Federal employees who are eligible to retire could switch instead to a hybrid in which they would continue working half-time while also receiving a partial annuity, under rules to be published Wednesday.
Rules proposed by the Office of Personnel Management would carry out “phased retirement” authority enacted nearly a year ago but still not available. The rules provide for a 60-day comment period.
“Phased retirement will encourage the most experienced Federal employees to extend their contributions to the Nation, and will operate as a tool to ensure continuity of operations and to facilitate knowledge management,” the notice says.
“The main purpose of phased retirement is to enhance mentoring and training of the employees who will be filling the positions of more experienced employees who are preparing for full retirement. It is intended to encourage experienced employees to remain, in at least a part-time capacity, while less experienced employees are preparing to assume the duties of the employees who are planning to retire,” it says.
Under the rules, employees meeting standard retirement age and years of service combinations — and who in addition have worked full-time for the previous three years — could request phased retirement. An exception is that employees subject to mandatory retirement — primarily meaning law enforcement officers, firefighters and air traffic controllers — will be ineligible.
If approved by the agency, the employee would switch to a half-time schedule with a proportionate salary. The annuity benefit the employee accumulated to that point would be calculated and the employee would receive half of that as well.
The salary portion would be increased by standard pay raises and the annuity portion increased by retirement cost-of-living adjustments.
The employer contribution toward health insurance would remain the same as for a full-time employee, and benefit levels under the federal life insurance program are to be based on the full-time salary of the position.
Phased retirees will be expected to spend at least a fifth of their working time mentoring other employees. The employing agency is to decide what satisfies that requirement.
Phased retirees will be allowed to work more than half time only in “rare and exceptional” circumstances. With agency approval, however, they will be allowed to move to another position within the agency or to another agency, and may switch back to full-time work. But only one phased retirement period will be allowed per person.
A phased retiree could retire fully at any time without the agency’s permission. At that point, the salary will stop and the annuity will be recalculated to take the additional working time into account.
The rules also cover numerous technical considerations such as survivor benefits, crediting of unused sick leave toward the annuity, the effects of court orders and more.
When the idea was being considered last year, the Congressional Budget Office estimated savings over 10 years of $427 million from phased retirees drawing smaller annuities than they would have as full retirees, and an additional $24 million in revenue to the government from them continuing to pay retirement contributions from their salaries.
This post has been updated.