Buyouts: Show ’em the money

Folks who want to trim or reshape the bureaucracy have a simple, relatively inexpensive, tool at hand. At least in Uncle Sam’s biggest civilian operation, the Defense Department.

It’s the new buyout authority that permits the Pentagon to pay workers up to $40,000 to quit or retire. Other agencies are still being held at the $25,000 VSIP (voluntary separation incentive payment) level, which was OK during the Clinton administration but not so much now.

The alternatives — reducing agencies by attrition or using the messy, expensive and disruptive RIF (reduction in force) system — take longer and can be more costly.

Congress and the White House — as they did in the mid 1990s — could extend the $40K buyout to some, or all other agencies. But for now, as per usual, DoD will take the lead.

The question many retirement-age Army, Navy, Air Force and Marine Corps civilians are asking is when? When will Defense start using its new authority?

The buyouts of the 1990s were aimed at and priced for tenured males with veterans preference protection. Clinton officials knew enough about civil service rules to know that a RIF with the then “last hired, first fired” rule would likely wipe out the diversity gains they had made in hiring.

So they came up with buyouts which left a tidy sum (up to $18,000 even after deductions) for shipyard workers, electricians and other employees who were virtually fireproof, but old enough and with enough service (both civil service and military) to retire. And they did, in droves. But that was a long time ago.

If buyouts return en masse at the $40K level, would feds jump at them? That’s definitely possible as the number of workers who meet the age-service requirements for an immediate annuity — with health insurance for life — is growing monthly. Consider this from Ms. T in the DoD:

“Morning Mike,

“I’ve read the below article but am confused on the info about the buyout and the hiring freeze! How does this info affect me since I’m waiting to see if I can be offered more than $25,000 to retire?
I’m ready to leave the federal government but $25,000 really is an insufficient incentive, really. This is what has always been offered but all the taxes break it down to nothing today.

“I looked at my info in the TWMS system and see that under the VSIP tap there is $25,000 … I want to be offered more. For goodness sake, it’s 2017! If Congress is on the brink of making the offer more than $25,000, then I want to hold out until this happens. I am 61, widowed over 10 years and still single and feel that I should be offered more but how does the hiring freeze affect all this?

“Anyone in my shoes would want to be offered more. I’m not desperate, do want to retire, but why shouldn’t I wait to be offered more? People think when it comes to money that us little people should settle for anything but the big wheels are not in our shoes. The POC told me yesterday that the $25,000 is what has always been offered. I really wanted to say this, ‘just because this is what has been offered it doesn’t mean it should be this way again.’ I politely told her that this amount is what was offered back in the day and is not enough now. Am I wrong for waiting?”

The National Defense Authorization Act permits — but doesn’t require — Defense to offer the $40K buyouts. But it gives Defense the authority to say who gets a buyout offer and who doesn’t. And to set the amount. What is likely is that once the buyouts start, other agencies will want to be able to offer the more generous package. And that could trigger the retirement tsunami that has been long predicted, but which never showed up.

Nearly Useless Factoid

By Michael O’Connell

On average, Americans consume 21,917,808 chickens per day.

Source: Reference