Administration weighs DoD benefits changes

Nine Defense Department benefits proposals-including expanding buyout authority and reducing the early-retirement penalty-are being vetted through the executive branch's budget process. DoD will send proposals that survive the budget review to Capitol Hill as part of the department's fiscal 2000 legislative package.

Under one proposal, DoD would ask Congress for permanent buyout authority, allowing the department to indefinitely offer up to $25,000 to employees who voluntarily retire. The department's current buyout authority expires Sept. 30, 2001. Under another proposal, the the early retirement penalty would be lessened. Currently when employees take early outs, their pensions are permanently reduced by two percent for each year they are under age 55. The DoD proposal would allow employees to make lump-sum payments to offset the early out penalty, so that their pensions would be the same as if they had retired later.

DoD would also like to have permanent authority to offer early outs.

The proposals, however, face rigorous budgetary and policy scrutiny before heading to Capitol Hill in early spring. Policy and management officials at the Pentagon, DoD's general counsel and the Office of Management and Budget will all have their say before the Clinton administration makes the proposals official. Since new spending proposals, such as reducing the early-retirement penalty, must be offset by cuts elsewhere, the nine benefit-boosting ideas face an uphill battle.

Mark Gable, legislative director for the Federal Managers Association, said extending DoD's buyout authority is an important measure because DoD civilians face continuing downsizing. DoD has targeted 237,000 civilian positions for public-private competitions over the next five years. Historically, government workers have lost the competitions to private contractors 50 percent of the time, so more than 100,000 civilians could see their jobs moved to the private sector in the next five years. Without extended buyout authority, DoD may need to rely on reductions-in-force (RIFs) to reduce its workforce.

"Congress needs to take another look at DoD's buyout authority and adjust it so the department can do more downsizing without having to do those expensive and brow-busting RIFs," Gable said.

In addition to the buyout and early out proposals, legislative measures could include:

  • Extending the department's authority to pay up to $10,000 for retraining or relocation expenses for former DoD employees when their bases close.
  • Amending transfer rules to make it easier for the department to relocate employees as DoD consolidates operations.
  • Reinstating the Alternative Form of Annuity option, which would allow DoD employees to withdraw their retirement contributions in a lump sum and receive a reduced annuity.
  • Permitting employees who are laid off and eligible for severance pay to remain on non-duty pay status until they become eligible for an immediate annuity.
  • Repealing the restriction on using government funds to pay for required examinations, licenses and certifications.
  • Lifting the restriction on using training funds for educational degrees.
The benefits proposals are part of a longer-term effort the department is undertaking to make civilian personnel policies more flexible.
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