When it becomes fully operational, the phased retirement program will allow pre-approved employees to reduce their work schedule to part-time, while simultaneously paying them a partial annuity. Will this be a net gain for employees?
To put together an accurate forecast of the net impact of the phased retirement program, data is needed:
- How many employees will be approved for participation?
- How many of the approved will opt to participate?
- What salaries will they have?
- How many days per week will they work?
- How many employees will be in each retirement system?
- How much will their fractional annuities be?
- How long will they stay in the program before they take full retirement?
- What will the administrative costs be?
Being in the future, the answers are all unknown. Without this information, it is not possible to do an accurate forecast. Still, Congress wants numbers. So, our friends at the Congressional Budget Office (CBO) came up with something. It is their report on Phased Retirement, which was prepared based on H.R. 4363.
CBO estimates that enacting the legislation would decrease direct spending by $427 million and increase revenues by $24 million over the 2013-2022 period.
There you go. Hmm. Are these numbers correct? What are they based on?
BASIS OF ESTIMATE. For the estimate, CBO assumed that about 1,000 federal employees per year – a mix of employees in the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) – would enter into phased retirement for a period of three years before fully retiring.
Sounds authoritative, doesn’t it? But you still have to wonder where the estimate came from. Fortunately, there is a footnote (no. 1) that clears it all up:
The estimated number of participants is based on assumptions used by the Office of Personnel Management for their evaluation of this program.
Now we are on solid ground. The CBO ESTIMATE of what will happen in the future is based on ASSUMPTIONS made by another agency. Is this smoke and mirrors? Is it a “SWAG” (Scientific Wild A_____ Guess)? Do you believe the numbers above will turn out to be correct? More important: are other CBO reports constructed this way, with the same level of diligence? I hope not.