Voluntary Separation Incentive Program

Enrollment has declined significantly at the Commonwealth Campuses, in aggregate, over the past 10 or so years while the number of faculty and staff at the campuses has remained relatively flat. The University must reduce its overall operating costs and prioritize funding for investment in student-focused initiatives, and there is no way to do this without addressing personnel costs. Penn State must address its existing operational and personnel approaches so that it can focus on its commitment to delivering the highest value to students and creating a more resilient institution. This is a proactive measure to address the University’s budget challenges and create a sustainable business model while providing a substantial financial package to Commonwealth Campus employees who may wish to pursue retirement or other professional opportunities outside of Penn State.

This program is designed to help address specific challenges at the Commonwealth Campuses. At this time there are no plans to implement a VSIP at University Park, the law schools or the College of Medicine, however, that decision may be reevaluated based on future needs.

Voluntary workforce reductions like this VSIP allow employees to weigh their options, take time for making critical decisions, and be in more control of their futures. The possible impacts of this program and any subsequent actions to be taken will depend on many factors, including how many employees participate, impacts on a department or program, and potential additional changes to Penn State’s financial health, among others.

Involuntary layoffs and non-reappointments could occur in the future and could include people who are eligible for this Program. The benefits under the VSIP will not be offered as part of an involuntary layoff or non-reappointment.

The University offered a voluntary retirement package to retirement-eligible employees University-wide in 2016 and offered a similar plan in 2014 to eight western Pennsylvania campuses, as well as within the College of Agricultural Sciences, Outreach and Penn State Dickinson Law. Other higher educational institutions have offered similar programs.

Exclusions are based on the needs of the University to continue delivering on its mission of teaching, research and education as well as funding sources for employee salaries and employment contracts.

Vacation and sick leave will be paid out in accordance with existing University policy.

Yes.

Yes, as long as they meet the eligibility and enrollment requirements, employees who have already announced a retirement date in accordance with HR 54 are eligible to enroll in the VSIP and receive the benefits, but the separation date will be governed by the VSIP. Units will need to inform Human Resources of any individuals in their unit in this situation if the individuals choose to pursue the VSIP.

As long as they meet the eligibility and enrollment requirements, employees on a phased retirement are eligible to enroll in the VSIP and receive the benefits, but the separation date will be governed by the VSIP.

Eligibility to participate in the VSIP is based on several factors such as the primary work location of the employee and where positions are funded. Employees should check the relevant plan documents on the HR website

No.

No.

Yes, any employee who is on an approved leave of absence is eligible to participate as long as they meet the eligibility and enrollment requirements.

Eligibility to participate in the VSIP is based on several factors such as the primary work location of the employee and where positions are funded. Employees should check the relevant plan documents on the HR website

No, you must remain actively employed by Penn State through your designated separation date in order to receive benefits payable under the VSIP.

Your payment will be direct deposited into the same account to which your current payroll is deposited. The lump-sum severance payment cannot be directed to any tax-deferred account and must be distributed to you directly.

The University cannot provide tax advice to employees. Individuals considering the VSIP should consult a financial adviser or attorney for questions regarding their individual situation. 

In general, severance pay is considered supplemental wages (not regular wages) because it is not a payment for services in the current payroll period, but a payment made upon or after termination of employment for an employment relationship that has terminated. The University will withhold 22% federal income tax on the severance payment. Social Security, Medicare, state and local taxes also will be deducted, where applicable in accordance with taxing authority regulations.

No, severance payments do not count as earnings for Penn State benefits purposes and there will be no retirement contributions made in connection with this payment.

Consistent with any voluntary separation, tenured faculty who participate in the VSIP will relinquish their indefinite tenure statuses on their separation date.

Faculty eligible for emeritus status will be afforded such status upon retirement according to Policy AC 25.

No, anyone who meets the eligibility criteria may choose to enroll in the VSIP. However, the University reserves the right to delay an employee’s separation date to no later than December 31, 2024, based on the University’s academic, operational and budgetary needs.

If you participate in the State Employee's Retirement System (SERS), you can contact SERS at 1-800-633-5461. If you participate in TIAA, you can contact TIAA at 1-866-842-2173. Your plan administrator can provide assistance to prepare you for retirement by taking into account a variety of factors including your age, number of years of service, and savings.

No. The VSIP offers active eligible full-time employees at the Commonwealth Campuses a chance to voluntarily terminate their employment with the University in exchange for a lump sum payment and the temporary extension of some benefits. However, employees who are within 36 months of retirement eligibility as outlined in HR 54, and meet additional criteria outlined in the plan will be able to enroll in the medical plan offered to retirees, as well as receive other fringe benefits offered to retirees. This provision does not apply to employees hired after January 1, 2010, and enrolled in the Retirement Health Care Savings Plan.

Employees who choose to participate in the VSIP will be prohibited from being employed by the University in any capacity or serving as a consultant to the University, directly or indirectly, for a period of 36 calendar months from their separation date.