DoD spending bill offers civilian workers up to $40K to retire

Defense Department civilians willing to retire early are getting a bump in their farewell package from the government.

The 2017 defense authorization bill increases the maximum Voluntary Separation Incentive Pay (VSIP) for civilian defense workers by $15,000.

President Barack Obama signed the annual defense authorization act into law on Friday, authorizing up to $40,000 in incentive pay for workers opting for early retirement. The act states the change in VSIP is the first increase since it was established in 1993.

“The $25,000 has been in place for a very long time and it has not really kept up with inflation, so for people who were on the fence about whether or not to retire the $25,000 was just not enough of an incentive for people to retire,” said Sheila McCready, defense consultant for the American Federation of Government Employees.

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DoD used VSIPs in the past to mold the defense workforce. The department offers early retirement to positions that are not needed anymore or are in less demand so DoD can then hire the employees it needs for more needed jobs.

VSIP “provides the insurance to shape the workforce in a way that is beneficial and is beneficial to those who need to retire or want to retire and it’s beneficial to those who want to remain in their jobs in their field set,” McCready said. “You don’t have the bump and retreat. You don’t have people being transferred to jobs where they’re less than qualified. … You’re able to move people more surgically out of the jobs that we don’t need anymore.”

DoD is also in the midst of headquarters staff cuts. The Pentagon is cutting 25 percent from its headquarters staff by 2020. Despite objections by DoD, the 2017 defense authorization bill makes future cuts to headquarters staff and puts ceilings on the number of people the department can have on its headquarters payroll.

A handful of critics think DoD’s staff has expanded far beyond its need.

“The growth in Defense infrastructure has been continuous. The tendency has been to add, rather than subtract. As we have added more staff, more layers and more infrastructure, we have slowed the decision process, expanded the number of players and made the overall system more risk adverse, at a time when we need to take more risk and make quicker decisions,” Arnold Punaro, a member of the Defense Business Board, told the committee last year.

The Pentagon was successful in meeting its goals to cut civilian workforce spending and reducing the staff by about 7 percent from 2012 to 2016. However, as that happened, contractor spending rose by more than $1 billion from 2014 to 2016.

McCready said AFGE was instrumental in upping the VSIP payout. AFGE provided Congress with a survey of federal defense workers showing they would be more likely to retire early if the VSIP were increased.

DoD is offering other ways for federal workers to leave on their own term. This summer it started implementing the phased retirement program.

Retirees who sign up for the program agree to work part-time at their posts while receiving half of their salary and half of their accumulated retirement annuity. During the transition, outgoing federal workers mentor employees seeking to take over their workplace responsibilities.

DoD civilian workers had been waiting and asking for the phased retirement policy, Smith said. DoD currently has about 77,000 people in the Civil Service Retirement System and Federal Employees Retirement System who are eligible for retirement.