Retirement Security:

S. 2197, Optional Early Retirement Program for Federal Employees

Published: May 15, 1986. Publicly Released: May 15, 1986.

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Testimony was given concerning early retirement for federal employees. GAO noted that S. 2197, a bill to establish temporary early retirement, would: (1) allow employees of a certain age with a specific number of service years to retire on immediate annuities; (2) reduce benefits by 2 percent for each year under age 55; (3) be available for a 6-month period ending December 31, 1986; (4) apply to all federal retirement systems; (5) restrict eligibility for employees in hard-to-fill positions; and (6) not allow agencies to replace early retiring employees until October 1991 but would allow internal promotions to fill vacant positions. GAO also noted that: (1) the bill would not be limited to federal agencies that are implementing employment reductions; (2) over 700,000 employees would be eligible; (3) Congress is considering changing the taxes on federal pensions, which might act as an additional incentive for employees to take advantage of the early retirement plan; (4) the plan would minimize the reductions in force (RIF) that some agencies are experiencing and would, therefore, save jobs for recently hired employees; (5) more promotion opportunities would exist for younger employees; and (6) the government could save billions of dollars if the retiring employees are not replaced. GAO found that: (1) if many employees retire without replacements, it could adversely affect agencies' programs; (2) training costs for the large number of new employees would increase; and (3) the bill applies to anyone wishing early retirement and could result in mass retirements in some agencies. GAO held that: (1) Congress should waive, for a limited period, the RIF requirement for approval of early retirements so that selected groups of employees could seek early retirement; and (2) agencies should show that early retirements would not adversely affect their programs and would be cost-efficient for the government.

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