Voluntary Separation Incentive Pay (VSIP) and
Voluntary Early Retirement Authority (VERA)

Section 1101 of the National Defense Authorization Act for FY 04, Public Law 108-136, authorized the Department of Defense (DOD) to establish permanent Voluntary Separation Incentive Pay (VSIP) and Voluntary Early Retirement Authority (VERA) programs. VSIP, also known as a "buyout," and VERA, which allows eligible employees to retire early, are separate programs that can be used alone or in conjunction with each other. They are management tools to reduce the impact of downsizing and restructuring actions, not employee entitlements. Both contain annual reporting requirements. To offer VSIP and/or VERA to their employees, commanders of USAREUR activities must first obtain approval from USAREUR.


VSIP is a monetary incentive for employees to voluntarily separate. There are two types of VSIP, "downsizing" and "restructuring." A "downsizing" VSIP is used to help preclude a reduction in force (RIF) or lessen the number of involuntary separations. Management uses a "restructuring" VSIP when reorganizing or restructuring positions but there is no need to reduce the number of personnel. VSIP use is restricted to an annual limit; Commanders will be asked to provide a projection of their VSIP need during the fiscal year. Department of the Army (DA) policy is that organizations projecting the involuntary separation of U.S. employees through RIF should offer VSIP before issuing RIF notices. Funding for VSIP is derived from local budgets.


VERA allows an employee to retire based on reduced age and service requirements. There is no limit on the use of early retirement authority so long as the actions are consistent with DOD, Army, and USAREUR guidance. VERA may be used to reduce the number of personnel or to restructure the workforce to meet mission objectives without reducing the number of personnel.

USAREUR guidance supplements and should be used in concert with DOD and DA policies, procedures, and guidance. Management should carefully consider other tools, especially as cited in DA guidance, such as reassignments, re-training, hiring freezes, and tour curtailments in their downsizing and restructuring planning.