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Does Voluntary Separation Target Older Workers?

August 10th, 2010 by Chris Henry

Kitsap County is considering a voluntary separation agreement for its employees as a way to help balance the 2011 budget. The city of Poulsbo recently approved such an agreement.

According to Poulsbo Mayor Becky Erickson, the program isn’t targeted only at employees close to retirement. But both the Kitsap County undersheriff and county clerk on Monday told the board of commissioners they would prefer to see workers close to retirement take advantage of the offer.

Maybe “targeted” is the wrong word, since both programs are strictly voluntary. Both, however, clearly offer employees who have been in their positions the longest the greatest incentive to leave.

Under Poulsbo’s agreement adopted by the council, employees who take the voluntary separation would receive varying payouts based on how long they worked for the city.

Employees who have been with the city for up to five years would receive two months’ pay, those with five to 10 years of service would receive 2 1/2 months of pay and those with more than 10 years’ service would receive three months’ pay.

Under a draft proposal, Kitsap County employees who have worked fewer than 10 years would receive 10 percent of their annual rate of pay up to $10,000; 10 through 15 years, 15 percent with a maximum of $12,000; 15 to 20 years, 20 percent with a maximum of $15,000; and 20 years or more, 25 percent with a maximum of $20,000.

I asked the county’s HR director Bert Furuta how such a program would be expected to affect morale. “OK,” he said. “As long as it’s fully voluntary.”

The county has already made layoffs in addition to leaving positions unfilled. Poulsbo has not yet had to make deep budget cuts, so I’m wondering if the voluntary separation agreement isn’t making folks around city hall just a tad nervous.

I’d appreciate hearing from anyone whose employer has offered a voluntary separation. How was it for those who accepted the agreement? How was it for those left behind?

And for those of you who haven’t had to chance to consider a voluntary separation offer, what would it take to get you out of your position?

Thank you. Chris Henry, reporter

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One Response to “Does Voluntary Separation Target Older Workers?”

  1. Marvin Says:

    From an employee standpoint the economics of these buyouts makes no sense whatsoever. Just do the math. The retirement system is such that you cannot retire before age 65, though you can get reduced social security at age 62. Having enough ‘credits’ in the retirement system is CRUCIAL to getting any decent benefits. A buyout would give you up to 3 months salary (Poulsbo), but you would forego those credits.

    If you are 60, you can retire no matter how many years you have in, though there is a severe penalty for not waiting until 65. If you have 25 years in, you can retire at 55, but once again, with a retirement about 1/3rd of what it would be at 65. If you have thirty years in the system, you can retire with much less of a penalty. It might be feasible, might not. A person who is vested could leave, then NOT draw retirement until age 65, with no penalty except that incurred by fewer credits in the system. That might be feasible for some people with another source of income and health insurance, e.g. retired military.

    If these voluntary separations are considered layoffs, then a year’s worth of unemployment can be thrown into the mix, but realize what is happening here. The cities and county are essentially taking employees off the employment rolls and placing them on welfare. It’s still all tax supported, just not from the same place.

    Any way you parse these offers, the incentives are not very large, amounting to two to three months of wages. I doubt seriously that many employees will take ‘advantage’ of such paltry offers.

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