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The federal government is offering deferred resignations to most of the federal workforce. The reason behind the federal government “deferred resignation program” is that with the new presidential administration taking office, the federal workforce is expected to undergo significant near-term changes. Because of these changes and uncertainty, the feeling among members of the administration is that some employees may want to leave federal service on terms that will provide them with sufficient time and economic security to plan for their future.
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With the exception of military personnel of the armed forces, the US Postal Service, federal job positions related to immigration enforcement and national security, and any other positions specifically excluded by a federal agency, the deferred resignation program is available to all full-time federal permanent employees.
Each eligible employee should have recently received an email from their agency offering the employee a deferred resignation. The deferred resignation program provides employees with the option to submit a deferred resignation letter with the resignation effective no later than September 30, 2025. Those employees who formally accept the deferred resignation offer will be put on administrative leave and get paid their full salary between now and the end of the deferred resignation period, September 30,2025, unless the employee has elected an earlier resignation date.
Acceptance of the deferred resignation offer exempts those employees from mandatory return-to-office requirements
An employee has no obligation to respond to the email. Not responding to the email means that the employee will continue in his or her current job position. However, that also means that the employee who until now was teleworking (at least 3 to 4 days a week) will have to return to the office full-time. Also, an employee who does not respond to the deferred resignation offer could be fired, furloughed or reassigned in the future. Accepting deferred resignation is the employee’s sole discretion and completely voluntary.
The deadline for formally accepting a deferred resignation is February 6, 2025.
Employee benefits for employees who accept deferred resignation
Those employees who accept the deferred resignation offer will continue to have their benefits. These benefits include making contributions to the TSP, accruing annual and sick leave hours, accruing retirement benefits, and federal employee health, dental, vision, life and long-term care insurance benefits. At the end of the deferred resignation period (September 30,2025 or earlier if the employee has elected another an earlier resignation date) all of these benefits will cease.
Options for employees who become eligible for early/normal retirement during the deferred resignation period
Those employees who become eligible for early retirement, including a Voluntary Early Retirement Authority (VERA, with no buyout) and Voluntary Separation Incentive Program (VSIP, with a buyout), or an immediate retirement during the deferred resignation period, and who decide to retire before their final resignation date, then their retirement will override their deferred resignation offer acceptance.
Upon retiring, these employees will:
1. Start receiving their monthly CSRS or FERS annuity.
2. Keep their FEHB program health benefit – assuming that they were enrolled in the FEHB program for the five-year period ending on the effective date of their retirement.
3. Keep their dental and vision insurance benefits.
4. Keep their FEGLI life insurance benefits. This assumes that they were enrolled in the FEGLI program for the five-year period ending on the day ending on the effective date of their retirement.
5. Keep their FLTCIP long-term care insurance.
6. Receive a lump-sum payment for all unused annual leave hours (any unused sick leave hours the retiring employee had on their will be converted to months and days of service for the purpose of calculating their CSRS or FERS annuity).
What are the retirement options and benefits for employees who accept deferred resignation and who are not eligible for immediate retirement?
A federal employee who leaves federal service before he or she is eligible to retire has one option when it comes to receiving their federal retirement benefits. This option is called “deferred retirement” in which the employee will receive their CSRS or FERS annuity starting at one of the three ages, depending on how many years of service the employee has when he or she leaves federal service. The “deferred retirement” option is discussed in the recent column entitled “FERS Deferred Retirement Options”.
In order to utilize this option, the departing employee cannot request a refund of their CSRS or FERS retirement contributions that they made via payroll deduction during their years in federal service. The procedures associated with deferred retirement are somewhat complex. With a deferred retirement, an employee permanently loses their FEHB program, FEDVIP, and FEGLI program insurance benefits. In OPM’s memo explaining the deferred resignation program, nothing is discussed about the deferred retirement option. OPM and the administration have left it up to the employee to contact their Personnel or Human Resources Office for answers as to how resignation from federal service affects any future retirement benefits including their CSRS or FERS annuity, TSP and insurance benefits.
The question then becomes: Are federal Personnel and Human Resource Offices prepared to answer the onslaught of questions coming from employees regarding the deferred resignation program in less than a week’s time? Probably not.
What should federal employees consider?
A consensus has emerged among federal employee unions and other federal employee associations that employees should not take the deferred resignation offer because:
(1) Questionable legal authority to offer a “deferred resignation” and how the offer will be funded;
(2) A lack of guarantee that an employee’s resignation will be accepted by the current administration and an employee’s pay and benefits will continue; and
(3) Nothing in the deferred resignation program documentation purports to prohibit the termination/firing of an employee in the near future (within the next eight months) who accepts the deferred resignation offer.
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While the OPM memo discussing the resignation offer states that employees will maintain their compensation and insurance benefits until the effective date of the employee’s resignation, the memo does not explicitly state that employees are shielded from layoffs or other adverse actions.
In short, the OPM memo discussing the deferred resignation offer lacks clarity about the terms of the offer, thereby making the offer unreliable. Moreover, there is the question of whether OPM has the legal authority to use “deferred resignation” as a means of putting employees on extended administrative leave. No doubt that the “deferred resignation” offer will be tested in the courts.
In the meantime, employees who are not eligible to retire immediately are strongly advised by some to do nothing at this time, thereby not accepting the deferred resignation offer. On the other hand, those employees who are eligible for immediate retirement within the next eight months might consider retiring with full benefits.
