Army Materiel Command:

Factors Influencing Retirement Decisions During 1990 Reduction in Force

NSIAD-93-28BR: Published: Dec 31, 1992. Publicly Released: Jan 29, 1993.

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GAO examined early retirements that Army Materiel Command (AMC) civilian personnel took during a 1990 reduction-in-force action, focusing on: (1) how the early retirements helped to avoid involuntary separations; (2) the major differences among personnel who took early retirement and those who did not; and (3) retirement-eligible employees' reactions to hypothetical retirement incentives.

GAO found that: (1) a combination of events, including the Persian Gulf War, caused AMC to curtail its original plans to reduce its work force through 4,144 involuntary separations, 7,771 demotions, and 1,254 voluntary early retirements; (2) by October 1990, AMC had reduced its work force through 940 early retirements, 181 involuntary separations, and 1,882 attrition actions such as voluntary separation, standard retirement, and death; (3) although 11 percent of the AMC work force was eligible for early retirement, the 2 percent that chose to do so would have provided little assistance in avoiding the originally planned large number of involuntary separations; (4) financial security, funds expected from the sale of a home, retirement law expectations, health concerns, family member pressure, and job satisfaction were the most influential factors in employees' decisions to retire; (5) such external factors as the economic recession, the Persian Gulf War buildup, and speculation about more favorable retirement benefits may have discouraged some employees from taking early retirement; (6) incentives that could have encouraged eligible employees to take early retirement included decreased annuity penalties for those retiring before age 55, salary bonuses, and pay for unused sick leave; and (7) those employees who took early retirement stated that they would not have done so if an alternative annuity option had been eliminated or if cost-of-living adjustments had been delayed.

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