Is the VSIP Increase a New Incentive to Retire Early?

Across the Department of Defense (DoD), retirement has been an issue that was continuously trying to be solved with an outdated solution. DoD employee retirement options have remained unchanged since 1993. “The $25,000 has been in place for a very long time and it has not really kept up with inflation, so for people who were on the fence about whether or not to retire, the $25,000 was just not enough of an incentive for people to retire,” said Sheila McCready, Defense consultant for the American Federation of Government Employees.

According to Federal News Radio, last year Congress approved a pilot program that increased Voluntary Separation Incentive Pay (VSIP) for DoD civilian workers to $40,000 for one year. For government employees, this has made a huge impact on early retirement decisions. With the old amount being such a low number, it put the DoD in a complicated situation where not many people wanted to retire. Thus, more efforts have been made to continue this trend, as it benefits both the Federal employees and the government.  According to the article, “The House Armed Services Committee now wants to extend that incentive to 2021 in the 2018 defense authorization bill. Committee aides said the goal is to give DoD more options to control the size of its workforce.”

The VSIP serves as an important tool for the government as the DoD has used “VSIPs in the past to mold the Defense workforce. The department offers early retirement to people that are not needed anymore or are in less demand, so the DoD can hire new employees for more needed jobs.” With the DoD in the middle of a headquarters staff cut, this gives them better flexibility with their employees. Reducing costs along with helping aid people in early retirement benefits both parties.

As an employee-owned company, St. Michael’s offers a distinctive retirement benefit to our staff. We hire many retired civil servants that eventually become employee-employers. We look forward to maintaining a strong relationship with the DoD community by providing financial management services that help serve the DoD.