Tightening Eligibility Standards Could Cut Involuntary Retirement Costs by Millions of Dollars

GAO reported on the eligibility standards governing the involuntary retirement program which was established to provide immediate annuities to employees of long service who are involuntarily separated through no fault of their own. Age, service requirements, and benefits are established in law; however, the Office of Personnel Management (OPM), as administrator of the civil service requirement system, is responsible for determining what constitutes an involuntary separation. Originally, involuntary retirements were permitted only for employees subject to reduction in force. However, over the years, the OPM implementing policy and instructions have been liberalized. Under current policy, an employee becomes eligible for involuntary retirement when he is merely notified that his position is to be abolished.

GAO believes that OPM needs to tighten the eligibility criteria for early retirements to avoid unwarranted separations and reduce costs. Hundreds of unwarranted involuntary retirements are occurring because current OPM policy permits employees to decline reasonable offers of other positions and retire early. The involuntary retirement program needs to be restructured to prohibit early retirements when an agency extends to the employee, whose position is to be abolished, a reasonable offer of another position. GAO concluded that restructuring the program would serve a twofold purpose by retaining experienced employees who are retiring prematurely and by reducing outlays from the civil service retirement fund.

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