The Postal Service's Early-Retirement Snafu

Better communication, not additional incentives, is all the Postal Service needs to entice more employees to retire early, a union leader says.

The USPS is providing incomplete benefit estimates to eligible employees, according to Don Cheney, a long-time leader of the Auburn, Washington APWU local who has worked extensively on early-retirement issues for the past six years. In some cases, USPS is providing eligible employees with early-retirement estimates that are at least $1,000 per month too low, says Cheney, who has written several articles about USPS retirement programs for PostalReporter.com

USPS is also failing to counter the common misconception that most eligible employees would be penalized if they take early retirement, according to Cheney.

Noting the importance of early retirements to USPS’s downsizing efforts, Dead Tree Edition reported last week that only 3% of eligible employees have accepted the latest offer because they want to avoid a penalty. But the penalty applies only to employees in the pre-1983 retirement plan known as CSRS, which is less than 20% of the workforce, rather than to the newer FERS plan, Cheney says.

“The U.S. Postal Service failed to promote the unique advantages of VERA [voluntary early retirement] to FERS employees,” Cheney says. “FERS was designed to be a flexible and portable retirement system.”

For example, USPS is not telling FERS employees about the annuity supplement they can receive from age 56 to 62, he says. That normally requires 30 years of service, but the early-retirement program reduces that to 20 years. And because the Postal Service has skimped on retirement counseling, most employees don’t realize that money in their Thrift Savings Plan accounts can be “withdrawn as an annuity at any age without an early withdrawal penalty.”

Postal workers who try to get more information about VERA benefits face a Catch-22 situation -- a USPS notice that for VERA it “cannot verify whether employees are on the eligibility listing or discuss individual questions/concerns until application for early retirement is submitted and approved.”

“Once an application is approved, it is past the deadline to withdraw!” Cheney told Dead Tree Edition. “Who is going to risk applying for VERA under these circumstances without knowing in advance what their FERS annuity supplement is going to be, what deposit must be made for military service after 1956, their eligibility to keep their insurance benefits, etc?”

When an early-retirement package was offered to APWU members six years ago, postal workers came to Cheney for help because he was president of the Auburn local. He remembers one woman in particular.

“People in personnel could not answer her questions. So I read everything I could about FERS. Like FERS-eligibles today, she could not get from USPS an estimate of her FERS annuity supplement, although she was . . . eligible for it. Six years later, FERS-eligibles still get the run-around when they ask about their FERS annuity supplement.”

Recent Cheney articles about early retirement include ones countering the notion of a penalty for early retirement and another claiming that USPS lacks an automated system for calculating VERA benefits.

It's not every day that a union leader says, basically, "You don't need to give us more money, just tell us what we're due."

The atrociously low response to early-retirement offers is evidence enough that the Postal Service needs to rethink its efforts. If even half of what Cheney says is true, the Postal Service is missing out on a seemingly easy, humane, and cost-effective way to carry out a much-needed thinning of its ranks.

See the follow-up article "What the Postal Service Left Out of the Early-Retirement Deal"
about the enhanced early-retirement package the Postal Service announced for some employees in late August of 2009.