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Can Part-Time Retirement Save USPS?

A little-known rule already on the books could help the cash-strapped agency save big.

As U.S. Postal Service representatives announced a new plan for rural post office closures Wednesday, discussion continues on a more comprehensive USPS overhaul. No matter the outcome or timeline for reform, a lesser-known regulation already on the books could affect Postal Service retirees’ pay and benefits in the near term.

About half the Postal Service’s 557,000 employees are eligible to retire, according to a congressional staffer, and 80 percent of the cash-strapped agency’s costs are labor-related. Some who work on postal reform legislation estimate that as many as 150,000 USPS employees could retire today, and another 100,000 could be eligible in the next four years.

As a result, USPS policymakers are closely watching recent proposals that would institute work-retirement hybrid programs for all federal workers. Both the House and Senate have approved proposals to help ease eligible employees into retirement slowly -- allowing agencies such as USPS to delay hiring and training new employees.

While the House bill would amend U.S. code to allow feds to continue working part time while partially retired, a lesser-known but similar setup already is available under an Office of Personnel Management regulation. According to a statute approved in 2009 and due to expire in October 2014, both Civil Service Retirement System and Federal Employee Retirement Service retirees can voluntarily receive their original annuity and a part-time salary -- for a limited time.

The existing rule requires agencies to cap the number of re-employed annuitants at 2.5 percent of their workforce, but House sources with knowledge of postal reform bills say USPS could still make use of the rule to save on labor costs, regardless of the outcome of legislation.

Re-employed annuitants are retirees who fill part-time roles for agencies for a year or less. The number of hours they can work depends on how long they have been receiving an annuity, as they will continue to receive retirement annuity benefits from from their original jobs. For example, an annuitant cannot serve for more than 520 hours during the period ending six months after the date their annuity commences; the total rises to 1,040 hours of service if it’s a full year after. The re-employed annuitant cannot receive additional annuities benefits based on that employment.

The OPM statute was put in place in part to help agencies implement the 2009 American Recovery and Reinvestment Act and parts of the 2008 Troubled Asset Relief Program. Agencies can use authority under the statute to assist in procurement functions, provide training and mentoring to other employees, assist in recruitment, or respond to emergency situations.

This authority differs from re-employed annuitant status, which is described here.

Correction: An earlier version of this story understated the number of full-time postal employees. There are 557,000, according to Ali Ahmad, a spokesman for Rep. Darrell Issa.