Phased Retirement Coming to DoD

By on June 22, 2016 in Current Events, Retirement with 32 Comments

“Phased retirement” has been a topic of discussion for the past four years. It has not been a smashing success. As noted in one recent article, “OPM has received 31 applications for phased retirement since the law enabling it was passed in 2012.”

But, like a locomotive that has built up a head of steam, once a program gets going in the federal bureaucracy, it can take a long time to implement and, once it starts, it isn’t likely to slow down or go away.

So, now that we have had four years of “frequently asked questions” about the subject,  Congressional Budget Office reports extolling how much money the program will save the government and lengthy rules that took many people and months to write explaining the multiple issues for implementing phased retirement published in the Federal Register, the Department of Defense (DoD) is now moving out with its phased retirement program.

DoD announced on June 21 that it will now allow phased retirement to begin. In effect, civilian employees who are eligible will be allowed to “semi-retire” while also working part-time, presumably to help the agency manage its programs without losing the expertise of older employees, most of whom have probably been with the agency for a long time.

One reason there has not been more interest may be that some agencies have not implemented the optional phased retirement program. With a large agency like the Defense Department adding its imprimatur to the concept, the program may start attracting more employees.

In a nutshell, here is a description of phased retirement (See: Phased Retirement: Just the Facts):

  • Phased retirement allows employees to ease into retirement by remaining employed half-time and being retired half-time.
  • Phased retirees must spend 20% of their work time mentoring new (or newer) employees.
  • CSRS employees must have been full-time employees for the three years immediately preceding phased retirement; be eligible for voluntary retirement; and meet the criteria of age 55 and 30 years of service or age 60 and 20 years of service.
  • FERS employees must have been full-time employees for the three years immediately preceding phased retirement; be eligible for voluntary retirement; and must the criteria of minimum retirement age and 30 years of service or age 60 and 20 years of service.
  • Individuals applying for early retirement are not eligible for phased retirement.
  • Individuals in a position subject to mandatory retirement may not participate in phased retirement.
  • During a period of phased employment, phased retirees are still federal employees and are bound by ethics rules and any restrictions on outside employment.

The National Active and Retired Federal Employees Association (NARFE) is pleased with the DoD action. In a press release, National President Richard G. Thissen was quoted as saying,  “As a retiree of the Department of the Army, I’m proud that phased retirement is now a reality for the men and women who work for the largest federal government agency. NARFE applauds the Department of Defense for implementing phased retirement for the dedicated employees whose decades of service and experience now will be retained a while longer and passed on to their successors. As a result, the federal government will save money and continuity of operations at DOD undoubtedly will improve.”

So, while the reception of the program by federal employees has been languid, acceptance and implementation by DoD may breathe life into the program. Or, as federal human resources expert Jeff Neal observed: “[W]e have an option (phased retirement) that costs more, is more difficult to administer, and does not offer most employees something  they really want that is in their interest.”

If that is the case, the government will have spent a significant amount of time and effort addressing a problem that may not exist.

Now that Defense has jumped on the bandwagon, and with four years of explaining and going through the many nuances of implementing the program, the federal community will get a better idea of how popular and useful the program will prove to be in practice.

DoD Directive on Phased Retirement

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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