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Senate backs phased retirement for federal employees

Federal employees could phase into retirement by switching to part-time work while collecting a partial annuity, under language approved by the Senate on Thursday as part of a transportation bill.

Under current policy, federal retirees who return to work for the government generally continue to draw their full annuities but have the salary of the job reduced by that amount, although there are exceptions.


The Senate language mirrors an idea the Obama administration initially proposed in 2010 in a hiring reform bill and that it repeated in its budget proposal last month. The administration touts the plan as beneficial both to employees who want to cut back on their working hours but who are not ready to retire completely, and to government agencies that stand to lose expertise now that a quarter of the federal workforce is eligible to retire.

The plan envisions that phased retirees typically would work half-time, meaning they would draw half the salary of the position and half of the annuity they have accumulated. But their working time could range between 20 and 80 percent of a workweek. A fifth of their working time would be spent mentoring younger employees; exceptions to that policy also would be allowed.

Phased retirees would be treated as active employees for most purposes, and when they retired completely they would receive their full annuities, with a prorated increase for the time they worked under that arrangement.

The Senate adopted the language as offsetting savings for extending a program for rural roads and schools. The budget projected savings on the assumption that agencies would not hire full-time workers to replace those switching to part-time employment.

Although phased retirement would be voluntary, several employee unions and the head of the Senate federal workforce subcommittee, Sen. Daniel K. Akaka (D-Hawaii) objected to again using savings from employment-related changes for other purposes. That was done recently by partially funding extended unemployment benefits by raising required retirement contributions for most of those hired into the government after this year. Akaka voted against the transportation bill amendment, saying it was part of “Congress’s new habit of treating federal employees like a piggy bank.”

The House could take up the transportation bill after recessing next week.

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