Some answers to questions about RIFs and early retirement – Federal News Network

Tom Temin: Let’s talk about RIFs. People are entitled to something from the government. What have you learned?

Tammy Flanagan: Well, a lot of times when everything is happening this time of this administration, it’s so fast and furious that people don’t know what they’re entitled to. And initially, with the Fork in the Road, that was a voluntary early retirement authority, which is when people can choose to take advantage of it, which many people did. But then now it’s coming down to where people are being forced out or literally fired, and that’s an involuntary separation. So when there’s a reduction in force, which is government wide as we speak, when people are losing their jobs involuntarily, that’s what I guess we’re going to call it a RIF. You know, this isn’t the normal RIF procedures that happened in previous times, right?

Tom Temin: Those are limited and well known in advance and highly selective and etc.

Tammy Flanagan: Some ways to move around to different jobs. And it’s you know, the last resort has always been a RIF. You know, we do voluntary early hours, we do buyouts, we change positions, we do everything possible to avoid laying off or firing an employee. But that’s not what’s happening now. Now it’s happening. And you wake up one day and you no longer have a job. So people are understandably worried that, well, does this mean I don’t have a retirement either? And that’s not true. Depending on how much service you have and how old you are, you might be eligible for immediate retirement. Because in a rough situation, just like the voluntary early outs, you only have to be 50 with 20 years of service. So you can you can take retirement right then or any age. You could be younger than 50 if you have 25 years of service. And that would be qualifications for a discontinued service retirement, which is what happens under an involuntary separation. Now, of course, these employees who are getting fired for what I consider no, no fault of their own, but they’re losing their jobs, they’re saying you’re fired. Those folks are worried about losing their retirement benefits because they thought you couldn’t get them if you’re fired. And that’s not necessarily true either. The only people that are really prohibited from their retirement would be if they commit an act of treason. And so far, I don’t think no one’s been accused of that yet.

Tom Temin: We have not heard that one yet. They’re bloated, they’re corrupt, they’re inefficient, but they’re not treasonous, so far as we’ve heard so far.

Tammy Flanagan: Yeah, so far, that’s not the case. Let’s not start a new rumor. But with law enforcement officers, for example, some of those, like the FBI agents who are being fired, they are concerned about losing their liberalized benefits of law enforcement where they can retire at a younger age. They get a more generous calculation because they’ve been subject to mandatory separation, the dangers of the job and the physical nature of the job. And if they’re let go for cause misconduct or delinquency. And that could be the issue here. They’ll lose those enhanced benefits. They become just a regular FERS employee to get either a deferred retirement or the 1% formula. So those folks have reason to be a little bit concerned if their separation is considered for cause.

Tom Temin: Got it. So what about the $25,000 buyout that often comes with RIF?

Tammy Flanagan: We don’t have that anymore. Now we have the administrative pay until until your last day on the job, which I guess in a way is more generous than the $25,000 buyout by a long shot, because, you know, for some people, that means March 1st to September 30th, they’re getting their full salary and staying home or looking for another job or whatever it is that they want to do. So some people did find that this situation was a blessing in disguise. You know, they weren’t eligible to retire the day before, and all of a sudden they became eligible at a much younger age and could, you know, have time to look for their next career. So this did work out for many employees, but the majority of people I find have been very nervous and very unsettled and down to the point of losing sleep over what’s going to happen tomorrow.

Tom Temin: Yes. Right. And one other question on retirement, if you are younger than 50 plus 20, and suppose in three years or five years you come back to the federal government, does the clock begin ticking again towards that 20 years.

Tammy Flanagan: So yeah, it’s just like any other employee who resigns, you know, you have 10 or 15 years of service. You left federal service thinking the grass is greener on the other side. And then, you know, 5 or 10 years later, you come back, you pick up where you left off, you even get reinstatement of your sick leave that you had before you left, so, you can do that. And, you know, we have a lot of employees who will take a break for a year or 2 or 10 years, and then they come back to reinstate their benefits, their health insurance, you know, all that, and then they retire like they normally would have, but with less service.

Tom Temin: If you are not, just clarify at 50 with 20 years, do you have a partial retirement plan? I mean, there’s some annuity that’s part of that whatever service you have.

Tammy Flanagan: Couple of things with the FERS basic benefit, which is the government pension, as long as you have five years and no less than five years of civilian federal employment, you will have a deferred retirement even if you’re not eligible for an immediate benefit. And depending on how much service you have, you could either claim that when you’re 62 or maybe as early as 57, depending on whether you have ten years or just five years. So deferred benefits will still let you have something to show for what you’ve done. So that’s something. And then with the TSP, you know, nobody talks too much about the TSP these days because has been not the subject of conversation. But certainly that’s a valuable benefit. Many employees. I an employee I talked to yesterday with 2.5 million in his Thrift . That’s unusual. But he did a really good job of investing and saving in the Thrift. And that money is yours. I mean, even if you leave after three years of government service, whatever you put in, whatever agency matching or automatic contributions, that’s all your money. You don’t necessarily want to take it out right away if you’re 45 years old because you’re going to pay tax penalties, but that money can continue to grow until you stop working later in life from whatever job you might have.

Tom Temin: So you would still have a TSP account with log in and access literally as long as you want that.

Tammy Flanagan: That’s right. And that’s another worry people have. They’re like, well, can I keep my money in the Thrift if I’m let go or if I leave under these circumstances? And yeah, you can certainly keep your money there. The only minimum requirement is that you have $200 to keep your account open. The TSP a lot of people don’t know this, but that agency has maybe 250 employees that manage close to $1 trillion. And it’s because I think this is kind of what the government’s working towards as we speak. But it’s mostly contracted out. You know, the customer call centers contracted the administration of the funds or contracted out. So the TSP just basically administers those contracts and make sure everything is running smoothly and according to the law.

Tom Temin: Sure. And just on a completely different topic somehow related, I guess we are now learning from Social Security what the disposition of those entitled to Social Security benefits after passage of the Social Security Fairness Act, which took away the restrictions for people that had worked without putting into the system. What is the disposition of that now, and can people look forward to getting that money and is there backpay?

Tammy Flanagan: Right, yeah. So late last year, as we know, the windfall provision, the Government Pension Offset, which would drastically reduce a person who had a pension from work not covered by Social Security. So if that person earned outside of their federal career or outside of their teachers job. This affected not only federal employees, but also state workers. Anybody who worked in a job where they didn’t pay into FICA. But that was repealed. So now, under this new provision that got rid of the windfall and got rid of the Government Pension Offset, all these folks, there’s literally millions of people who are going to get more money from Social Security that they felt it was due to them when they first started collecting it. But finally that got repealed. And now the question was, well, when are we going to see the money? You know, show me the money. And Social Security just announced recently that this month they’re in the process now of administering that repeal of those provisions, thereby giving these folks their money back. Now it’s only going to go back to January of 2024. So if you applied for Social Security in 2015, well, that’s still under the windfall under the government pension offset. But now they’re going to automatically go back in and see that you were wept or GPOed and they’re going to take away that reduction going back to your January payment of last year. Now, here’s the thing people got to remember, though. Let’s say you never filed for benefits because you thought, why bother? Because it’s just going to be reduced or eliminated anyway. Well, if you never filed for benefits filed today because they’re only going to go back six months. So if you didn’t file before January of 2024, even though you might have been entitled to it or ineligible for it if you didn’t file for it, they’re only going to go back to the date you filed for the benefit.

Tom Temin: And by the way, they’re pretty slow these days. Social security, because I know someone for.

Tammy Flanagan: Some reason this is going full speed ahead. All of a sudden I think this is something they can do electronically with their right. Their system is so much more technologically advanced than OPM’s because it’s all automated. You know, when you’re dealing with not just 2.4 million people, but 60 million checks that go out every month? It’s a good thing they are.

Tom Temin: Yes, because if you’re a regular recipient, I know that personally from someone very close to me. 60 days so far and still no disposition of the standard ordinary retirement benefit claim.

Tammy Flanagan: Wow. That’s unusual because usually that’s pretty quick.

Tom Temin: Right? Usually it is. But everything’s up in the air these days.

Tammy Flanagan: Yeah. We can’t count on anything. I always tell people have six months of cash on hand, because you never know how long it’s going to be before that retirement check comes. And I just saw the statistics from January. And this isn’t even the tip of the iceberg, but OPM received 16,000 retirement applications in the month of January. That’s we always have a lot that month, but that’s extraordinarily high. And I think February, March, April is going to be just as bad.