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OPM calls for end to pension penalty for rehired retirees
Allowing federal retirees to return to work without an offset to their pensions could help address many of the government's future workforce challenges, the Office of Personnel Management told a House subcommittee on Tuesday.
Nancy Kichak, associate director of strategic human resources policy at OPM, told the House Oversight and Government Reform Subcommittee on the Federal Workforce that the government loses a lot of critical skills and knowledge because of a law that discourages federal annuitants from coming back to work part time for the government.
Salaries for re-employed retirees are reduced by the amount of their pensions. OPM can waive the offset for agencies on a case-by-case basis for positions that are difficult to fill or for emergencies. But with such a penalty in place, many retirees opt to work for contractors, where they can earn a full annuity and salary.
Legislation (H.R. 3579) introduced by Rep. Tom Davis, R-Va., would enable the head of an agency to hire a federal annuitant on a temporary basis without OPM approval and without the annuity offset. The law would be restrictive, however, allowing retirees to work no more than 1,040 hours in any 12-month period and no more than 6,240 hours in a lifetime.
Patrick Purcell, a specialist in income security at the Congressional Research Service, said annuitants made up only 0.3 percent of the federal workforce in 2007, a one-tenth of a percent increase since 2000.
Kichak told lawmakers that offering the flexibility to all agencies is imperative, especially as the government faces a massive loss of critical skills and knowledge during the next decade due to retirements. The legislation would allow agencies to rehire retirees to help train and mentor new employees and to complete short-term projects, she said.
Subcommittee members and witnesses raised concerns about the legislation, noting that re-employed annuitants would not be eligible for most benefits that other employees receive, including contributions toward health premiums, retirement benefits or the Thrift Savings Plan. Subcommittee Chairman Danny K. Davis, D-Ill., questioned whether this could sway agencies to bring back annuitants rather than hire or promote full-time permanent employees.
Purcell also noted that the proposed legislation could encourage workers to retire and then seek re-employment in a federal job in which they could receive both a salary and an annuity. "This would present federal agencies with disruptions in staffing, and it could result in increased total compensation costs to the federal government," he said.
Maureen Gilman, legislative director for the National Treasury Employees Union, said at the hearing that OPM's authority to waive the offset rule was sufficient, noting that approval takes only a few weeks.
"NTEU is not aware of any serious problems with the current rules that allow for re-employment of annuitants. And for the most part we agree with the notion that if it's not broke, don't fix it," she said.
Gilman pointed to a recent report by the Government Accountability Office that found part-time work, flexible schedules and telework have a strong impact on recruitment and retention, specifically among older workers. She recommended encouraging agencies to use these flexibilities to retain those nearing retirement, rather than making the rehiring flexibility easily subject to abuse.
Del. Eleanor Holmes Norton, D-D.C., suggested launching a pilot program to determine the need for more flexibility in hiring retirees as well as the risk of abuse. "This may be the only answer that's available now," she said. "But I suggest we would want to document experience before moving forward. ... I would think OPM would have done that before coming forward with this bill."
COMMENTS
- I wrote Rep. Davis, the co-sponsors, and their committees after encountering and researching 9902j last year; perhaps someone kept my letters. I'm a former DOD employee and disability annuitant who cannot work full-time, but could and has worked his way off permanent Social Security eligibility. Sure, I now make more money as a P/T contractor, but the uncertainty of when they will go out of business, lose a contract, lay me off because of schedule slips, etc. is enormous. Clearly civil service employment, even with offset for former Feds, is the best option for the disabled. However, I cannot return to the employer I gave ten years to, because 9902j got slipped into Public Law as the NSPS retirement system was being pushed. The services - at least some in the Army - have contested the hiring hindrance for years, but were heretofore ignored. Irrespective of NSPS, 9902j should be sticken from the U.S. Code. And BTW, those afraid of "big government" would gain a fresh perspective if they could see how DOD, NASA, Social Security, the Treasury, etc. can barely function by doing "more with less." Chris in VA Posted November 16, 2008 4:08 PM
- In response to Mr. Roy Wells it is obvious either he works for the private sector,he is unaware of policies that exist pertaining to reemployed annuitants and/or he never read the Federal Employees Almanac. If he were to read the Under Secretary of Defense Memorandum of 18 March 2004 he would see that reemployed annuitants work at the will of the hiring authority not at the "whim" of management. No Mr. Wells, this is US Department of Defense policy not the private sector. Federal Civil Service workers have safeguards against managers who like to pull puppet strings and abuse those who are employed under them. Not so with a reemployed annuitant. That was my point. One would think that if they are reemployed by the Federal Government they would be protected under the same laws and policies as a regular civil servant. But a reemployed annuitant is not. Secondly a reemployed annuitant has a choice whether to have health and life insurance benefits taken out of his/her annuity or... do a conversion and have health and life insurance benefits taken out of their salary. If you take life insurance out of your salary instead of your annuity, you'll be able to obtain a higher amount of life insurance. Please refer to the Federal Employees Almanac. Thirdly, reemployed annuitants shouldn't be limited to "PART TIME". The retired military officer who opts to retire today and return to his/her same job as a civilian isn't. Read policy and booklets pertaining to these things before you comment please. Reemployed Annuitant Posted June 3, 2008 10:02 AM
- Its about time this was enacted. It is already in place for the military coming back into civilian service. And it is true, you can go with a contractor and not have the salary offset. I could never figure out why a re-employed annuitant would come back after retirement with no additonal money. And as far as benefits go under this provision, the retiree already has them and doesn't need the regular benefits. If you actually give it some thought, its cheaper for the government to hire an annuitant - benefits are already covered through the retirment system. If you were to hire a new employee, you'd pay benefits in addition to salary. I did notice some complaints about "working at the whim of management". Do you think that if you worked for a contractor you wouldn't be doing so at the whim of management? As with anything, there is room for abuse. Agencies must be fiscally responsible and plan their HR resources so that there is a succession plan. Hiring an annuitant is not a succession plan, but can be a viable piece of one under the right conditions. This is a step in the right direction. Roy Wells Posted June 2, 2008 9:33 AM
