Retiring early from any job is a dream come true, and even more so when you can collect a pension while doing it. VERA (Voluntary Early Retirement Authority) was designed to allow early retirement for those who need or want it.
VERA retirement is a form of retirement that allows one to retire earlier than they would otherwise retire.
While there are many advantages to VERA, unfortunately, there still exist many myths and misconceptions around this concept, which we will hopefully clear up in this article. We’ll also take a close look at the advantages and disadvantages of VERA retirement.
What is VERA?
A Voluntary Early Retirement Authority (VERA retirement) is more commonly known as something called early-out retirement. With this type of retirement, federal employees with special circumstances can retire early without meeting the minimum age and/or service requirements.
This measure temporarily lowers the requirements usually needed to retire within a specific organization to make more employees eligible for retirement. This allows the organization to downsize or make structural changes without firing or laying off employees.
As with any federal program, there are specific eligibility requirements one must meet to be offered a VERA retirement:
- You must be at least age 50 with 20 years of creditable service under your belt, at least five of which must be civilian service.
- You must be a (Federal Employees Retirement System) FERS employee.
- You may also be any age with 25 years of creditable service behind you.
- You may not be in a time-limited position.
- You must have been employed for a minimum of approximately one full month (31 days) before the VERA request is submitted to the Office of Personnel Management (OPM).
- You must obtain a notice in writing that states that you are not being fired or let go due to misconduct or poor performance.
- You must retire before the VERA retirement expiry date (the VERA retirement window).
- Unused sick leave can not be used to qualify.
Myth #1: When You Retire Under VERA, Your Pension Gets Reduced.
For employees who retire under VERA, there is no reduction in pension (or any other early retirement penalty) – period. However, there is something called a Special Annuity Supplement that is affected by your VERA retirement.
With the Special Annuity Supplement, federal employees who have served in a position covered under the special provisions (law enforcement officers, firefighters, and air traffic controllers) are eligible for a special supplemental retirement income.
When regular FERS employees retire under VERA, this additional income remains postponed until the minimum retirement age (MRA) is reached.
Myth #2: VERA Retired Employees Are Not Eligible to Return to Work Later.
This one is also not true. There are only minimal restrictions on whether a federal employee retired under VERA can return to work.
For example, one can obtain a job elsewhere at a non-federal agency with little to no penalties. However, some retirees may still be held to specific ethical standards when seeking a post-retirement job.
Additionally, should a federal retiree eligible for the aforementioned Special Annuity Supplement return to work, they could see that supplement reduced or discontinued depending on their new earnings and current assets.
Should a federal employee wish to return to work at a federal entity, they are free to do that. However, they would see their federal salary decreased by their annuity amount.
Myth #3: If Someone Retires Under VERA, They Lose Their Health Benefits.
In general, your health benefits as a federal employee continue into retirement. Once you’ve retired, you continue to pay the same premiums that you would if you were a full-time federal employee. This does not change just because you retire under VERA.
While there is a requirement for those in federal employment that states that one must be enrolled in their Federal Employee Health Benefits Program (FEHB) for five years prior to retirement to carry it over, there are notable exceptions made for VERA.
Instead of being bound by the standard requirements, special waivers are granted to VERA retirees so long as the program has continuously covered them since their VERA approval. They must retire under VERA to utilize this waiver, however.
Additionally, your Federal Employees Group Life Insurance (FEGLI) will also continue into retirement depending on the decisions you make regarding its continuation – so long as you have been enrolled for five years or more. Unfortunately, there is no waiver available for this insurance.
Other insurance policies that are eligible to continue into retirement under VERA include your dental, vision, and long-term care insurance. Additionally, any unused leave or sick time will be paid out to you in a large lump sum.
Myth#4: A FERS Employee Will Not Receive Additional Years of Service.
A FERS employee will receive 5 additional years of service as granted by OPM. VERA offers a waiver of penalty only. This does allow for early retirement without penalty.
Advantages and Disadvantages of VERA Retirement
Like anything, however, VERA retirement has its advantages and disadvantages:
- Health benefits are eligible to continue with the government paying the majority of the premiums, the same as if you were a full-time employee.
- In many cases, you will be allowed to pursue another non-federal job during your retirement without it affecting your annuity or your new job’s salary.
- There are no pension reductions for a normal VERA retirement.
- Your retirement benefits depend on the length of creditable service you have under your belt, and there is currently no way to raise those benefits.
- Your FEGLI will not continue if you have not been enrolled for longer than five years, and there are no waivers available to offset this – at this time.
- The Special Annuity Supplement will not be paid out early for VERA retirement and will only be paid out starting at your MRA.
VERA is an excellent program designed to offset the cost employees incur when government agencies are downsizing or reorganization. However, it may not be suitable for everyone.
Please note that VERA is not automatically a VSIP (Voluntary Separation Incentive Payment) or ‘Buy-out’ – this is a separate program, and it is, therefore, not the same thing as VERA.
If you have questions regarding the information in this article (or about federal retirement in general), our planners are here to help. When you contact our dedicated planners, you’ll receive expert advice in all of the areas of federal retirement you’re unsure about, as well as help to develop a custom retiree plan.
We’re here to help you retire comfortably and securely.