Sunday, October 14, 2012

Confusion, Misinformation Could Hinder USPS's Early-Retirement Push

Confusion reigns among the 115,000 postal workers who received notices in the past few days about a buyout offer. The confusion could limit the number of APWU-represented career employees who accept the U.S. Postal Service’s $15,000 incentive to retire or quit.

”The Postal Service's voluntary early retirement annuity estimates are as bad as before,” says Don Cheney, a long-time critic of the U.S. Postal Service’s communications with its employees regarding retirement benefits.

As usual, the errors tend to understate what employees’ benefits will be upon retirement, says Cheney, an APWU member who for the last nine years has been advising postal workers and writing about errors in retirement estimates the U.S. Postal Service provides its employees.

(See How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways, Why Does USPS Make Retiring Difficult When It Has So Many Excess Employees?, and The Postal Service's Early-Retirement Snafu for more on how the Postal Service’s poor communications have undercut its previous efforts to downsize by offering early-retirement incentives.)

“I am receiving numerous inquiries about the retirement incentive,” former APWU president Bill Burrus wrote a few days ago. He urged the union’s current leadership to designate a knowledgeable officer or staff member to help members who have questions about the early-out incentive.

“This is an important time in their lives and they are in need of timely answers to their questions,” Burrus wrote. And they won’t get those answers from the Postal Service. As Cheney notes, USPS offers no retirement counseling to employees taking early retirement until after the decision to retire is irrevocable, which postal unions claim is contrary to federal regulations (not to mention common sense).

Referring to a recent estimate one employee received, Cheney says, “This 51-year-old individual in the FERS retirement system was not told whether they are eligible for the SS [Social Security] annuity supplement, how much it would be or when it would start.”  He adds, “If VERA [Voluntary Early Retirement] eligibles in FERS knew they would get about $800/month more in their FERS annuities at Minimum Retirement Age (MRA), more would take it,” he adds.

"There is still the misconception among FERS employees of an age penalty in a Voluntary Early Retirement,” Cheney says. “The opposite is true in most cases.”

Also tending to discourage early retirements is the mistaken belief that the IRS charges a 10% early-withdrawal penalty for money taken out of a Thrift Savings Plan by early retirees, he says.

 “Congress made an exception for federal and postal employees that retire or separate at age 55 or later. For them, there is no 10% IRS early withdrawal penalty,” Cheney says. “Younger retirees can avoid the IRS penalty by withdrawing their money as an annuity.”

Slow processing of retirees’ paperwork and payments has also tended to discourage early retirements, but this time around at least some postal workers may benefit from the backlogs at the Office of Personnel Management (OPM). The 21st Century Postal Worker, a web site serving APWU members, passes along this message:

“For all that put their retirement paperwork in prior to the [incentive] announcement, call OPM ASAP and ask if your paperwork has been processed. If it has not been processed (there is a 6-8 week wait), the effective date of retirement can be changed to reflect the incentive memo. Do NOT DELAY! Do not hang up until you actually reach a representative from OPM. Do NOT leave a call back. Stay on the phone until you make sure the paperwork is reprocessed and you fax in a copy to change the date of retirement.”

19 comments:

Anonymous said...

Also, many jobs posted as NTFT- Non Traditional jobs and then reposted as Traditional when not bid upon,were put in system as NTFT, causing the VER booklets to give APWU represented members a Feb. 2013 ending date for retirement.

All Your TSP Belong To Us ! said...

Criminal that an employee wanting to retire has to jump through these confusing hoops just to do so.

Anonymous said...

I have been retired for a year and a half and I got a buy out notice. I wonder if I can get the $15000 they are offering? It took me 9 months to get my first dime of retirement money, so take notice how bad the system is messed up.

Anonymous said...

very good, informative article that i believe i read a very similar piece about 3 or 4 years ago. my point is this, the u s postal service management is a bunch of incompetent bureaucrats that can't seem to get anything right even years after the problems arise and management is informed. usps managament is not fit to run a lemonade stand much less a $70 billion dollar company. hence, the major problem with the usps that hasn't been discussed by congress is a total elimination of the current incompetent postal managers and their replacement with someone with 'a clue.'

EX BMEU Tech Olympia said...

I retired on April 22nd 2012 and as of yet have not received my full retirement pay only about 75% of the Postal Services amount and no Supplimenmt until the Postal Service amount is finalized. Frustraiting and expensive to say the least. EX BMEU Tech Olympia WA

Anonymous said...

If you are under the Fers system you are not elegible for the FERS Supplement until you have reached your minimum retirement age.

Anonymous said...

i recieved my retirement package probably the 5th one. and every time i say no to early retirement. this time no because i would make 20,000 dollars less per year than if i would have stayed and then offering 10 one year and then 5 the next does not even make up for the 20 grand in one year if i left. plus the almost 1 year before you get paid keeps me working i am a single person without enough cash to get me through that long. go if you can i say but be extremely ready. once gone there is no coming back.

Anonymous said...

Some FERS employees would go if they didn't lose 50% of their sick leave. If they want us to go, then give us all our sick leave. The only ones leaving are the ones that took off every other week and used their sick leave.

Again the USPS and the Union screwing the employees that did the right thing save our sick (or thought we did).

Anonymous said...

If you are getting close to retirement there are all kinds of retirement websites, on-line retirement calculators, etc. that you should be reviewing before making your decision. If you are relying on a $15,000 buyout as part of your decision you are probably not financially ready to retire.

Don Cheney said...

OPM typically pays a postal retiree about 75% of their estimated basic annuity until it is finalized. They pay nothing on the FERS SS annuity supplement (even if eligible) until the annuity is finalized. You are paid a lump sum for your earned annual leave with your last paycheck (see ELM 512.73 for the rule). Beginning a month after retirement you have access to your TSP monies, either as a lump sum, annuity or both, unless you have an outstanding loan. If that is the case, then you must tell them it is okay to declare it as a withdrawal. There is no IRS penalty if you are age 55 or older when you retire. If you are under age 55, you can avoid the IRS penalty by taking an annuity. If eligble for the VER incentive, on May 24, 2012 you will get a $10,000 lump sum payment minus taxes. That should keep you going for a while. It is criminal that the HRSSC contractor, to boost their profit margin, won't provide any retirement counseling to VER eligibles before the date of irrevocability. They ignore Chapter 40 of the CSRS and FERS Handbook for Personnel and Payroll Offices.

Anonymous said...

to 'don cheney'..
can you explain your post that the hrssc
contractor 'increases their profit' by not providing consultation before retiree must commit to going? i don't doubt it, i just don't understand how the contractor makes more money this way. thanks.

Anonymous said...

i have reached MRA and will have 29 years by 1/31/13. am i eligible for the supplemental s.s. and where can i find this info?

D. Eadward Tree said...

To Anonymous (October 16, 2012 10:44 AM): I believe Mr. Cheney was referring to the fact that the contractor is saving itself money by not hiring people to do pre-retirement counseling. My question is whether the contractor is ripping off the Postal Service or if that's the deal USPS agreed to. In either case, it seems penny wise and pound foolish.

RJ said...

I retired from the Postal Circus on the VER for postmasters in July. It annoyed me that after giving them 29 years of my life, the best they can do is a telecon with 20 other people. Retirement info from them is spotty at best. Call the help line three times for three different answers. Thank God I'm out.

Anonymous said...

4I had retirement papers in originally for july 31 but extended it for 6 months to Jan 31,2013 waiting on incentive. Now although my papers are in and have been for 6 months, they will not let me change the date of my retirement to an earlier time, like Dec 1. Normally they said I could, but with the incentive deal, they will not allow me to. Seems that I would be one less to worry about on Jan.31. I have the age and years to retire, so I am not going on early out. Anyone else had this problem? Sounds wrong to me.

Anonymous said...

I had retirement papers in for July 31 but call and changed it to Jan 31 waiting on an incentive. My papers have been in since May. They will not let me change my retirement date to an earlier time, so I do not understand why I cannot choose an earlier date. OPM cannot give an explanation except to say that is the way it is. Anyone else had this problem?

Anonymous said...

to 'anonymous oct 16,2012 2:37pm,'

i think you know the answer to your own question. you can go earlier but you don't get the
incentive. i assume that is because you had already picked the date of january 31, 2013. so what is the big deal? you said yourself you changed the date to jan, 31, 2013 to get the incentive. work the two months from dec to the end of january and say goodbye. i suppose
if you call in sick most of these 2 months you will be long gone before the post office is able to do anything about poor attendance anyway. have a nice retirement.

Anonymous said...

What if you choose a monthly
payment is there a penalty.

Anonymous said...

Took early retirement Aug 31 2010. Was 56 then with 20 years. Was charged 10% penalty by IRS for taken full payment of TSP. Was this incorrect on IRS and can I get the 10% back??????