Phased Retirement: Just the Facts

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.

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.

Agencies who are interested in a pre-retirement seminar for their employees can contact Federal Career Experts at [email protected], or visit our website at http://www.federalcareerexperts.com.

About the Author

John Grobe is the former President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies.