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Congress approves phased retirements

Jun. 29, 2012 - 03:36PM   |  
By STEPHEN LOSEY   |   Comments
OPM Director John Berry is a supporter of the phased retirement proposal.
OPM Director John Berry is a supporter of the phased retirement proposal. (Thomas Brown / Staff file photo)

Federal employees will gain the ability to ease into retirement on a part-time basis under a bill that Congress passed Friday.

Congress approved a conference report on the Transportation authorization bill that contains a semi-retirement option for most federal employees. It was expected to be signed by President Obama.

The provision represents a significant change in how federal employees and agencies plan for retirement. Instead of abruptly moving from full employment to full retirement, older employees will be able to ease into retirement over a period of several months or even a few years. The Obama administration, which proposed the phased retirement concept in February as part of its fiscal 2013 budget proposal, hopes it will alleviate the government’s “brain drain” problem by giving employees with decades of experience more time to pass on their expertise and wrap up crucial projects.

Employees phasing into retirement will also be required to spend at least 20 percent of their working hours mentoring younger employees, except at the U.S. Postal Service.

Office of Personnel Management Director John Berry in February called the proposal “a no-brainer” and one of the budget’s most important measures concerning federal staffing.

“You can only play so much golf” in retirement, Berry said. “We have this incredible pool of talent in the federal government. People are living longer, and they want to continue to contribute.”

The National Treasury Employees Union on Thursday applauded the phased retirement option’s inclusion.

“This is a workforce management tool that allows a great deal of flexibility,” said NTEU President Colleen Kelley. “The federal government is facing a retirement wave, but many of these eligible workers are not ready to step completely out of the workforce. They have experience, knowledge and great insight to share with younger employees, and phased retirement is a great way to manage that transition.”

Most employees will work half-time and retire half-time, though the bill also allows eligible feds to work one to four days a week and retire for the remainder.

An employee under phased retirement would receive an annuity that is reduced proportionally by the amount of time he works. So if an employee works half-time, he would get half his pension; if he works one-fifth of the time, he would get four-fifths of his pension.

A phased retiree would continue to accrue pay raises through step increases, and his partial annuity would be increased by the standard annual cost-of-living adjustment.

When he enters full retirement, his pension would be recalculated to consist of two parts. The first part would be the full annuity he earned before entering phased retirement, only no longer reduced to account for his partial work schedule. The second would be a partial pension accounting for his phased retirement period, which would take into account the additional time he worked and any pay raises received during that time. Both parts would be added together for his final pension.

The White House estimates it would save $720 million over the next decade by spacing out retirements and new hires.

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