Phased Retirement Is in Regulation Limbo

It’s been almost two years since a law allowing phased retirement for federal employees has been on the books. But the program is still in limbo because the Obama administration has yet to issue final regulations on its implementation.

The Office of Personnel Management issued a proposed rule in June 2013 outlining the new option for eligible federal employees who want to partially retire, collecting prorated pension payments and working part-time for the government. The so-called phased retirement provision, included in the 2012 transportation reauthorization act, allows eligible federal employees to work 20 hours per week, receiving half their pay as well as half their retirement annuity.

But the government has been pretty quiet on the subject since the proposed rule was published in the Federal Register last summer, prompting federal employees and others to question the delay in implementation. Phased retirement seems like a win-win for the government and retirement-eligible federal workers: Uncle Sam gets to keep valuable employees -- who are required to spend 20 percent of their time training and mentoring their replacements -- for a bit longer, and partially-retired employees will earn more money than they would by fully retiring, or simply working part-time.

According to an OPM spokeswoman, however, the “proposed rule on phased retirement is still under review.” Delays in implementing final regulations on new policies and laws aren’t unusual, but given the popularity (at least in the idea of) phased retirement among employees, and the benefit to agencies, it’s not clear what the hold-up is.

“I urge OPM to make the phased retirement program available to agencies as soon as possible and, in turn, I hope agencies will move quickly to put the program in place,” said National Treasury Employees Union President Colleen Kelley, who noted that the percentage of the retirement-eligible federal workforce is growing and will continue to for the foreseeable future. “Many of these eligible workers are not ready to step completely out of the workforce. Phased retirement gives agencies the flexibility to keep experienced employees on board and allows for a transition period,” Kelley added.

OPM would not comment on whether the rules were still under review by the Office of Management and Budget.

See past columns on the topic by Tammy Flanagan who writes Government Executive’s Retirement Planning column for more information on how the incentive could play out.