you aren’t eligible to retire now, you may still be able to receive an annuity later on. For example, if you had at least five years of service when you left, you could apply for a deferred retirement at age 62. If you were a FERS employee who had 20 or more years of service, you could apply at age 60. In either case, your annuity would be based on your years of service and highest three years of average basic pay on the day you left. Note: FERS employees applying for a deferred retirement aren’t eligible for the special retirement supplement.

Health and life insurance

You must be covered under the Federal Employees Health Benefits program and/or the Federal Employees’ Group Life Insurance program for the five consecutive years immediately preceding your retirement (or from your first opportunity to enroll) to carry that coverage into retirement. (Coverage under Tricare also counts toward the five-year requirement, as long as you were enrolled in the FEHB program when you retired.)

Fortunately, the Office of Personnel Management has some flexibility. If you haven’t met the requirement to continue your coverage but are currently enrolled, you may be eligible for a pre-approved waiver.

A final note: If you are a FERS employee who is eligible to carry your FEHB or FEGLI coverage into retirement but you postpone the receipt of your annuity to a later date, you can re-enroll in those programs when your annuity begins. On the other hand, if you leave government and apply for a deferred annuity, you can’t re-enroll in either program.

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