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.