Let’s say you work for the federal government. You are 52 years old and have 24 years of experience as a federal employee—not an uncommon situation. Before your world changed a few weeks ago, your plan likely would have been making it to minimum retirement age & 30 for the holy grail of federal retirement—the immediate retirement. You can exit a 30-year career and, with some processing time by the Office of Personnel Management, receive your leave check, have your pension start right away (along with retiree health insurance you pay for), and qualify for the annuity supplement which offers additional income until age 62 (subject to an earnings test).

Since you were born after 1970, your MRA is 57, but to fulfill the second requirement of 30 years you need to stay until 58—another 6 years. Technically, making it to age 62 with over 20 years of experience is the true holy grail for pension planning as then your amount is 1.1% of your high-3 average salary. But, even exiting at 58 with an immediate pension, and the ability to continue your health insurance for life, is a fantastic option.

For customized guidance for your specific situation, you can reach out to Brian Kuhn via email, or schedule time with his office.

Then, over the course of the past few weeks, you:

• Were mandated back into the office
• Have a new agency head
• Have seen co-workers terminated, reassigned, or placed on leave
• Are being told there will be additional, unspecified scrutiny on your performance
• Were offered “an opportunity to leave” via the Deferred Resignation Program (DRP)

The DRP opportunity provided you with 8 days to decide, and answered practically no questions as to its legality or logistics. You likely initially chose not to accept this offer due to the lack of clarity and concerns about potential drawbacks, but mostly because you wouldn’t achieve the 6 additional years you need. Then 3 days later (now 6 days out from the deadline), you receive an additional clarification email saying there is a Voluntary Early Retirement Authority (VERA) “tied to” the Deferred Resignation Program. This only raised more questions:

You may have had more questions, like:

• What does “tied to” mean? 
• Is my agency participating? 
• Do I qualify?
• Would I be retiring? Or resigning since those are different? 

VERA is a program that under normal circumstances is legitimate. It is an arrangement where you are offered the opportunity to exit the government while retaining your ability to immediately start your pension and go on the Federal Employees Health Benefits (FEHB) retiree health insurance. To be eligible for VERA, you need to be at least 50 years old with 20 years of experience, or have 25 years of experience with no age requirement. For those looking to exit one day anyway, VERA is the holy grail, but better—provided it’s a legitimate offer. You might not want to exit right now. You like your job, your salary and benefits, your prior job stability, and your co-workers, but if you don’t take the offer in the next 6 days there are a variety of additional unknowns concerning your ability to stay on for that additional 6 years. Potential changes could include the elimination of entire agencies, re-locations, and terminations.

What happens if you don’t take it, and then subsequently lose your job? There are procedures to remove a federal worker, but what happens if those procedures are ignored? The DRP email didn’t follow normal procedure, so what happens if one day you are escorted to the door? What is supposed to happen if you stay on and there is then a reduction in force happens? This could potentially trigger a Discontinued Service Retirement (DSR).

Whether you qualify for the DSR depends on whether cause is documented, and also depends on a future job offer you may or may not get. If you do qualify under the eventual DSR, and if it’s implemented under the regulations you previously trusted, then you fall into the VERA program so your pension and health insurance can start immediately. You might not have wanted your job to end, and your pension is far less income than your salary, but at least you have it and the health insurance.

If you don’t qualify for the DSR, and your employer attempts to document cause as the reason your employment is ending, then you would fall into a different category called Deferred Retirement. Now you can’t receive your pension right away, you’ve lose your job and health insurance, and the ability to sign up for the health insurance again when your pension does kick in. If that termination occurs a year from now when you are 53 with 25 years of experience, that would qualify you only to have the pension start at 62, not 58. Also, because you didn’t separate from employment after reaching age 55, if you access funds inside your TSP between now and age 59.5 there would be a 10% penalty plus income tax.

Ready for the next scenario? What if you don’t take the VERA or aren’t eligible (or it’s not real), so you continue to work until you planned to originally retire. Then the only thing you have to worry about are proposed changes to the way all of these benefits work. The following proposals are being considered, but none have been implemented yet: 

• Remove locality pay from the amount of your pension (which if you live in a high-income area would affect you)
• Change the high 3 to a high 5 which generally can lower the pension
• Remove entirely the annuity supplement
• Push back the start dates of some pensions
• Pay cuts for underperforming employees, leading to less income and a lower pension
• Increase the cost an employee has to pay to receive their pension, lowering net income for no additional eventual pension amount.

Now that we’ve covered potential scenarios, what can you do next? Lots of things.:

• Continue to do your job well
• Ask questions about the offers you need clarity on
• Document what you do and are asked to do
• Download your personnel file and review it for accuracy
• Keep in touch with your union, if you’re a member
• Consider joining various federal workforce advocacy groups
• Contact an attorney whose focus is federal employment law
• Assemble liquidity in case of a job change
• Identify an outside specialist who can consult on your employment benefits (this occupation exists and is different than HR or a financial advisor)
• Talk to family about what-if scenarios and what you would do
• Identify how you would obtain health insurance should there be a job change
• Manage stress

Finally, you should work with a financial advisor who understand your benefits so they can help you build a retirement projection. Some assumptions here might not come to pass, but that is why we plan. Reach out today to find out how we can help make plans for your future, whatever it may hold.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

#2025-6795