March 2, 2007
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:
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.
March 2, 2007