The U.S. Postal Service said yesterday that The Office of Personnel Management has granted it the authority to offer early retirement through Sept. 30, 2001.
As a result, the agency next month will make early retirement offers to employees at its headquarters and at 10 area offices as part of an effort to cut 700 administrative jobs.
This is the first time the USPS has received the authority to offer early retirement.
The postal service announced the reduction of positions earlier this year as part of an effort to reduce expenses by $1 billion annually over the next four years. Increased labor costs, declines in First-Class postage revenue and new competitive pressures, including e-mail and the Internet, have made it difficult for the post office to break even.
The agency said it also hopes that providing early retirement to employees will help it avert layoffs in fiscal 2001.
USPS vice presidents currently are studying which job cuts they need to make, said Patrick R. Donahoe, senior vice president for human resources at USPS. “They are looking at the numbers and putting together proposals to come back to me on how they would like to apply VERA [Voluntary Early Retirement Authority] and … what the potential outcome will be,” he said.
The first “window” for early retirement offers will open in November and close in December, according to preliminary plans. If the USPS falls short of its target, another round could be offered after Jan. 1, 2001.
The majority of postal employees will not qualify for early retirement. The authority, as approved by the OPM, will be limited to nonunion employees at headquarters, area offices and field units who perform a variety of functions. The number of employees eligible for early retirement and the number of those likely to accept has not been determined.
Normally, an employee is eligible to retire from the government after 30 years of service and is age 55; after 20 years of service and is age 60; or after at least five years of service and is age 62.
During periods of downsizing or restructuring, OPM may allow agencies to temporarily lower the age and service requirements to encourage voluntary departures. Under early-out authority, an employee may retire with 20 years of service at age 50 or with 25 years of service, regardless of age. In addition, under early-out authority, employees can receive an annuity years before they would otherwise be eligible.
However, employees will be offered no financial incentive to leave early and their retirement annuities will be reduced by 2 percent for every year they are under age 55, which is the normal retirement age.
But, Donahoe said he believes many employees will be interested in retiring early, despite decreased annuities and lack of financial incentive, largely because of the strong national economy.
“The job market's good,” said Donahoe. “If a person at 50 or 51 years old leaves, there's a pretty reasonable chance they'd be able to start a new career if they wanted to do that,” he said.
Donahoe said the USPS will send out notices and hold planning sessions to help interested employees make their decision about early retirement.
