Have you ever thought how nice it might be to ease into retirement by working your way down from 40 hours per week to a part-time schedule before retiring? I've had many requests over the years to address the issue of what effect such a move has on a federal employee's retirement benefits. Here is a recent e-mail I received:
I would like to suggest that a future column cover how part-time employment is treated under [the Civil Service Retirement System and the Federal Employees Retirement System]. Please include how the pension amounts are prorated, how the high-three [average salary is] calculated, and all relevant details. For example, are the calculations similar for part-time employees in different agencies, and under different employment authorities?
A confession: I've avoided this topic because it's complicated and confusing and I couldn't think of a way to explain it that would simplify the rules. The main problem is that there has been an inequity in the law since 1986 that adversely affects CSRS employees who work part time during their "high-three" salary period (usually the last three years of a career).
Until this inequity is corrected, I would not recommend that anyone covered under CSRS switch to a part-time schedule in the three years prior to retirement. In fact, anyone currently on a part-time schedule under CSRS who plans to retire in the near future should seriously consider returning to a full-time appointment.
This week and next week, I'll explain exactly why this is the case. Next week, I'll get into a nitty-gritty comparison of how part-time employment is treated under CSRS and FERS. This week, let's just look at some of the overall rules:
- The regulations for computing part-time service are the same regardless of what agency you work for or in what capacity. Whether you were employed under the General Schedule, the Wage Grade system, the National Security Personnel System, or in a temporary or career conditional status doesn't matter. There is one exception: A modified method of computation applies to those who retired after Sept. 20, 1986, and have careers that include credit for part-time title 38 service with the Veterans Health Administration (formerly the Department of Medicine and Surgery).
- Working a part-time schedule will not affect your length of service as far as being eligible for retirement. Under both CSRS and FERS, an employee may retire at age 60 with a minimum of 20 years of creditable service. So if Mary worked full-time for 20 years, she would be eligible to retire at age 60. But so would Julie, even if she only worked for 24 hours per week over the same period. The calculation of their retirement benefits would be different, but both women would be eligible for immediate benefits.
- Part-time service is not the same as intermittent or "when actually employed" service. Intermittent service is defined as less than full-time employment under an appointment that does not specify a prescheduled regular tour of duty. Working under this status will affect an employee's length of service for retirement eligibility and his or her service computation date.
- Your agency should give you credit for the actual hours you worked. If you worked part time during your career in addition to the scheduled hours noted on your personnel action statement, your records should reflect that. For example, if you were scheduled to work 24 hours per week, but sometimes worked 32 or 40 hours, you would receive credit for the actual hours worked if your payroll records showing the hours for which you were paid were sent to the Office of Personnel Management along with your personnel records showing your scheduled tour of duty.
Next week, tune in for the all the details on how part-time service calculations work out in real life.
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.