Pentagon revises retiree rehire policy

Managers at the Defense Department now can rehire civil service retirees for critical positions without reducing the retirees' salary by the amount of their annuity.

Congress granted Defense the retiree hiring authority last year in the 2004 Defense Authorization Act, the legislation that allows Defense to create a personnel system for its nearly 700,000 civil service employees.

Only retirees rehired after Nov. 23, 2003, will be eligible for the new program. Those hired before that date will continue to have their salary reduced by the amount of their annuity.

Also, any employee who left the department through a voluntary separation incentive pay program will not be eligible for 12 months unless the Defense Secretary approves a waiver. And any employee who's received voluntary separation incentive pay cannot return to the department within five years without repaying the incentive pay.

In a memorandum sent to top Defense officials last week, Defense Undersecretary for Personnel and Readiness David Chu said that the policy "will help address the challenges of 'retirement-driven talent drain' as our current generation of dedicated civil servants become eligible to retire."

Until now, Defense retirees had to sacrifice the portion of their salary equivalent to their annuity in order to come back to work for the government, a policy intended to prevent workers from retiring and then immediately returning to their former positions and drawing both their annuities and salaries.

Last year, in lobbying for the authority, Chu said that the department didn't "want to encourage people to stop working on Day T, and then on Day T-plus-one come back." As a result, the new authority is limited to hard-to-fill positions where a "severe shortage of candidates" exists, or to individuals with "unique or specialized skills."

In some cases, the department will rehire retirees to mentor less experienced employees or provide continuity during critical agency transitions, the memo said, but those rehired employees will be able to work for a maximum of one year full time, or two years part time.

The policy of reducing a rehired employee's salary may have led the department to hire contractors who were not always the best qualified person for the job, Chu said last year.