What You Need to Know About Discontinued Service Retirement

The sole type of federal retirement that does not fall into the ‘voluntary’ category is Discontinued Service Retirement or DSR. An employee can be eligible for DSR if, against their will, they are separated for reasons other than “misconduct or delinquency.” They must also meet the age and length of service requirements. Those requirements are either:

Age fifty with twenty years of service

or

Any age with twenty-five years of service.

In either of these cases, a minimum of five of the years of service are required to be creditable civilian service.

Ultimately, the Office of Personnel Management makes the determination as to whether the separation is involuntary. However, the following actions are usually considered to be involuntary:

-Reduction-in-force (RIF)
-Abolishment of position
-Lack of funds
-Expiration of incumbent’s term of office
-Unacceptable performance (unless due to employee’s misconduct).
-Transfer of function outside the commuting area
-Reassignment outside the commuting area when there is no mobility agreement.
-Failure to continue to meet the qualification requirements of the position. This is in the event of non-disciplinary separation, and if the action is initiated by the agency.
-Separation from failure to qualify during probation due to performance (not misconduct).
-Separation of a National Guard technician as a result of loss of the military membership or the rank that is required to hold the National Guard position.
-Removal from the Senior Executive Service for less than completely successful performance (under title 5, U.S.C., Ch. 43, Subchapter II).

It is important to note the differences between separation due to unacceptable job performance and separation due to misconduct. A worker who “can’t do” may be eligible for DSR, while a worker who “won’t do” will not be.

The employee’s separation can meet the criteria previously mentioned above, and the employee will not be eligible for DSR if they refuse a reasonable offer of a position.

An offer is reasonable if it is:

-In the same agency
-The same commuting area
-The same tenure group
-Within two grades of the previous position he employee was in.

Much like early retirement, DSR provides for a two percent per year reduction in a CSRS retiree’s pension for each year or month they are under age fifty-five (which is one-sixth of one percent per month). A FERS DSR retiree, who is not classified as a special category employee, will not have an age-based reduction to their pension, but until they have reached the age of sixty-two, they are not eligible to earn a cost-of-living increase.

HR practitioners dealing with an unacceptable performance or inability to perform cases should be aware of some special provisions related to those actions, cautions Barbara Haga, of Federal HR Services, Inc.

The agency must have decided to remove the employee for an employee to be eligible to retire under DSR, for either unacceptable performance or disability or illness.

If there was a performance action was taken under 5 CFR 432, this would mean that the employee was given an opportunity to correct their performance but the employee was unable or unwilling to improve. In this instance, the removal action would be what the employee’s retirement is based on. Therefore, an agency may not settle the case and remove the notice of decision so as to provide a clean record for the employee.