The Office of Personnel Management is offering early retirement to all of its employees through the end of September. OPM's offer may be a harbinger of similar offers in other agencies as managers attempt to deal with fiscal 1998 budget blows.
OPM's agencywide early retirement offer is unusual because it is not limited to certain types of employees at certain grade levels. OPM Director Janice Lachance said the agency is offering early outs to address the "skills imbalances resulting from an agency redesign which we created and the technological improvements which are occurring within the agency." An OPM spokeswoman said there is no target for personnel reductions.
The agency must also absorb the costs of higher contributions to the retirement system. Over the next five years, agencies will be paying an additional $2.9 billion into the Civil Service Retirement System. To absorb the hike, agencies will have to cut personnel costs. They have three primary tools at their disposal for doing so: early outs, buyouts and reductions-in-force.
In December, Lachance informed agencies that they can ask OPM for early retirement authority through Sept. 30. Federal employees who opt for early outs get smaller pensions than those who qualify for regular retirement. Employees under the Civil Service Retirement System have their pensions reduced by 2 percent for each year they are under age 55. To qualify for early retirement, an employee must have 25 years of service regardless of age or 20 years of service and be at least 50 years old.
Only a few agencies--including the Defense and Agriculture Departments and NASA--can still offer employees buyouts of up to $25,000 to retire or resign. Other agencies' buyout authority expired on Dec. 30.
Agencies prefer to avoid reductions-in-force, or RIFs, because they wind up costing more per employee than buyouts and lead to a high level of anxiety among workers. From October 1992 to July 1997, 33,895 federal employees were let go as a result of RIFs, according to OPM.
In May 1997, Federal Managers Association President Michael Styles criticized the increase to agencies' CSRS contributions as a "silent RIF." Styles predicted that the increase would "force agencies to resort to layoffs."
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