The previous post, Senate Bill: Indications of the Scale of Early Retirements Expected, created some confusion regarding the types of incentives that the new bill allows the Postal Service to offer. That post was based on the Senate bill summary that I had received and comments at the press conference. The actual language of the 21st Century Postal Service Act of 2011 indicates that the new retirement incentives now available to the Postal Service than previously thought.
If the Senate Lieberman/Collins/Carper/Brown bill is signed into law, the Postal Service will have three potential incentives available to them. In order by cost to the Post Service:
- VERA with no cash payment and no increase in service time – this option, when offered, has had a negligible impact on the normal retirement-related attrition rate at the Postal Service
- Retirement with service time adjustment – this offers a 2% increase in CSRS or FERS pension benefits over the life of the pension. For example if one assumes a CSRS high-three salary calculation of $50,000 and sufficient time to earn 60% which would yield an annuity of $30,000. Based on the wording of the bill an extra year of service would be given to CSRS or two years to FERS which would increase the the calculated annuity to 62% of high three or a $31,000 annuity. [Thanks to cynical for the example.]
For someone earning a $30,000 a year pension this would equal a $600.00 annual increase in benefit.The actual benefit depends on their salary at the time of their retirement and the number of years of service that they have.size of the pension.The added pension costs could be amortized over many years so that the Postal Service would have only a small up-front cost of offering the incentive. - Cash payment – Currently the maximum cash incentive that the Postal Service can offer is $25,000. It does not have to offer that amount. In the past, the Postal Service has offered incentives of $15,000 and $20,000. In both cases the incentive was spread over two years to reduce the impact on the Postal Service’s cash flow. Paying the incentive over two years may have some tax benefits for the recipient of the incentive.
After passage of the Senate bill, the Postal Service will then be free to choose among these three incentives during its restructuring process. Logically, the Postal Service would offer the smallest incentive necessary to get the needed bump in retirements that it desires.
Cash payments are likely to be used when it has to reduce employment rapidly. For example, the requirement that the Postal Service close regional and area offices forces a rapid reduction in retirement eligible employees that would require cash payments to avoid RIF’s. A simultaneous elimination of multiple mail processing plants in one region at the same time would also trigger a need for a rapid reduction in retirement-eligible employees.
The less generous increased pension benefit incentive would appear to make sense only in cases when the Postal Service needs to encourage employees that are already planning to retire to retire a year or two earlier. This would be most likely to occur as part of the Postal Service’s retail, processing, and delivery restructuring, if that restructuring is staggered over multiple years.
The smaller incentives suggest that getting 100,000 Postal Service employees to retire early, as Politico reported, will be extremely difficult unless normal retirement rates would result in a significant portion of the 100,000 retiring anyway.
For a perspective on retirement incentives from a postal industry veteran see:
Thoughts on the Value of Retirement Incentives
It would appear you’ve got the added year calculation wrong. Assume a CSRS high-three salary calculation of $50,000 and sufficient time to earn 60% which would yield an annuity of $30,000. Based on the wording of the bill an extra year of service would be given to CSRS or two years to FERS which would increase the the calculated annuity to 62% of high three or a $31,000 annuity.
The added years of service would apply to the annuity calculation, the same as adding sick leave to years worked in CSRS to increase the time served.
You are a font of misinformation!
Good point, I will correct that. It still is a small incentive.
Well,….Idont know of many employees that will take that as a “Good Deal”. For one wouldn’t.
If the USPS is right in their problem, it is that they have too many employees and want to get rid of them. If the Senate Bill is a means to achieve that purpose then; the only way to achieve it will be to offer the $25,000 either in designated controlled areas or categories as appropriate.
$25,000 – approx 25% with holdings leaves approx $18,750 (not $25,000).
The people who are now retirement eligible and did not leave for the last buy outs are staying for the $25,000 offer. Many will not leave now even if offered LESS THAN $25,000 because they don’t want to go and then have it offered to others later.
3 things Congress should and must do (THAT THEY HAVE NO DONE) to make this a smashing success:
1. Make it possible for the employee to elect that the Cash Buyout Incentive have the option to be deposited into the TSP Retirement Account. This will be a greater incentive to many on the fence as they get the entire $25,000 now and pay taxes later at a lower rate when retired and taking it out.
2. Ensure that OPM can in a timely manner process Retirement applications within a 30, or 60 day window. Last time men and women, and families went approx 9 months without their first check. The current short fix of giving a partial payment until the Retirement processing is completed still is not a fix.
3. Require OPM to provide the accruate Retirement Annuity Payment to the Employee and NOT THE PO. The PO Estimate is just that and is never the amount the individual receives.
Providing accurate numbers is only fair and will encourage, not impede, getting people to retire.
The retirees did not have to wait 9 months to receive an annuity check. They got “interim” checks until their final annuity could be calculated. Just as there are not enough letter carriers and clerks to process and deliver the mail there are not enough administrative people. Go figure.
For those of us who left in May (excessed jobs), the interim check is @ 75% of what you’re told to expect. (Example, $900 instead of $1700.) Once out, you learn that OPM is back-logged with postal & other federal RIF’d employees. Full (finalized) annuity checks for a lot of us hasn’t happened yet. OPM response is they have until @ Jan 1st to process (8 mos). In the meantime, hope you have $$ left from your annual leave check to live on.
It’s been 10 months for me and I’m still on interim pay – wish it was ONLY 8 months.
I retired 1/31/11. Got my first full check 11/1/11. That’s 9 months. Don’t know if I got it because I wrote and complained last month, or if it was just my turn. Never got answers to my complaint.
I don’t understand. 75% of 1700 is 1275, not 900.
This is the best plan yet. I wish the PO would come to the realization that keeping eligible retirees on the role is not fiscal responsibility. It cost the PO approxiamately $2,500 per month to keep ER’s on the payroll, why can’t they figure this out.
Maybe if they offered five years of service time it would be wotrth it to leave early, but not two percent! What a joke! People who are close to retirement can wait untill they are ready to go! If you want them to leave, you have to make it worth losing future earnings!
If the Postal Service is really serious about reducing numbers, they need to bite the bullet and offer an across-the-board 25,000 to everyone eligible to retire. There would be no more, “let’s wait and see if they offer more later”.
It might hurt service in some areas, but they hire temps instead of career people, anyway, so they can continue that. Temps, as hard as they work (and they do), just cannot provide the service that full time regular career employees do.
I personally have reached my Minimum retirement age, etc, but would have serious doubts about leaving with less of an offer than the max they could give in cash, extra years, and extra percentages added to the annuity.
Just do it once and be done with it, and move on.
Just retire you dont miss a beat I love it stayed 2 years longer damn I wish I would have went when I should have. You can never get that time back that you could have been doing what you want to when you want to.
I’m confused – so does this mean that if you are ready to retire (or 10 years over being ready to retire) and you are not in a “geographically desired” location, you might not receive the incentive to retire? If that’s the case, then that’s not fair at all.
All the law states now is the Postal Service can offer two types of incentives now (VERA and and a cash payment.) The Senate bill adds a third type of incentive ( a bigger pension). When they are offered in a particular location or on a national basis depends on a management decision. I am not privy to those decisions but I am willing to bet there are plans to implement something if they implement the Network Optimization or the Retail Optimization Initative in a short period of time
Baffled, I see that discrepancy also. No, it is not fair. Some younger people than me, with less years, could theoretically receive a nice buyout while I still have to pound the pavement and mud in the rain, sweat and cold.
I think they should offer everyone who qualifies, wherever they are, whatever craft they are in, the same offer, and be done with it. They could then concentrate on slave-driving the poor people who remain behind, to do the job we used to help them with.
But they do a lot of unfair things. I truly had a severe stomach flu that started on my day off, Thursday, and I had to call in Friday and Saturday. Our new OIC postmaster told the floor supervisor to call everyone who called in today, Saturday, that they needed medical documentation. One bullet for all, even myself, who does not abuse sick leave, and am not on a restricted sick leave list. In 28 years, I have NEVER called in sick when I did not have some kind of medical issue. How can I leave the house to go to a doctor for severe diarrhea, LOL, and be too far from a restroom????
i am a 50 year old mailhandler with 28 years of service. if i were to take early retirement i would be punished severely. in stead of 60% of my salary, i would be getting only 50% because of penalties. no one in their right mind would take this. unless they take away the penalties(2% for each year shy of 55 years of age and 30 years of service] very few people will take the early out, especially in this economy.
I think they will wait until you hit 55 and you will have an incentive to leave then. This gives you time to train for another job. You may want to start training now and if you find another job the “penalty may not be so bad as you will have a second source of income starting in two or three years.
why would I leave this job where I’m earning about $58,000 yr, for ONE YEAR ADDED and go to some other job and make $7.00 an hour?? that doesn’t make sense? I’m 55 and the only incentive they can give me is to add a reasonable amount to my retirement pay to make it worth my while to retire now…. I’m only 55…. they are wanting raise SS retirement age to 67 or 70 and they want a 55 year old CSRS to leave at 55 for almost NOTHING? they wasted their time on this one…. we have several CSRS eligible in our office and NONE of us will leave for this crap… they could add 5 years to our years of service and still save money by working non career, low paid people in our jobs, which they plan to do anyway… they are not really serious about getting us to leave…. NO, this BS won’t incentivise any of us to leave.
True that, magnolia! They can present this option to the eligible personnel, and they can make their own decision. But this incentive to retire is severely lacking to anyone that can compare all offers verses a whole career. FERS personnel should remember that there is NO COLA until 62. A VERA attached to this offer might sway many more.
There is a procedure to reduce to necessary personnel levels in place, called a RIF! Of course, using a RIF would not help them in replacing expensive senior people with non career lower paid workers!
couldnt agree with you more keep your cash money and give me something i can count oincentive not this bs they have out know n more years of service added to my time if they are really serious about getting civil service employees out then offer a serious
Now I’m 53 with 31.5 years in the last time they offered a VERA I was in the same situation,not even 50 yet with 28 yeras in.Of course I did not take that hit of 10% plus,but now by the time they would do something I would have my 32 years in still 53 but I’ve had enough,I will go this time.
Steve,
This senate bill does NOT include an VERA offer. The VERA would be something that would have to be ok’d by OPM, and offered by the USPS. Good luck with that!
50:1 odds that the 100,000 that get incentives are at least 50% management,if not closer to 80%: the scam is, has been and always will be to get more for management, while they do less work and blame everything on craft employees, while they harass, bully and intimidate craft employees to make productivity better to cover their sorry asses.
you know, I guess I should have known they would do this! …. this offer to CSRS of ONE YEAR!! to eligible employees who are still too young to retire is just a BULLSHIT INSULT!! I’m 55 with 32 years and they are offering me ONE YEAR! this lets us know they are not really serious…. if they would come to us and make us a good faith offer… if they would make it in the THEIR and OUR benefit to retire, like offer 5 years added, they would see a mass exodus… I predict they won’t find many takers… WHY would I retire and leave this job I have put way over half my life into when I’m still too young to retire for what amounts to NOTHING?!! I mean, I have 20 more years to work? they can take it and shove it… I’m staying!… let them throw me out … this announcement didn’t do anything but piss me off!
Ok Magnolia, lets do the math. You say you are 55 with 32 years of service. If they give you 1 year of service that comes to 33. Now lets say you’ve been a good employee and you also have a years worth of sick leave, thats a total of 34 years of service. 34 x 2 = 68% of you salary averaged out of three years. Lets say that number is $50,000. Take $50,000 and multiply it by .68 = $34000. Now lets say you know how to push a cart in the parking lot of your local K-Mart. You can earn $10./hour. 2080 (40 hours per week) x $10 = $20800. Add that to $34000 and you have $54,800 annual pay. You will earn more money if you retire and get a job pushing carts at your local store. Perhaps you might be lucky enough to earn a position as a greeter in Wal-Mart.
I believe your retirement formula is wrong. I thought it was years of service X 2 minus 4? 64% instead of 68%.
I will have 33.5 yrs in on my 55th birthday and I am recieving 63% of pay. So letdothe math is wrong. I was a ptf for about a 1 1/2 yr. There was times that we didnt get many hrs.
Are you insane? You want her to retire AND THEN push carts for 40 hours a week? At 32 years of service, she probably has the best position, and top benefits! Do YOU THINK she wants to spend her time working a sh*tty job? You must really want her job!
Hey math: why would I retire at 55 making a salary of about $58,000 to work at walmart full time for $20,000 when I can keep working here, increasing my retirement and earning $38,000 more? what’s your point? they are just not offering enough to really encourage their senior people to retire…
Got to agree on this comment. Management ALWAYS looks out for their own. I know of two managers who were caught stealing from the Postal Service and were not fired but reassigned. I also know two craft employees who were caught stealing around $100 each (one carrier opened cards and one clerk took stamps) and BOTH were fired. This was in the same district within a few years of each other, so it’s not different ways of handling things in different regions.
I have 36 years in and would not take this. If I stay one year I make more than the $25k difference and also get the year added. Give me the 5 years and max me out and I’ll leave tomorrow. Without the $25k
That’s what I mean, Ray… just give us enough to make it worth giving up our entire life’s work and the 5 years would do it for me
Does anyone in fers wonder if this isn’t just another ponzi scheme like social security and medicare? Aren’t we just robbing from Peter (fers) to pay Paul (csrs)? What will be left for the people who have carried longer on the street than those before us. I have 27 years under fers with 9 years to go until minumum retirement age. What will the incentives do for the rest of us~Bankrupt!
Five years and Fifty Thousand is the only way I’ll leave early. CSRS, 63 yrs old with 32 yrs in. Easy money. Make it worthwhile
I’m an MPE in the FERS retirement system who is 55 years of age with 28 years and 4 months of service. I will attain the age MRA next September but will be about 9 months short of the 30 years needed to attain the complete MRA requirements of 56 with 30 years. I already sent off for info about my retirement with 2 different dates. If I go October 1st, 2012, my postal payment would be $882.00 per month with the holdout for my wife. If I wait to go on August 1st, 2013, then my postal payment would be $1296.00 per month. That’s $414.00 a month more. The difference is based on a 5% per year penalty for every year that I’m not 62 years old which equates to a 30% penalty. What the USPS needs to do is to offer those people within 3 years of retirement an incentive to add years to their time and their age, but no more than 3 years combined between the two (time and/or age) so the employee doesn’t have to be penalized for doing the USPS a favor and retiring early to help the USPS out of their predicament they’ve allowed themselves to mismanage themselves into. If the USPS does this and offers $25,000.00 to boot, they will undoubtedly succeed in reducing the payroll by the 210,000 employees that has been stated that needs to be done. Just remember that anything that USPS can screw you out of will also affect the amount that your spouse will get when you die.
not 100 % sure about this but i dont think that they can legally make you older then you are that means they cant give years to your age
Your dreaming Kazoo!
Offers will afford those AT MRA already, who are short up to 1yr(csrs) and 2 yrs(fers), the chance to become eligible for retirement. Those already eligible can receive the money.
This might induce some who really want to leave. But make no mistake about it, this is a Win Win for the government (usps), and BARELY makes financial cents (haha) for anyone who is following a retirement plan optimized for their retirement needs. If you expect anything more from the government, you are DREAMING!
i think that the $25k would work , with an added incentive of 3-5 years of service added.
most people that i know wont take the 18K CLEAR, WITHOUT ADDED YEARS, ESPECIALLY IN THIS ECONOMY.
BUT, IT IS LIGHT YEARS BETTER AND MORE VIABLE THAN THE ISSA=ROSS BILL.
I would take it. Cant stand it any more. I hurt all over. I dont think I can make it longer than another yr. I just read about 6 ways to turn the post office around. I hope they dont implement any of these 6 things. I know I cant pick up 70 lbs anymore. For one I hurt my back about 18 yrs ago. It has only gotten worse. I have tendonitis and carpal tunel. The tendonitis is from my neck all the way to my feet. I never knew u could get tendonitis in your feet. I was stunned when the doctor told my that. I have worked through all my injuries. On occasion I have taken a day off because of the pain. Also u can take ur tsp without penalties if u retire in the yr. u turn 55. I have been researching my options. I have been working 33 yr. and cant stand it anymore. I will go. Sorry to disappoint .
Dory…Is that true? You can take your tsp without penalties if you retire in the year you turn 55? I am hoping that you are right…I hurt all over also…Just a terrible place to work anymore…
this website is confusing me. i assumed that the post office office would be able to combine all three options into a package in they chose to do so and assuming this senate “option” would become law. by that i mean they could lump a VERA along with a small payment along with up to 1 year sadded time for csrs and up to two years added time for fers. alan robinson appears to be saying that they can only choose one of the options. donahoe talked about MAYBE a
VERA in about a year with 2 to 3 years added service and maybe two small cash payments.
this was before proposed senate bill but donahoe gave no indication he was limited to only one option. anybody clear up this confusion for me??????????
The Senate bill is very explicit. It is only one. The options cannot be combined.
12 months from now appx. 250,000 apwu members will get 1% raise. If the avg. raise is $500, this will amount to $125,000,000 added to the usps payroll bi-weekly. The usps should stop trying to play us cheap. Give us $25,000 incentive, add 3-5 years onto our pension regardless of years of service, and do not penalize those who are younger than 55 years of age. If the usps is serious about reducing the workforce I suggest they sweeten the pot. If not, then in Nov. 2012
give me my 1% raise along with my other quarter of a million union brothers and sisters. Pay us now or pay us later. Because with the state of this economy many workers are unable to retire.
56yrs old 34yrs service No way I am taking one year of added service time and 25k. Give me 5 yrs added service time, or I will just stay and do my own time till I get another parole hearing.
I agree Peter: I mean didn’t the senators THINK about those of us who would be offered these offers? Didn’t they really think about how much it will cost us to retire even if we are eligible? I COULD retire with the 25K or ONE year or even both, but at my age (55) it still would not benefit me… I could make a lot more money to just stay and work another 5 years. That’s why I said they are not really serious about getting us to retire.
Heck No, Magnolia! They just want us out! They know they can’t force us out, without stepping on several discrimination laws. Their angle, just dangle a carrot in front of us, and hop we take a bite!
I’m 56, with 25 years of service. I’m FERHS. If they force me to retire, someone told me I can’t touch my TSP until I;m 591/2. No social security til 62.The postal record magizine shows $1143.00 before taxes a month. I’ll be homeless in two months.
Mike, If you retire at 55, you can withdraw your TSP without the 10% penalty. It’s not like a regular IRA.
Lynn I posted another question , maybe you can help. Thanks.
Found this at FederalTimes.com
A: The rule is simple: If you separate from TSP-covered service during or after the calendar year in which you reach age 55, you may take penalty-free withdrawals from your TSP account. This is not true of an IRA, so if you roll over your TSP balance into an IRA after you leave federal service, you will have to wait until age 59 1/2 (unless you qualify for some other exception, such as disability or by employing a series of Substantially Equal Periodic Payments under IRS rules) for the same penalty-free access to your funds.
you dont pay taxes on your pesion
zero taxes, are you sure about that?
You certainly do pay taxes on your pension – also on Social Security if your income is above a certain limit.
I was under the belief that if you took the money you got no time and the time was only to get you into eligiblity for a VERA and nothing more.For example CSRS 55 with 30 years you get money no time.CSRS 55 with 29 you get the year no money.Same as case may be with FERS.
That souns right but the extra year or two increases the pension.
It’s really not a VERA if you qualify for an immediate pension, they are just giving time to qualify. The money is no more than a VSIP, an incentive to retire.
where did you get that, Sam? I believe the senate bill says 1 – 2 years OR $25K…. I think
I am a postmaster with 30 years service, 57 years old. I looked at my retirement package and what it boiled down to is around 1750.00 a month which did not include taxes and insurance that still have to come out of that. I still have a child in college. I don’t know about you folks, but I can’t live on $1000. a month. That wouldn’t be enough to pay bills and medicine, let alone groceries. Get real USPS! Give me my max years and the $25k and I’ll seriously think about it. Otherwise I’m probably here till I die, then my family can have my 350k life insurance!
Nice article. Thank you for this info Your site is very useful for me .I bookmarked your site!
There is no other federal agency that requires employees to stay 41 plus years to get max retirement annuity. Most offer either 20 0r 30. Give all CSRS with 30 plus years 80% and there will be a stampede out the door.
If your eligible take what ever you can get and get out. Do this now, dont wait til your sick. Enjoy your time and life after the PO. Dont wait til your walking on the beach with a cane, do it while you feel good. Especially if your getting 30k plus a year. Way too many of us are waiting too long,chasing that carrot on a string, for an extra 2% a year. Dont stay 36 to 41 years then die after a couple of retirement ckecks, it happens way too often, go now , start getting that monthly check now, and hopefully enjoy it for a long time. Your worth it. I left 3 years ago at age 52, took the ver 30 k a year, ive collected 90 k so far, pay much lower income taxes, and enjoy every day. cant beat it. The best is waking up and not having to go to the PO.. Peace All
Is this correct? If I’m 56 1/2 years old now, have 25 1/2 years service(city carrier)under FEHRS ,can the P.O. force me to retire? Can I roll my full TSP amount into a IRA and collect a monthly $ amount? Maybe Lynn knows?
First of all, at the present time, the PO cannot FORCE YOU TO RETIRE!! I know you can roll your TSP into an IRA. However, I don’t know if you can withdraw it from there before you are 59 1/2 like you can with the TSP. You’d have to investigate that with the IRA people. You can collect a monthly amount from your TSP if you wish to do that.
Found this at the Federal Times Website:
A: The rule is simple: If you separate from TSP-covered service during or after the calendar year in which you reach age 55, you may take penalty-free withdrawals from your TSP account. This is not true of an IRA, so if you roll over your TSP balance into an IRA after you leave federal service, you will have to wait until age 59 1/2 (unless you qualify for some other exception, such as disability or by employing a series of Substantially Equal Periodic Payments under IRS rules) for the same penalty-free access to your funds.