The topic of “phased retirement” has been of interest to a number of readers. Following the issuance of rules on this published in the Federal Register, the Office of Personnel Management issued a list of frequently asked questions (FAQs) in a document dated August 8th. (See Phased Retirement for Feds: Easing Into Retirement)
The initial information provided by OPM noted that, in a number of instances, more information would be forthcoming. These FAQs are one step in this process.
If you are interested in entering the new phased retirement program, you must have been employed on a full-time basis for not less than the 3-year period preceding the effective date of his or her entry into phased retirement status. The program covers employees in either the CSRS or FERS retirement systems. An employee can file an application for phased retirement beginning on November 6, 2014.
- FERS employees must have at least 30 years of services and have attained at least their Minimum Retirement Age (MRA), between ages 55-57, or have at least 20 years of service and have attained at least age 60.
- CSRS employees must have at least 30 years of service and have attained at least age 55 or have at least 20 years of service and have attained at least age 60.
OPM has provided a couple of examples of income for hypothetical employees who enter this program.
Example of Income for a CSRS employee with 35 years and 9 months of service.
|CSRS Phased Retirement Income|
|Current Salary $68,275 X 50%||$34,137||$2,844.75|
|Current Annual Annuity $45,296.30 X 50%||$22,648||$1,887.00|
|Total Employee Income in Phased Retirement||$56,785||$4,731.75|
Example of Income of a FERS Phased Retiree
The example below is for a FERS employee with 35 years and 9 months of service.
|FERS Phased Retirement Income|
|Current Salary $68,275 X 50%||$34,137||$2844.75|
|Current Annual Annuity $23,868 X 50%||$11,934||$ 994.50|
|Total Employee Income in Phased Retirement||$46,071||$3,838.75|
*No FERS annuity supplement is payable in phased retirement.
Health Insurance, Life Insurance, and Leave Accrual
Several readers asked questions about their health insurance and how leave accrual would work in the phased retirement program.
For FEHB (health insurance program) and FEGLI (life insurance program for federal employees) purposes the employee is considered to still be working full time.
As far as leave accrual is concerned, you would accrue leave just as any other part-time employees accrue leave. An employee in the phased retirement program will have at least 20 years of service and therefore will be accruing leave at the rate of one hour of annual leave for each 10 hours in a pay status and one hour of sick leave for each 20 hours in a pay status.
An employee in phased retirement status with a 50% working percentage who works 40 hours per pay period will earn 4 hours of annual leave and two hours of sick leave per pay period.
For FERS Employees, What About Your Minimum Retirement Age?
The FERS Annuity Supplement will not be available to FERS employees while they are in the phased retirement program. However, the FERS Annuity Supplement may be paid after an employee in phased retirement status fully retires and begins receiving a composite annuity.
Options for Ending Phased Retirement
Phased retirement may be open-ended or subject to a time limit agreed to between the agency and the employee. The employee may also request to return to regular employment or submit an application for full retirement.
As more information becomes available on this new federal employee benefit, FedSmith will provide the latest to readers.