The Effects of Workforce-Shaping Incentives on Civil Service Retirements
Evidence from the Department of Defense
An increasing number of retirements from federal employment is predicted over the next decade owing to the aging of the federal workforce. Most of these retirements will be among workers covered by the Civil Service Retirement System (CSRS). To influence the timing of these retirements, federal agencies could use a variety of financial incentives. This research provides estimates of the effects of early retirement incentives, buyout incentives, and retention allowances on the retirement rates of federal employees CSRS in the Department of Defense (DoD). The first two programs are intended to increase the financial incentive to leave voluntarily; the third is intended to increase the financial incentive to stay in the civil service. The authors found that these workforce-shaping polices would have sizable effects on the financial incentive to retire or separate from the civil service and on predicted retirement behavior. The predicted effects of early retirement benefits were especially large, more than doubling the separation rates of those age 50 with more than 20 years of service Thus, these polices could have important effects on the retirement and separation behavior of federal civil service personnel covered by the CSRS.