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Key developments in the world of federal employee benefits: health, pay, and much more.

Movement on Phased Retirement, Discussions of Automatically Escalating TSP Contributions and More

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It’s been three years since the enactment of a law allowing federal employees the option of phased retirement, and almost a year since the date agencies could actually start offering the program. But not much has happened.

The tide may be slowly turning. Federal News Radio reports that the Environmental Protection Agency has started a program allowing most retirement-eligible, full-time employees to ease into retirement gradually (union members are an exception, since the agency is still reportedly in talks with the National Treasury Employees Union over the arrangement).

The Housing and Urban Development Department also has notified employees via the workplace social network Yammer that a partial retirement program is on the way, said spokesman Jerry Brown. The program is still being finalized and the department’s deputy secretary still has to sign off on it, so there has been no formal announcement. But employees can expect one soon, according to Brown.

Generally speaking, phased retirement allows eligible feds to work 20 hours per week, receiving half their pay as well as half their retirement annuity. Those employees who enter phased retirement must devote at least 20 percent of their work time, or about 8 hours a pay period, to mentoring other employees, ideally for those who take over for them when they fully retire. The idea is to keep talented employees with valuable institutional knowledge on the job a little longer so they can train other workers, while they also enjoy a partial retirement.

The Office of Personnel Management finalized rules for the program in August 2014, but agencies have discretion in deciding how or whether to implement it. Employee groups are eager for agencies to move forward with the program.

In other retirement-related news, the Federal Retirement Thrift Investment Board has approved a $219.9 million budget for the Thrift Savings Plan next year, Federal News Radio reports. That is a 6 percent increase from the $207.2 million budget in 2015, according to the report.  Some of the extra money will go toward tighter cybersecurity controls. The budget also anticipates that TSP may need to plan for possible fall 2017 implementation of changes to the military retirement system, according to the report.

The TSP is also discussing the possibility of legislation to automatically increase TSP contribution levels, Federal News Radio said. Currently, the board has authority to automatically enroll people in the retirement savings plan, and has been doing so at a 3 percent contribution level. But many participants leave their contributions at 3 percent rather than reevaluating and adjusting them periodically. Increasing contributions annually until they reach 5 percent would allow participants to take full advantage of agency matching contributions.

Employees might need to boost their retirement savings a bit if current trends with the annual retiree cost-of-living adjustment continue. It appears unlikely that retirees will receive any COLA in 2016, based on the latest figures for the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), released Wednesday. Those numbers are an important data point for calculating the COLA, though the final determination won’t be made until the September consumer price numbers come out next month.  

In more positive news for current federal employees who are looking to start families, there has been more movement on securing paid parental leave. Sens. Brian Schatz, D-Hawaii, and Barbara Mikulski, D-Md., earlier this week introduced legislation that would give federal workers six weeks of paid administrative leave after the birth, adoption or foster placement of a child. The bill would not require federal employees to dip into their accrued sick or annual leave to care for a new child.

Such legislation hasn’t made much headway in past congresses, but its chances may have improved somewhat. President Obama has advocated for the benefit, and Rep. Carolyn Maloney, D-N.Y., introduced a similar bill in the House in January. A Congressional Budget Office score of the bill from the 111th Congress found  the new benefit would not create any direct spending, although the annual value of the paid time off was $140 million for four weeks and $209 million for eight weeks. To keep the costs down, other employees would have to pick up the slack for their colleagues on leave.

Finally, for those concerned about a more imminent threat – a possible shutdown if Congress doesn’t approve agency funding by Sept. 30 – you can rest assured that lawmakers are already thinking of ways to guarantee your pay. Sen. Ben Cardin, D-Md., on Wednesday introduced a bill that would ensure workers furloughed during a shutdown receive back pay quickly once the shutdown is over. Currently those workers are not guaranteed any pay for the days they don’t report to the office. The bill would also require prompt payment for those who are required to continue working during shutdowns. Those employees are guaranteed back pay, but after the 2013 shutdown ended, they had to wait until their next scheduled paycheck to receive the money they were owed.

Of course, it would be better to avoid a shutdown altogether, as Democratic lawmakers and federal employee advocates are quick to point out.

Kellie Lunney contributed to this report. 

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