VERA, VSIP, and RIF
With the continued downsizing of the federal workforce, here’s a rundown of how VERA, VSIP, and RIFs function within federal agencies.
Voluntary Early Retirement Authority (VERA)
VERA, often called an “early out,” allows federal employees to retire earlier than they would under standard retirement rules. It’s a voluntary option designed to help agencies reduce staff without resorting to involuntary measures.
VERA temporarily lowers the age and service requirements for retirement eligibility. Employees can retire with an immediate annuity if they meet one of these criteria: at least 50 years old with 20 years of creditable service, or any age with 25 years of creditable service (including at least 5 years of civilian service).
Retirees receive an immediate annuity and can typically carry Federal Employees Health Benefits (FEHB) into retirement if they’ve been enrolled for the prior 5 years (or since eligibility).
Voluntary Separation Incentive Payment (VSIP)
VSIP, often referred to as a “buyout,” is a lump-sum payment offered to employees as an incentive to leave federal service voluntarily, either through retirement (including VERA) or resignation. It’s another tool for agencies to manage workforce size or skill alignment.
The payment is generally capped at $25,000 or the amount of severance pay you would receive, whichever is less. Employees must apply and be approved by their agency during a designated window. After taxes, the net amount is typically lower (e.g., $18,000–$19,000, depending on tax brackets).
Employees must have at least 3 continuous years of service, be in a position targeted by VSIP, and not be in time-limited appointments or facing involuntary separation for misconduct or performance issues. Retirement eligibility isn’t required. If an employee returns to federal employment within 5 years, they must repay the full pre-tax VSIP amount before starting the new job unless a waiver is granted.
Combination Use
Employees can sometimes take both VERA and VSIP if eligible, maximizing incentives to leave before a RIF hits. For example, accepting VERA/VSIP can secure a payment and annuity, while waiting for a RIF might only yield severance or retirement without the extra cash. Not sure which strategy aligns best with your retirement goals? Contact a Federal Retirement Consultant® who can help you crunch the numbers.
Reduction in Force (RIF)
A RIF is an involuntary process used when an agency must eliminate positions due to budget cuts, reorganization, or mission changes. It’s a last resort when voluntary measures like VERA or VSIP don’t sufficiently reduce staff.
Retention priority is determined by tenure (career vs. temporary), veterans’ preference, length of service, and performance ratings. Employees may be reassigned, demoted, or separated. Those separated may qualify for severance pay or Discontinued Service Retirement (DSR) if they meet age and service criteria (e.g., 50 with 20 years or any age with 25 years).
Separated employees lose their jobs but may receive severance (based on years of service and age, capped at 52 weeks’ pay) unless they’re retirement-eligible, in which case they get an annuity.
