DoD offers buyouts and dual compensation boost

DoD offers buyouts and dual compensation boost

The fiscal 2000 National Defense Authorization Act extended several incentives designed to help some Defense Department civilian employees leave federal service and one incentive for a select group to consider staying on the DoD payroll.

The latter comprise some 7,000 retired military officers across the federal system, most of whom work for DoD organizations. However, they represent only about 10 percent of all military retirees employed as civil servants by DoD.

Before Oct. 1, the dual compensation limit required retired officers to forego 50 percent of their military retired pay in access of $10,450.77 if they worked for the federal government. The pay cap also limited their combined military retiree pay and civilian employee salary for 1999 to no more than $110,700, the amount earned by assistant defense secretaries and service secretaries. Retired officers affected by the limit continued to draw their full retirement annuity, but their civilian pay was offset.

The retired officers affected by the change began seeing bigger civilian pay checks in October.

Diane Disney, the deputy assistant secretary of defense for civilian personnel policy, said the move will save DoD administrative costs, because a separate system is no longer required to manage their pay. But more importantly, she said, the change could make federal jobs more appealing to retired officers.

"What we will find, probably, is that civil service becomes a more attractive second career to some retired officers," Disney said at the Pentagon Dec. 8. "Perhaps some whom are now working for the government may want to stay a bit longer than they would have stayed, otherwise," she added, "because their income will be increased. We see this as a benefit to a group of people who have served the country."

Since the civilian draw down began in 1989, however, Disney's office has been busier finding ways to encourage people to leave rather than stay. Incentives to retire or separate have helped induce 400,000 departures. DoD needs to cut another 100,000 employees from its payrolls by 2005, and Disney said the recent authorization extending some incentives will help.

The fiscal 2000 budget gave DoD authority to continue offering employee buyouts under the Voluntary Separation Incentive Pay plan; pay health insurance premiums for up to 18 months after employees leave DoD; and make lump sum severance payments. Authority for all three incentives was extended through Sept. 30, 2002.

"Voluntary Separation Incentive Pay has been one of our single most valuable tools in easing the transition for separating employees," Disney said. "It enables people to manage the transition more effectively, to start a new career, pay off debts and do a wide range of things than enables them to adapt after leaving DoD."

Since DoD began offering buyouts in 1989, 139,000 employees have qualified. The buyouts aren't an entitlement, Disney warned. Employees have to be in units or organizations undergoing downsizing and may have to be in specific jobs and pay grades.

Federal law permits civilian employees leaving federal service and their families to continue their federal health benefits plan for up to 18 months, as long as they are willing to pay for it. For the past three years, however, DoD has picked up the government's share of health insurance premiums, or about 72 percent of the cost. With its authority extended to the end of fiscal 2003, DoD will continue the pay the employer's share of health insurance premiums.

"That really eases the transition, particularly if somebody is trying to find another job," Disney said. "Because then, you don't have worries about being able to pay for the insurance or being faced with a loss of care because of preexisting conditions. It's a very, very excellent buffer."

Lump sum severance pay, in lieu of biweekly payments, can also help employees cover expenses after they leave DoD, Disney said.

"We're grateful to Congress for extending these incentives," she said. "These are three very useful tools and we will not have them through virtually all of the draw down."

The Pentagon reviews the need for such incentives each budget year, Disney said, and it is always open to fresh approaches to dealing with personnel cuts.

"Every year we try to find new ideas," she said. "Individually, they may not help a lot of people, but collectively they really enable us to manage the transition humanely. We encourage people across the department to suggest pieces of legislation that relate to work force transition."

Disney said anyone with suggestions of how to improve or enhance the draw down should call her office at (703) 614-9487. "Dave Hyde is our director of legislative affairs, and he would be more than happy to hear from people having concerns or ideas," she said.

For personal assistance with buyouts and other incentives, contact your local civilian personnel office. A limited amount of information on civilian assistance and reemployment also is available on the Civilian Personnel Management Service home page at

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