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.”