Phased Retirements and CSRS Employees

The author provides a follow up to his previous article about the proposed phased retirement; this time, he looks at its estimated savings in the federal budget.

Part I on this topic was about calculating the annuity proration factor for part-time work under FERS. The procedure for CSRS employees was not covered.

Unfortunately, for CSRS the calculation is significantly lengthier and more intricate, involving separate computations for pre and post April 7, 1986 service. The detailed steps can be found on pp. 5-13 of Chapter 55 of the CSRS & FERS Handbook. Summarizing these steps is beyond the scope of this article.

An alert reader pointed out that the standard work year for the FERS calculation is 2,087 hours, not 2,080 as used in my article. Correcting for this, the proration factor in the example given becomes 0.9900335 rather than 0.99.  This factor results in an adjusted annuity (see previous article) of $20,790.70, or 70₵ more annually, or 6₵ per month, compared to the previous numbers.


The Senate estimate of savings through passage of this bill is $465 million over 10 years, as calculated (?) by the Congressional Budget Office. The White House estimate for an identical proposal was determined by the Office of Management & Budget to be $720 million.

I would like to see the actual numbers and assumptions used for these estimates! Since nobody has any idea how many employees will opt for phased retirement, I cannot imagine how they did it.

Pension plans are set up by actuaries. Actuaries have years of sophisticated training and must pass a series of difficult exams to order become certified as an actuary. By law, the Office of Personnel Management is supposed to have a “Board of Actuaries.”  Really? When has anybody heard from them (the Board)?

I’ll bet no actuaries were harmed in the formulation of this “piggy bank” plan. Probably the only actuary involvement was when he/she left the room, saying “this is nonsense!”

The existing part-time program is not, strictly speaking, a benefit, nor is the proposed phased retirement a benefit. But for a small minority of older employees the existing program is, in my opinion, an attractive option. So far, the same cannot be said for phased retirement.

Please remember: the phased retirement option is only for those who already qualify for retirement.

How many employees want to keep working after they are eligible to retire? If the annuity is not enough for them to afford retirement, then they will probably keep working full time, not part time, in order to build it up.  Or they might just retire and find work in the private sector. Of course, if they want to help “pay for public roads, (and) schools and forest-related economic development projects in rural areas,” they can opt for phased retirement!  It’s the patriotic thing to do.

There is just one purely attractive feature in phased retirement. It is voluntary!

About the Author

Robert Benson served 35 years in various Federal agencies, as both a management analyst and IT specialist. He is a graduate of Northwestern University.