Wednesday, April 7, 2010

Should Voluntary Early Retirement Become the New Normal?

The Postal Reporter News Blog reported that the Postal Service is quietly announcing the introduction of a voluntary early retirement program in selected cities.  Voluntary early retirement programs allow employees to retire early but do not offer them a financial incentive to do so.  This program requires eligible employees to decide between now and May 21, 2010 with their retirement date occurring in June 2010.

Voluntary early retirement is the least expense method that the Postal Service has to convince excess employees to leave voluntarily and the least attractive method for employees who might consider retiring.    Because of the minimal cost of voluntary early retirement programs, it would make sense for the Postal Service to offer these programs every Spring prior to slower summer mailing season when demand for employees are lower and many of its processing consolidation actions take place.  

Early retirement can have significant financial penalties in the form of reduced pension and/or social security payments which is why incentives are often needed to get significant number of employees to retiree early.   However, even if the program only convinces employees thinking about retirement to retire 6-months or a year earlier, it will have the effect of reducing employment costs by moving normal attrition up by a few months. 

If Postal Reporter News is correct, the Postal Service's decision to offer voluntary early retirement only in selected cities, suggests that the program may exist to give employees that work in offices that are losing processing operations to other facilities or experiencing significant declines in volume the option to retire rather than accept reassignment at a facility that would require a long commute.   As there are no incentives, this year's voluntary early retirement program will likely only attract employees that are at or very close to normal retirement age or those eligible employees who use the next few months to find another private-sector job to supplement their CSRS or FERS retirement income. 

In cities where processing operations are being consolidated or declining volumes have created stand-by employees, the Postal Service should have within its workforce management arsenal the ability to offer incentives to employees only in those cities, as well as those cities where the processing operation is moving to.   Transferring employees to new facilities is not cost free as there are additional training costs to deal with each employee bumped by a transfer.  These costs, added to the wages that do not have to be paid, create a justification for the Postal Service to offer some early retirement incentive, although it is not clear if its additional costs are above or below the $15,000 that it offered last year to encourage retirement.   Postal unions may want to consider doing the analysis to figure out what the benefit is to the Postal Service of convincing someone to retire early.   The union should use this information to negotiate an addendum to their existing contracts to include a streamlined process for offering early retirement with incentives based on a value that makes financial sense for the Postal Service.  This would give employees some protection from reduced retirement benefits that voluntary early retirement does not offer and give the Postal Service an early retirement program that more closely meets its needs than the voluntary one that it now plans to use.  

Even without incentives, postal employees who are eligible for voluntary early retirement should take the time to see if early retirement from the Postal Service makes sense for them.  Potential early retirees could use the retirement income calculators available on the U.S. Geological Survey website to determine what their income would be after retirement. [The actual numbers should come from the Postal Service.]   This new program is coming at a time when most economists expect to see significant increases in available private-sector jobs which should make a job search now a lot easier than when the last voluntary early retirement program was offered.   With two months to look for a new job, postal employees eligible for the voluntary employment program have sufficient time to find new employment if they take an aggressive approach to seeking a new job.

Early retirees from the Postal Service have an advantage in seeking new employment as compared to non-retirees as their retiree health care and other benefits allow them to choose among a broader range of employment opportunities that include jobs that do not traditionally offer those benefits.   In addition, employees seeking to shift careers have a base income to cover expenses during while they are taking classes or getting necessary licenses (i.e. real estate, insurance, investment sales, etc.) as well as the health insurance that many changing careers do not have. 

Early retirees should not think that they are too old for school as demand for a number of professions that require two years or less of training is substantial.   Even in the current recession, individuals with two years of post-high school education had relatively low unemployment rates even as those with a high school education or less had trouble finding any work at all. 

Employees that learn that they are eligible for voluntary early retirement and want to consider looking for new jobs while they are considering the offer will find that the following books by Donald Asher would be helpful in finding a new job in the shortest amount of time.

The Overnight Resume, 3rd edition  - A new book that includes good advice for writing a resume for a career change including how to write a resume that is submitted and read electronically.

The Overnight Resume, 2004 edition - This is the older edition that can be bought on Amazon for less than $5 including delivery charge and is an absolute bargain.

The Overnight Job Change Strategy - While this book was written  17 years ago, the approach is still sound.   It explains clearly why personal contacts is the best way to find a private sector job.  IF you add e-mail to telephone contacts and substitute, and for want-adsthen the ideas are up to date.  At under $5 used on Amazon including shipping, it is a bargain.  (Used books are often library copies.)

The Foolproof Job Search Workbook -  This book is 15 years old but covers Donald Asher's approach to finding jobs.   Again add e-mail and substitute, and for want-ads and it the approach is up to date. At under $5 used on Amazon including shipping, it is a bargain. (Used books are often library copies.)

How to Get Any Job -  written for college students and those under 30 (read without mortgages and children) who are looking for a job or a career change.  Provides some insight into the impact of the web on job-seeking and explains why the web makes job searching harder not easier as it make it too easy for job seekers to apply.  Asher's approach here is similar to what he explains in his earlier books but with a focus on younger job-seekers.   It is worth reading to identify what has changed since his prior books were published.

Cracking the Hidden Job Market - this book will not be published until the fall of 2010 but is worth pre-ordering if you are considering a job change in the next year.  His current presentations to college students and alumni-associations summarizes the key points that will be included in this book.   It follows  the same approach used in his older books, The Overnight Job Change Strategy and The Foolproof Job Search Workbook but reflects the changes in technology since the mid 1990's and how they affect the process required to get an interview.


Anonymous said...

The whole point of retirement is the fact you don't enjoy life. If you retire to get a different job...what's the point going from a 60 thousand dollar a year job to 20 thousand..stay where you're at until you can retire and enjoy life. I'll have 30 years with the government in 21 months...without an incentive to offset the falling economy I'm going to stay right where I'm at!!

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