By Stephen Barr
Tuesday, April 17, 2007

Instead of a leap into retirement, federal employees may be given the opportunity to take a slow walk into the golden years.

The idea of phasing in retirement is a key feature in proposals recently sent to Congress by the Office of Personnel Management, which is concerned that federal agencies will need to hold on to their baby boomers if they are unable to attract skilled replacements in an increasingly competitive labor market.

Current rules, rooted in law, make it difficult for federal employees to switch to part-time work and offer little financial incentive for a retiree to come back to the government to work on a short-term project or serve as a mentor.

Projections show that about 60 percent of federal workers will be eligible for retirement over the next 10 years, and while officials do not expect them to leave all at once, they are worried that federal programs could be at risk if agencies fall behind in hiring replacements.

Most agencies have stepped up their recruitment efforts, but some officials are concerned that Uncle Sam will not be able to counter job offers made by corporations and nonprofit organizations. Some surveys also suggest that many young people are not interested in a federal career or would be interested in public service for only a part of their career.

To address some of these concerns, Linda M. Springer, director of the OPM, has sent proposals to Congress that would:

· Authorize federal agencies to bring back retired federal workers on a limited basis and let them retain their pension and draw a full salary. Currently, retirees have their salaries reduced by the amount of their guaranteed pension payment.

The reemployment would be limited to 520 hours in the first six months after retirement and 1,040 hours in any 12-month period. The retirees who come back would not earn additional retirement credits and would have their insurance premiums paid from their pensions.

"This will encourage individuals who would otherwise leave government to continue their service on a part-time, limited duration," Springer said in the letter to Congress.

· Revamp the pension formula involving part-time work by people near the end of their federal careers who are covered by the old Civil Service Retirement System and not the new Federal Employees Retirement System. Some retirees have contended that the formula, which involves a computation of their average salary, unfairly leads to a pension reduction.

The OPM said the formula "can occasionally yield anomalous results" for federal employees who worked before April 1986, usually full time, and then retired after that as part-time employees. The agency's proposal would eliminate "the potential adverse effect" of working part time near the end of a federal career, Springer wrote Congress.

· Allow federal employees to invest their bonuses in the Thrift Savings Plan, the 401(k)-type program that the vast majority of government workers use to save for retirement.

Investing bonuses in the TSP would be subject to limits on retirement contributions set by the Internal Revenue Service each year, and there would be no matching government contribution for any bonus money invested, the OPM said.

Springer called attention to the proposed rule changes in a memo she posted on the OPM Web site. Similar proposals have been made over the past couple of years, either by the administration or by members of Congress, but did not draw widespread support on Capitol Hill.

But Springer has warned that retirements could surge from 2008 to 2010 as baby boomers depart public service. In her view, the government needs to do more to keep talented employees and bring back retirees with expertise that could be used to train new hires or to carry out sensitive projects.

The goal of the proposals, Springer wrote in her Web memo, is to provide agencies "with the tools they need to keep pace and compete with the private sector for skilled knowledge workers."

Stephen Barr's e-mail address isbarrs@washpost.com.