If you are a Federal employee, you may be surprised to find a new email in your inbox offering yet another opportunity to leave your government job immediately, and defer your actual separation date until September 30, 2025. It’s being called Deferred Resignation 2.0 (DRP), and has been offered, this time, on an agency basis to help reduce the entire Federal workforce to meet the goals set by the current administration. 

     So far, a host of government agencies have offered the second round of the Deferred Resignation Program to its employees with various deadline dates and they include: Department of Defense, Department of Energy, Department of Transportation, Department of Interior, Department of Treasury, Department of Agriculture, the IRS, Department of VA, SBA and probably a few others with no doubt more to come before this fiscal year is over. Was that first DRP offer a missed opportunity you should accept this time? Let’s make sure you understand what the DRP promises.

     As with the initial DRP memo of January 28^th, the second round proposes that interested employees contact their supervisors or, depending on your agency, respond directly through a portal, to accept the opportunity to resign.

     Under the DRP, employees will enter a transition period, the starting date to be specified by the agency, during which they are not expected to work and will receive paid administrative leave until September 30, 2025 when their Federal employment will end.

     What are the parameters of the DRP program?

     First that you are eligible to apply. You are eligible if you are a full time Federal employee with the exception of: the military personnel of the armed forces, the United States Postal Service, personnel in positions related to immigration enforcement and national security and those related to public safety. Additionally, each Federal agency may identify critical positions that may exclude this offer.

     Second, once an employee accepts the DRP, the decision is not to be rescinded. An employee who accepts DRP then changes his mind may request that his agency rescinds the resignation, but it is up to the agency to review a request and make a decision. In many cases once an employee has been placed on administrative leave, that may serve as a valid reason to deny a request to rescind.

     Third, if you accept the DRP and wish to retire or resign before the deadline of September 30, 2025, you may do so. But, if you wish to extend the deferred resignation date past September 30, 2025, the DRP does not allow this unless you are planning to retire by December 31, 2025 in which case the date may be extended to your planned retirement date this year.

     During this period of deferring your resignation, many agencies are also offering the Voluntary Early Retirement (VERA) which allows Federal employees to retire early with unreduced benefits. If an employee qualifies for and decides to retire under the VERA, they must apply for retirement by the end of the VERA offering, which may be different from the end of the DRP. Remember, to be eligible to do a VERA, an employee with at least 25 years of qualifying Federal service may leave at any age, and an employee with 20 years or more Federal service, but less than 25 years may leave at age 50 and over.

     If an employee is eligible for a VERA, he may still choose to leave under the DRP and effect his retirement date before the deadline for the VERA. So, if an employee is eligible for the VERA today, but chooses to leave under the DRP, he may separate now and choose to apply for the VERA on September 30, 2025, provided the VERA is offered through that date. The employee would still accrue retirement and leave credit for the period starting on the day of his separation and going through the end of September, and the retirement date would begin October 1, 2025.

     As with the initial DRP offer, agencies may impose exemptions to the DRP and the VERA for employees whose positions are considered critical. Each agency offering the VERA and/or DRP should include those positions that are exempt from these programs.  

     And last, according to the original DRP description, accepting the deferred resignation offer does not affect your ability to work for the Federal government in the future and does not affect your ability to do regular retirement during the DRP offer. Since the Federal workforce is expected to continue to go through significant changes, please remain aware of your actual retirement options as you make important separation decisions. 

     Keep in mind, Federal retirement benefits are payable to you for the rest of your life. Make sure you know when you qualify.

A special provisions retirement (payable for special category employees like law enforcement officers (LEOs) and firefighters) is used ONLY in computing an immediate retirement. This type of retirement provides a more generous method of computing the amount of retirement payable because these employees are retirement eligible with fewer years of service and at a younger age.
The age and service requirements to qualify for a law enforcement retirement are:

Keep in mind, qualifying law enforcement/firefighter service includes work after a transfer to a supervisory or administrative position as long as the work is still in the same capacity and there is no break in law enforcement service of more than 3 days. The determination whether service qualifies as special provisions entitlement is made by the appropriate administrative authority of an agency, usually the agency head. The employing agency must submit a certification letter with an employee’s retirement package to OPM to certify service covered under the special retirement provisions.
The special provisions retirement formula is far more generous than the one used for regular FERS retirement. See the formula below:

    
The question is, if you separate from a law enforcement/ firefighter position before you are eligible for a special provisions retirement, what retirement benefits will you receive?
You will not be paid a LEO retirement. Special provision retirements are paid only for immediate retirements. An immediate retirement requires an employee to have qualifying age and service on the date of separation, and payments begin within 30 days after separation.

A recent question was posed by a LEO who had worked for 20 years as a law enforcement officer, but was under age 50 and leaving Federal service. She wanted to know when the deferred retirement would be payable and if she would receive the LEO computation.
Though she has 20 years of LEO service, she is separating before age 50, and therefore does not qualify for immediate retirement. She will later qualify for a deferred retirement under regular FERS at her minimum retirement age, with no age reduction. To review the retirement computations for regular FERS, please see the previous article on “The Federal Retirement Benefit.”

Additionally, with a deferred retirement, she will not qualify for coverage under the Federal Employees Health Benefits (FEHB) or under the Federal Employees’ Group Life Insurance (FEGLI) programs. She will not receive the FERS Annuity Supplement which normally starts for LEOs at retirement and ends at age 62. And last, she will receive no credit for accumulated unused sick leave in her deferred FERS computation.

However, she may recover her law enforcement retirement if she considers returning to Federal service later and retiring after she reaches the appropriate retiring age. In the above example, if this employee returns to work for the government and reaches age 50, she would be able to retire with enough qualifying LEO service for an immediate retirement and retain FEHB and FEGLI coverage as long as she enrolls immediately when rehired. She would be eligible for the FERS supplement, and her unused sick leave would now be included. Best of all, she does not have to return to a law enforcement position.

Please be aware of your retirement rights as special provisions employees. The OPM Handbook for CSRS and FERS employees devotes an entire chapter to Special Category retirements. You may access this information at:  www.opm.gov. Under the retirement section, Forms and Publications, you can find the Handbook, Chapter 46 for Special Category retirements.

In our previous article, Know Your Retirement Rights, we explored the retirement eligibility rules for Federal employees facing possible termination. It is your responsibility to know if and when you are eligible for an immediate retirement. It is also important to know how much a Federal retirement benefit will be. This week’s article explains the Federal retirement pension for CSRS and FERS.
First, the Federal pension is a monthly benefit based on the following:

Total length of Federal service
High-3 average salary
CSRS or FERS formula

Total Length of Federal Service
Do you know how much total service you have? Generally, employees count their total service by starting the day they were hired and ending the date they separate. However, throughout your career, your service may be adjusted for a number of reasons, and you may have less service than you think.
Common reasons service may be adjusted are: different types of appointments, breaks in service, failure to pay for deposit/redeposit service, transfers to different Federal retirement systems, and moving to special provisions service to name a few. To verify the total years of service worked, employees need to know their retirement service computation date (RSCD). It may be different from the date you entered Federal service. When possible, verify your retirement SCD with your Human Resources department.
Once you’ve verified the RSCD, subtract this date from the date you are leaving Federal service to get your total service.

Computing Total Length of Service

If an employee has worked long enough to be eligible to retire, unused sick leave will be credited to increase the length of service. Sick leave is converted from hours to months/years.
So, if an employee is retiring with 1100 hours of unused sick leave, the sick leave conversion chart, found at www.opm.gov in the OPM Handbook for CSRS and FERS Retirement, Chapter 50, will be used to determine how many extra months and days of service will be added. Let’s say you have 1100 hours of unused sick leave. 1100 hours converts to 6 months, 10 days of service. This extra service is added to the service the employee has worked to determine total service.

High 3 Average Salary

The high 3 average salary is the 3 consecutive years the employee has been paid at the highest pay rates of their Federal career. During the high 3 average salary period, the types of pay that count will be:

Regular pay
Locality adjusted pay
Environmental differential pay, if part of annual salary
Special pay rate for recruiting/retention if in annual pay

The high 3 average salary will not include the following:

Lump sum payment for accrued and accumulated annual leave
Bonuses
Overtime
Night Differential unless Wage Grade employee
Travel allowances

Many government agencies have self-service platforms that provide employees a portal to manage their benefits and retirement information. Government Retirement Benefits (GRB), MyPay, and EPP are a few such platforms. From here you may print retirement estimates for planning purposes. To understand how OPM calculates retirement benefits, the formulas are listed below.

 Retirement Benefit Formula

The CSRS formula is as follows:
1.50% X high-3 X total service =
1.75% X high-3 X total service =
2.00% X high-3 X total service =
                        Add together for total annual benefit

The FERS formula for employees under age 62 is as follows:
1% X high-3 X total service = Annual FERS benefit

The FERS formula for employees age 62+ with 20+ years of service is:
1.1% X high-3 X total service = Annual FERS benefit

If a FERS employee is age 62 and over with less than 20 years of service, the formula is:
1% X high-3 X total service = Annual FERS benefit

The FERS formula for employees who retire under the MRA+10 retirement will include a permanent reduction in the retirement benefit. The 1% formula will be used to calculate the earned benefit amount before OPM reduces the retirement by 5% a year for each year the employee’s age is under 62.

MRA + 10 Retirement Calculation: Employee age 57 + 18 years svc

Employees may avoid the reduction by postponing the retirement benefit until they are older and their age and service yields the full retirement benefit.

FERS Annuity Supplement
FERS employees eligible for a full, unreduced retirement may possibly qualify for an additional benefit called the FERS Annuity Supplement. This benefit, payable by OPM, is included when a FERS employee retires under age 62 with a Regular or Early retirement option. The “supplement,” based on the amount of the actual Social Security benefit payable at age 62, will be less than the Social Security benefit due at age 62. However, it supplements the FERS benefit until the retiree reaches age 62 when it will end automatically.

Stay Informed:
If you are Law Enforcement, a Firefighter, or an Air Traffic Controller, the retirement eligibility rules and formulas are different and will be covered in the next article.