There has been a lot of talk about phased retirement, particularly its pros and cons. This article is not debating the merits of phased retirement; it’s “just the facts” in a handy bulleted list. This list was developed by myself and Ehren Clovis (one of Federal Career Experts’ retirement instructors), and is included in our retirement seminars.
What is phased retirement?
- 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.
How will phased retirement be implemented?
- OPM began accepting applications for phased retirement on November 6, 2014.
- Agencies have broad discretion in implementing phased retirement and need to consult with labor organizations in so doing.
- Phased retirement is not an employee entitlement. Agencies must decide to implement it.
- Employees and managers must discuss it and reach a written agreement as to duties.
- FERS phased retirees are not entitled to the Special Retirement Supplement.
- Unused sick leave is not used in computing phased retirement.
- Phased retirement schedules may vary week-to-week, but a phased retiree must work 40 hours in a pay period.
- When a phased retiree fully retires, their pension will be re-computed based on their additional service.
What are the requirements for phased retirement?
- 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 MRA 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, as such, by ethics rules and any restrictions on outside employment. Source: https://www.federalregister.
gov/articles/2014/08/08/2014- 18681/phased-retirement (OPM Final Rule, 79 FR 46607, 8 Aug 2014).
How are benefits treated with phased retirement?
- Benefits such as FEHB and FEGLI will continue as an employee, rather than as a retiree. The agency will continue to make the full FEHB contribution.
- For leave accrual purposes, phased retirees are treated as part-time. For example, a phased retiree who was accruing 8 hours of A/L per pay period when full-time, will accrue 4 hours of A/L when working half-time and will accrue 2 hours of S/L when working half-time.
- Phased retirees will not be able to take a post-employment withdrawal from their TSP.
- Phased retirees who are 70 ½ or older will not have to take RMDs from their TSP.
- TSP contributions are based on the employee’s pay (i.e., half-time).
Miscellaneous facts on phased retirement
- A phased retiree can return to work full-time.
- The period of phased retirement can last as long as the employee and the agency agree to it.
John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. Order your copy at shoplrp.com. Ask your human resources office to contact Federal Career Experts about pre-retirement training.