Back to Work, Again

By Tammy Flanagan

March 30, 2007

Last week's column on what happens if you seek to return to federal work after retirement sure generated a lot of reaction. So I decided it would be worth exploring the subject again, and looking specifically at how the rules have changed at the Defense Department.

First, here are some of the comments I received on the column:

These people aren't the only ones who think the rules on re-employed annuitants could use some changing. Earlier this month, Office of Personnel Management Director Linda M. Springer told a House appropriations subcommittee that the agency is "working to develop a proposal, as a means of combating the forthcoming retirement wave … that would allow federal agencies to rehire recently retired federal employees who can assist with short-term projects, fill critical skill gaps and train the next generation of federal employees without having a reduction in the annuity payments they have already earned."

So there you have it. Sometimes the old rules become outdated and need to change. At one time, it was in the government's best interest to discourage re-employment, but in times of need, the opposite can be true. As I noted last week, there already are changes taking place: Under certain circumstances, agencies can use provisions of the 1990 Federal Employees Pay Comparability Act to hire federal retirees without offsetting their salaries.

Following the terrorist attacks on Sept. 11, 2001, OPM delegated the authority to waive the salary offset. This delegation remains in effect until the president terminates his declaration of a national emergency resulting from the attacks.

The downside of this authority is that re-employed annuitants hired under it aren't entitled to future retirement benefits based on this additional service. Under the original rules for re-employment, it's possible to accumulate future retirement benefits if the re-employment lasts at least one year.

Defense Differences

One reader reminded me after last week's column that "the rules on re-employed annuitants in DoD are almost totally different as a result of a law passed five or so years ago."

Indeed, the 2004 National Defense Authorization Act provided the Pentagon with specific re-employment authorities, including the ability to waive salary offsets. David S.C. Chu, undersecretary of Defense for personnel and readiness, outlined the reforms in a March 2004 memo.

The policy applies to annuitants rehired after Nov. 24, 2003. The jobs can only be offered at the GS-15 level (or the equivalent) and below. And annuitants hired under the authority can only be brought on under the following circumstances:

By the way, the new National Security Personnel System that many employees are shifting to does not affect rules governing retirement, health and life insurance, leave, attendance and other similar benefits. If you were to return to work under NSPS, you would be treated as any other re-employed annuitant.

This is a good time for federal retirees at least to consider re-employment. Besides putting your skills to use, another major advantage is the option to test your retirement income. Some re-employed retirees live on their retirement benefit and bank their re-employment income. At the end of the re-employment period, this banked income can be used to pay off a mortgage balance or other debt to make full retirement more comfortable.

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

By Tammy Flanagan

March 30, 2007