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OPM releases long-awaited phased retirement rule

Aug. 7, 2014 - 06:00AM   |  
By ANDY MEDICI   |   Comments
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Federal employees eligible to retire now have the option to do it in stages. (Jack Gruber / /USA Today)

Employees eligible to retire could instead work half-time while receiving half a pension, under phased retirement regulations issued August 7 by the Office of Personnel Management. Retirement-eligible employees will be able to submit applications for phased retirement on Nov. 6, 90 days from the publication of the final regulations.

The long-awaited rules require than an employee work at least full time for the three years before retirement, and have accumulated enough years of service to qualify to retire, according to OPM.

As they continue to work, phased retirees also will accrue additional service credit toward their pensions. While on the job, they will have to spend 20 percent of their time mentoring younger employees, ideally those who will take over for them when they move into full retirement.

Previously: Lawmakers demand final phased retirement rules

“The regulation is another way the administration is giving agency leaders new tools to plan for the 21st century workforce,” OPM director Katherine Archuleta said in a conference call with reporters. “This program is a win-win. Employees who want to design [a] smooth transition into the next phase of their lives and agencies across government can work together to get a head start on succession planning.”

However, phased retirement must be approved case-by-case. Employees who are take voluntary early retirement are not eligible for phased retirement, according to OPM. In order to start the process of phased retirement federal employees must talk to their managers about the possibilities, according to Archuleta.

If both parties agree the employee and the agency will enter into a written agreement detailing what the duties and responsibilities of the employee will be during phased retirement - which can last as long as the agency and employee want it to, according to OPM.

“Phased retirement provides a new tool that allows managers to better provide unique mentoring opportunities for employees while increasing access to the decades of institutional knowledge and experience that retirees can provide,” Archuleta said.

Agencies can decide which positions would be eligible for phased retirement and can work out how they want to implement the new regulations, according to Mark Reinhold, associate director of employment services and chief human capital officer at OPM.

“Agencies have a lot of discretion in how to implement phased retirement within the framework of the regulation,” he said.

One potential issue is that employees applying for phased retirement must still have their annuity and application processed by OPM, which could exacerbate the backlog of retirement claims facing the agency. Once a phased retiree decides to retiree fully, that annuity and application must be processed again.

Ken Zawodny, the associate director of retirement services at OPM, said the agency is hoping that employees will not decide to file for phased retirement all at once, which could be a problem as the agency tries to reduce its current backlog of applications.

“We are hoping its spread out enough so that the impact will not be an issue,” he said.

Congress approved the law for phased retirement on June 29, 2012. Federal employees and agencies have been waiting more than two years for a rule to put it into effect.

Lawmakers wrote a letter to OPM July 9 demanding the agency finalize its draft proposal for phased retirement and said that federal employees were becoming discouraged about the lack of progress.

Rep. Elijah Cummings, D-Md., said in a statement he was pleased that OPM has issued final regulations on phased retirement after Congress authorized the law two years ago.

“I expect that phased retirement will be an invaluable tool for agencies to ensure the preservation of institutional knowledge and the readiness of a new generation of skilled workers as the baby boomers become eligible for retirement,” Cummings said.

Colleen Kelley, the president of the National Treasury Employees Union, said federal employees have been eagerly awaiting the development and finalizing of the phased retirement rules.

“For many federal employees, this program has been a long time in coming,” Kelley said. “NTEU pushed for the legislation on Capitol Hill, pushed OPM to issue the final rules, and now will push federal agencies to develop programs.”

She said the union will work with agencies to make the program as accessible and as widely available as possible for interested federal employees and will work within its collective bargaining arrangements to expand phased retirement where possible.

“From the beginning, NTEU has believed that the program should be broadly available and that remains our goal,” Kelley said. “We will be talking to the agencies where NTEU represents employees about establishing a phased retirement program and all the details that surround it.

Joseph Beaudoin, president of the National Active and Retired Federal Employees Association, said the organization had received calls almost daily from its members asking when they could participate in phased retirement and wanted the flexibility that phased retirement could bring.

“The new authority also should provide managerial flexibility, crucial during this time of austerity budgeting. Instead of losing experienced employees, agencies will be able to retain them on a part-time basis and benefit from the law’s requirement to mentor junior employees, including their replacements,” he said.

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