Shutdown Complicates Federal Retirement Plans for Some

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The partial government shutdown has created a complicated web in the realm of federal employee retirement, at the busiest time of the year for those who process requests.

Whether a federal employee can retire during the lapse in appropriations depends on a number of factors, including which agency they work for and if and when they informed their supervisors that they planned to leave public service.

First, the good news: The Office of Personnel Management’s Retirement Services division is funded by the federal government’s retirement trust fund, not appropriations, so it operates normally whether OPM is open or not. That means employees at agencies that have received their fiscal 2019 appropriations can elect to retire normally, and they won’t see any abnormal delays.

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Where things get more complicated is what happens if an employee at a shuttered agency planned to retire this month. According to shutdown guidance from OPM, as long as an employee has issued a request to retire at a certain date, he or she will be considered to have retired at that date, although paperwork may need to be filed retroactively after the government reopens.

“For employees who, on or before the requested retirement date, submitted some notice of their desire to retire, agencies should, when the lapse in appropriations ends, make the retirement effective as of the date requested,” OPM wrote. “The retirement request may be informal (such as a letter requesting retirement), and can be either mailed or personally submitted to the agency.”

Where problems begin to crop up is within individual agencies, where during shutdowns human resources departments are frequently furloughed wholesale. Even if an employee has submitted his or her application to retire before the start of a shutdown, the retirement package, including lump sum payments for unused leave, could be delayed, depending on whether an agency has completed its portion of the retirement process, said Jessica Klement, staff vice president for advocacy at the National Active and Retired Federal Employees Association.

“Yes, if you submitted your application before the government shutdown and your retirement date is during the shutdown, you are in fact retired,” she said in a webinar for federal workers and retirees Tuesday. “But I don’t have a good answer on whether your paperwork [will be complete by that date]. If a payroll department is furloughed, the processing of your retirement package may be delayed.”

For those who were scheduled to retire after the start of the shutdown but before the end of the leave year, which was Jan. 5, OPM said that they will not lose leave hours over the annual roll-over cap, even if agency furloughs prevented their retirement from being processed in time.

“The employee’s retirement would be retroactively applied to a date prior to the end of the leave year, and the employee would receive the full amount of accumulated and accrued annual leave in a lump-sum payment,” the agency said. 

Employees who had planned to retire during the shutdown but had not informed their agencies likely must wait until after government reopens to start the process.

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