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Why Agencies Need More Flexibility to Retain Retiree Expertise

Phased retirement holds great promise, but one approach will not fit all.

Given the polarization of our nation’s politics, it is sadly rare to find a bipartisan coalition of lawmakers uniting around anything more consequential than renaming a post office. That is why it was great to learn that a group of lawmakers from both parties recently joined together to urge the Office of Personnel Management to finalize the phased retirement regulations.  I hope OPM will respond quickly (after fixing one particularly problematic aspect of the proposed rule). If more time is needed to sort out the detailed complexities that will inevitably arise during implementation, OPM can use an interim rule to allow the most interested agencies to get started and work with OPM to sort out the issues that arise.

This encouraging development shouldn’t be too surprising, since phased retirement holds great promise as a valuable tool for federal agencies’ human resources toolbox. Originally passed in 2012, phased retirement authority would allow federal employees to work part time, collecting a portion of their salary for the time they work and a portion of their pension for the hours they do not, provided they spend at least 20 percent of their work time mentoring the next generation of civil servants. 

Understandably, there is a great deal of enthusiasm among some federal workers for such a system, which would allow the most experienced among them to contribute expertise to their agencies and complete projects, but reduce their hours. Given that 25 percent of respondents in the 2013 Employee Viewpoint Survey (about a half million people) plan to retire in the next five years, that’s a lot of expertise to pass on to the next generation before employees leave for good.

It’s also a winner for agencies looking to improve their long-term HR strategies. I’ve written recently about untying the knots in the federal hiring process, and it’s encouraging to see that there is some progress on congressional authorization of cross-agency recruitment (a bill to do so was introduced in the Senate in June). In addition, OPM is beginning to work with agencies to fix problems in federal internship and recent graduate programs, which currently make it difficult to bring in young, talented people serious about public service. Phased retirement promises to be a nice complement to these programs. It is likely to open up opportunities for upward mobility, while providing mentorship for replacements, new entrants and others. While no panacea, phased retirement has great potential.

Of course, many complex details must be addressed to make phased retirement work well. OPM must identify the correct blend of pension and salary to entice employees to take this option and must determine how to administer benefits to a new class of part-time employees. It is perhaps because of these nuts-and-bolts challenges that the regulations are delayed. 

In truth, it’s not all bad that the rules haven’t been locked in yet, because one proposed provision is worrisome. The legislative language creating phased retirement allows qualifying employees to work anywhere between 20 percent and 80 percent of their full-time hours, but in its proposed rule, OPM suggested setting the amount at 50 percent in all cases. In its commentary on this regulation, the Partnership for Public Service articulated concerns with OPM’s proposal: 

“We believe that restricting phased retirement to a ‘half-time’ work schedule may be unduly limiting. We appreciate the fact that the administrative burden associated with tracking phased retirement may be easier if all ‘phased retirement’ situations are limited to half-time only—and we appreciate that fact that the proposed regulations allow hours in excess of half-time to be worked in ‘rare and exceptional’ circumstances. However, we also note that a more flexible part-time schedule during phased retirement, such as working one day or four days a week, could be equally or more useful to federal organizations when the situation warrants.”

“Unduly limiting” is the key phrase: The purpose of phased retirement is to allow agencies greater flexibility in responding to their changing HR challenges. Why not allow an experienced employee to work two or three afternoons per week? It would be deeply unfortunate if seasoned workers who still want to contribute were denied that opportunity right out of the gate.

As the internal debate goes on, it’s undeniable that there are legitimate concerns about the ifs and hows of phased retirement. Is there sufficient interest among employees to choose this option? Will the administrative hurdles of managing various streams of compensation and benefits prove too great? How will agencies manage who is eligible for this option and who is not? 

Prudent planning on the part of OPM and agencies can address these concerns. I urge OPM to complete the regulations quickly, allowing agencies as much flexibility as possible. It would perhaps be prudent to consider an interim rule to allow agencies to move forward immediately to reveal issues needing decisions or clarification. Further, I encourage OPM to become a learning-leader to collect information about different approaches, share best practices and quickly resolve issues that will inevitably arise. As the federal workforce and the challenges it faces continue to evolve, the HR toolbox must evolve with them. Phased retirement is likely to prove a terrific tool to have on hand.

Shelley H. Metzenbaum is president of The Volcker Alliance, a nonpartisan organization launched in 2013 to address the challenge of effective execution of public policies and to rebuild public trust in government. Between 2009 and 2013, she was associate director for performance and personnel management at the Office of Management and Budget. Follow her on Twitter @SMetzenbaum.

(Image via Bad Man Production/Shutterstock.com)

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