This story has been updated with new figures on phased retirement enrollment from the Office of Personnel Management.
Although the number of federal workers enrolled in the government’s phased retirement program remains minuscule, analysts say it could be a valuable tool for agencies to preserve institutional knowledge and plan for the future.
As of Tuesday, 259 federal employees had applied for phased retirement, according to the Office of Personnel Management. This represents a significant increase over the 90 feds who had applied as of August 2016. An additional 82 people have applied for the program and are now retired.
Still, the numbers are below the Congressional Budget Office’s 2012 projections on enrollment, which came out ahead of the enactment of the Federal Employee Phased Retirement Act. Analysts at the Government Accountability Office said last week that while there are many challenges in implementing, promoting and maintaining phased retirement in general, it offers significant benefits, particularly for workforces that are aging and highly skilled.
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Phased retirement allows older workers to reduce their hours while continuing to work to ease the transition from full time employment to retirement. A relatively new phenomenon, it is seen by employers as a way to pass on a company’s knowledge base to younger workers.
GAO examined the use of phased retirement in the private sector, and found that only 5 percent of all employers had formal programs in place, while 11 percent of employers use it informally.
Many employers reported that there are significant challenges to implementing and maintaining phased retirement programs, particularly in complying with Internal Revenue Service and other regulations to avoid discrimination. But those who successfully navigate those issues see benefits both for workers and for management.
GAO interviewed nine companies with formal phased retirement programs. Companies with a highly skilled but aging workforce said phased retirement helped to retain older workers for longer, as well as train the next generation of employees.
“One small employer told us their main challenge is the aging of the workforce and succession,” GAO wrote. “We were told by another employer that it is expected a phasing worker will train and mentor his or her replacement, thus maintaining the company knowledge base.”
A majority of the employers also said that the program allows managers to better prepare for impending retirements and the need to hire replacements, since employees are more likely to share their retirement plans with managers longer in advance.
Employers reported that the program has been beneficial for the workers enrolled. Phased retirement allows workers to better acclimate to retired life by providing a more gradual path.
“Phased retirement eases the transition for workers afraid of losing their sense of professional belonging as they transition out of paid work,” GAO wrote. “In this same vein, an employer said that their program provides an attractive off ramp, and added that it is a way to reward a worker for their years of service.”
GAO’s report was commissioned by Sen. Susan Collins, R-Maine, and contained no recommendations for federal agencies.