Feds interested in phased retirement left playing waiting game

Nearly two years after Congress passed a bill allowing federal employees to ease into retirement on a part-time basis, the Office of Personnel Management is still finalizing regulations spelling out how exactly federal employees can join the program.

OPM now says it hopes to have regulations finalized by October.

That can’t come soon enough for many federal employees on the cusp of retirement who are caught in the regulatory limbo.

During an exclusive online chat with OPM Director Katherine Archuleta last month, the topic of phased retirement was top of mind for many feds.

“We are working hard on the rule,” Archuleta said in response to queries about when the new option would be available. “We are hopeful that it will be completed in fiscal year 2014. We want to make sure we get it right, and we will have an update soon.”


Under the legislation passed by Congress in July 2012, employees can partially retire and draw on half of their earned retirement benefits while continuing to work part time.

OPM’s draft regulations, issued more than a year ago, specified that would-be phased retirees must have 20 years of experience and be eligible for immediate retirement. In addition, phased retirees will have to spend at least 20 percent of their time mentoring employees.

OPM has been fairly tight-lipped about what’s taken so long to finalize the regulations.

“I think at this point, they seem to be crossing the t’s and dotting the i’s,” said Jessica Klement, legislative director for the National Active and Retired Federal Employees Association (NARFE). “But it took us two years to get to this point.”

‘It’s all coming up to a crunch…’

That’s left many employees in wait-and-see mode.

Tom Young, a 37-year veteran of the National Park Service, is nearing retirement and said he thinks phased retirement could be the best option for both him and the park service.

As a park ranger, Young, who’s 55 now, faces a mandatory separation age of 57.

“So, retirement for me is right around the corner,” he told Federal News Radio. “In fact, I had planned to have retired in July of this year. However, I am now waiting it out just a little bit more for OPM and for other reasons as well, to find out whether or not there are going to be any more options for me.”

Over the past 25 years as a park ranger at the Santa Monica Mountains National Recreation Area in southern California, part of Young’s job duties has been training less-experienced rangers, including as search-and-rescue, emergency response and special driving and firearms training.

The training courses he runs must compete with other duties of a full-time park ranger. If phased retirement became available, Young said his schedule would shift to be more training-focused.

Young said he now plans to make his retirement decision in late fall and that he hopes OPM will have clearer answers about phased retirement by then.

“The bottom line is that I cannot hold this position without undergoing mandatory separation by November of next year,” he said. “It’s all coming up to a crunch. Time flies by very quickly, and it’s been going on nearly two years since we’ve had this forward motion in phased retirement. And yet, there’s no final outcome.”

One employee takes matters into her own hands

Some employees have given up the waiting game.

Janet Benini, associate director for the Transportation Department’s International Preparedness division, has worked for the federal government for the past 16 years.

“When they passed the [phased retirement] legislation, I thought, ‘This’ll be just great,'” she said. “And I started looking into it, and I kept waiting and waiting and waiting for the regulations.”

However, when OPM finally published proposed regulations last summer, the draft rules restricted the new option to employees eligible for immediate retirement with at least 20 years of experience.

Even though those regulations hadn’t been finalized, Benini decided to take matters into her own hands. She struck a deal with her bosses at DOT, who she said were helpful in coming up with a work-around. Over the next three years, Benini plans to work a 70 percent part-time schedule — seven work days per pay period.

But unlike phased retirement, Benini is not earning part of her annuity and has to make a bigger contribution to her health insurance. That’s because since she’s gone to 70 percent time, the government has also scaled back the portion that it pays to 70 percent as well. On top of that, she’s only accruing 70 percent of her vacation time and sick leave each year.

But the work-around does allow her to spend time mentoring her successor “and that’ll offer a good opportunity for hand-off,” she added.

“When I worked it out, it still seemed like the best option for me … I’m just disappointed that OPM hasn’t passed regulations,” she said.

Still, if OPM came back with revised final regulations that loosened the years-of- service requirements, would Benini change her plans again?

“Oh, absolutely, I would take it,” she said.

Group seeks tweaks to rules

NARFE and other employee groups are concerned some of the draft regulations — such as the years-of-service requirement — will turn away otherwise qualified participants, and they would like to see revisions in the finalized rules.

The legislation, as written, only required employees to be eligible for immediate retirement under whatever retirement system they fall under.

“There was no rhyme or reason for this, so, we feel that again, in this age of austerity budgeting, you should be welcoming this provision, not limiting its eligibility,” Klement said of the draft rule’s restricted eligibility requirements. “And I have no idea why it was set this way.”

NARFE would also like to see OPM firm up the mentoring requirements in the final regulations. The draft rules were short on details, other than requiring phased retirees to spend at least 20 percent of their schedules mentoring others.

“If this is the main purpose for phased retirement, why are they giving agencies so much leeway to waive the mentoring requirement, and the discretion to decide what types of mentoring activities meet this requirement. … It’s really, really vague on the mentoring piece despite the fact that this is supposed to be the main purpose of this new law,” Klement said.

OPM getting agencies on board with changes now

But even when OPM publishes final regulations on phased retirement, those may not be the final word on the timeline.

Employees should be prepared for potential further delays as agencies take time to fully implement them, Klement said.

“Just because OPM hasn’t released the final regulations, doesn’t mean that when they do, everyone’s going to run toward phased retirement,” she said. “It doesn’t work that way. … Your agency still has to implement this. Your supervisor has to approve you becoming a phased retiree. There are more steps in the process.”

However, insiders say one of the reasons for the lag in final regulations is that OPM is trying to get agencies on board now with the proposed changes, so they’re not caught unawares when OPM releases them.

Judging by the comments on the draft rules submitted by agency HR offices, they want more details on the nuts and bolts of implementation, such as what happens if a phased retiree desires to return to full-time employment but the agency disapproves, whether phased retirement agreements would be for set for specific time periods, and the total length of time an employee can stay on as a phased retiree.

“From what I understand, OPM is trying to work with agencies now on that, so when the phased retirement regulations are finalized, agencies are ready to go,” Klement said.

Because of the tax implications for phased retirees, OPM also had to coordinate with the Internal Revenue Service and the Office of Management and Budget, which may have contributed to the lag.

“I know OPM is getting a lot of heat for this, but I know some of it is also outside of their control,” Klement said.


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