ProFeds Founder, Chris Kowalik, contrasts the Reduction in Force with the recent “Deferred Resignation” offer to help employees understand the stark difference between these two actions.
Key takeaways:
- Voluntary vs. Involuntary action
- Expected differences between the two downsizing actions
- Why some employees chose the deferred resignation instead of waiting for the RIF
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- Link to full RIF training series: FedImpact.com/RIF-training-series
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Transcript of this episode coming soon:
Originally released on 3/7/2025
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The deferred resignation offer sure did introduce a lot of chaos and craziness into the federal workforce just days after the Trump administration took office. That uncertainty and confusion led to a lot of skepticism about the program. And today, many people look back with a tinge of regret about not taking the offer.
Comparing a “Reduction in Force” and the “Deferred Resignation”
In hindsight, they realized that that was simply round one. Round two is on the horizon, and it is riddled with lots of other acronyms that we’re going to unpack throughout this video series. But I want to talk about the differences and some of those similarities that this program has, the deferred resignation versus the reduction in force.
Hi, I am Chris Kowalik of ProFeds, and welcome to the FedImpact Podcast where we offer candid insights on your federal retirement. This particular episode is all about comparing the deferred resignation offer to the reduction in force tools that the government has, all those downsizing tools that the government’s going to have at their disposal to be able to utilize in the coming months.
Deferred Resignation
So what’s changed? What’s the difference between these and what should we be looking for? Well, with the deferred resignation, this is where they put a September 30th resignation date. And the idea was, by the end of February, those federal employees would no longer be reporting to work, whether in person or otherwise.
And for the next eight months or so, they would still be on the payroll, drawing a regular check, but not working during that time. And so, of course, the extra pay that was coming along with that, presumably employees were going out and perhaps getting another job, where all that pay was going to continue turned out to be a nice perk for a lot of people who otherwise realized that they were likely not going to survive the rest of the RIF process or would have been unlikely to have made it through.
With the deferred resignation process, this was a completely voluntary choice. When it was first released, it was called the delayed resignation, which I loved because it wasn’t going to be confused with anything else. Then they came out a few days later and they did two really important things. They changed the name of it to deferred resignation, which caused all sorts of problems because deferred retirement is very different.
It has lots of different rules where you’re losing benefits and all of that, which confused everybody. But what it also did was it added in an early out component where it relaxed the eligibility rules for employees who were considering this but otherwise would not be fully eligible to go.
We have a whole video on VERA, and I encourage you to listen to that to see the nitty-gritty. But the idea with this deferred resignation is that you set your resignation date for 9/30, you voluntarily leave.
You maybe even take that VERA that early out to be able to leave a little sooner than you normally would, and you go. That was the plan. And whether we liked the packaging of all of this or not, it actually was a pretty good plan for a lot of people. Just depends on your age and the number of service years that you had.
And we did plenty of training on all of that. We did a nine-part series for that particular offer. But it inspired this particular series because there’s so much complexity that we really have to get to the bottom of.
Reduction in Force
I want to talk specifically about the RIF. So we have the reduction in force that has some different components. We have the voluntary early retirement, which is an early out. We have the voluntary separation incentive, which is that cash buyout. And then we have the discontinued service retirement, which is just like an early out, but it’s involuntary. So we have a mixture between voluntary and involuntary actions.
Most of the time, the agencies are going to call out to all of their people who are in this competitive area, this area that needs to be reduced. And they’re going to look for volunteers. They’re going to look for people who are willing to go out under an early out or a VSIP.
And they’re going to try to get those people out the door before they have to move to the involuntary portion of a RIF. So, of course, under this new era of the RIF, aside from the deferred resignation piece that was in play at the early part of February, there is no don’t go to work until September 30th component with any of these RIF offers.
These are normal RIF procedures that had been in play for a long, long time in the government as opposed to that deferred resignation, which was really new and chaotic for everybody.
We essentially have a few categories of employees. Those who would be eligible for an immediate pension. Those who would be eligible for a deferred pension. That’s a pension that’s still payable to you but many years down the road is when it starts.
And then the category of employees who have no pension at all. They haven’t worked long enough to be able to get to that point. Comparing the RIF tools with what we saw at the deferred resignation, they’re two wildly different programs.
Again, a few similarities that we see in there, but I want you to put away the deferred resignation rules and vocabulary that we became accustomed to during that span of time, that very short window that we had to help federal employees figure out what they were supposed to do. Just put that away and think about these normal rules with a RIF.
And that’s what this video series is designed for, is to help really dig into each of those different ways that employees can be compensated on their way out the door. Some voluntary, some involuntary, some with a pension, some without but these videos will help get to the bottom of each of those areas.
Get Connected & Next Steps
I hope that whichever category you might find yourself in, that you’re doing your best to get your numbers. We want to be a good partner with you in that.
If there’s something that we can do to help with respect to training, we have in-person workshops, we have webinar replays to be able to watch, of course, our podcast that you’re able to go back and listen to. I hope that you will take the time to be able to do that, to get yourself spun up on what is ahead for you.
If you want to stay more closely connected and be able to get regular updates from us, you can always pull out that phone and text the word podcast to 224-444-6144, and we will get that to you right away. So for now, go out and watch those other videos and make sure that you are properly spun up on the RIF and what it’s going to mean for you.
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