About 500,000 retirement-eligible federal employees would have an attractive new option to consider if the White House gets its way: semi-retirement.
President Obama’s 2013 budget proposal calls on Congress to allow federal employees to work part-time while also collecting partial pension checks and earning partial retirement benefits for their part-time service.
The benefits of the idea are twofold, proponents say. It would save money — the administration estimates $720 million over the next decade — by spacing out retirements and new hires. And it would help alleviate the government’s brain drain problem by keeping experienced staff on board longer to mentor younger feds.
“It’s a no-brainer,” said the idea’s biggest champion, Office of Personnel Management Director John Berry, who called it one of the most significant proposals in the 2013 budget.
“You can only play so much golf” in retirement, Berry said Feb. 15. “We have this incredible pool of talent in the federal government. People are living longer, and they want to continue to contribute.”
The administration has proposed the idea before — in 2010 as part of a hiring reform bill — but it went nowhere. Being included in the president’s budget proposal may lend it more clout and visibility, increasing its chances.
Agencies would save by not having to immediately replace employees phasing into retirement, and by delaying payment of full retirement benefits, the budget said. The plan could also reduce the government’s need to temporarily rehire retirees to fill critical skills gaps. Those rehired workers are now paid both their full salaries and pensions.
“Many individuals who are nearing the end of their working lives do not want to completely stop working, although they no longer wish to do so on a full-time basis,” the budget said. “This proposal will help encourage those individuals to continue working for the federal government and will enhance the attractiveness of late-career part-time employment, thereby facilitating continuity of operations and training of less experienced employees.”
The National Active and Retired Federal Employees Association applauded OPM’s proposal.
“A transition phase seems like an efficient way to help an agency with its succession planning,” said David Snell, NARFE’s director of retirement benefit services. “There are no apparent downsides to the affected employee in terms of pay or retirement and health benefits.”
John Palguta, vice president for policy at the Partnership for Public Service, also said it’s a good idea. “It’s all about knowledge transfer,” Palguta said. “There’s no particular logic that suggests that when someone has announced they’re leaving, you wait until they’re out the door to bring their replacement in.”
But one federal employee — Robert Scherer, the chief of the exercise and evaluations branch at the Air Force’s Joint Base McGuire-Dix-Lakehurst in New Jersey — has his doubts.
Scherer, who is 60 and thinking about retiring in three years, said he’d like to ease into retirement. But he said it would be difficult to scale his duties down to part-time work, and he thinks many older feds would have the same trouble. He fears that partial retirees would end up trying to do their full jobs in half the time.
“If you can afford to have a person work half-time, odds are you don’t need that person,” Scherer said.
The alternative to that, Scherer said, would be to hire a partial retiree’s replacement to work alongside him. But with budget cuts squeezing the entire government, he doesn’t see agencies finding enough money to do that.
“It’s a good idea,” Scherer said. “But the glass-half-empty guy in me says it’s not going to work.”
Palguta said agencies should sit down with phased retirees and come up with new responsibilities and duties to accommodate their part-time schedules.
More delayed pensions?
Adding yet another variation to federal retirements could throw one more wrinkle into OPM’s already complicated pension calculating process, and hurt its ability to eliminate a longstanding annuity backlog. OPM has pledged to fix its sluggish pension process, and the 2013 budget calls for increased staffing to do so.
Berry told Congress last month that the many varied retirement systems in the federal government make it impossible to create a single automated processing system.
But last week, Berry said OPM’s pension processing will be able to adjust to the change.
“That is such an important reform,” Berry said. “To the extent that it will layer on some complexity to our challenge, I’m willing to take that on, and I think we can handle that.”
Palguta also doubted that the plan will overly complicate the claims process.
“It adds a little more complexity to the workload, but not enough to throw a monkey wrench in it,” Palguta said. “In fact, if they were to use it for folks in the retirement section at OPM who are getting ready to leave, they could keep some of them on board to take care of this backlog before they go.”
Stemming the brain drain
Employees phasing into retirement would be required to spend at least 20 percent of their time mentoring younger employees.
Most employees phasing into retirement would work half time, though OPM could allow other increments ranging from one-fifth to four-fifths. Employees would not be able to change the amount of time they work during the phased retirement, even if they transfer to another federal job. Agencies would have to approve all phased retirements.
They would be able to return to full-time status if their employing agency agrees, and their phased-retirement period would be treated as part-time employment. But those employees would not be able to move back into phased-retirement status.
Law enforcement officers — including Customs and Border Protection, Capitol Police and Supreme Court Police officers — firefighters, nuclear materials couriers and air traffic controllers, all of whom face a mandatory retirement age, would not be eligible for phased retirement.
Employees under phased retirement would receive an annuity that is reduced by the proportional amount that they work. So if an employee works half-time, he would get a half-pension, and if he works one-fifth of the time, he would get four-fifths of his pension. Partial pensions would not include credit for unused sick leave.
When someone enters into full retirement, OPM would then recalculate his pension. That retiree would get the full annuity he would have been owed on the day he entered into phased retirement, plus a partial pension accounting for his phased-retirement period.