OPM has finally published proposed regulations to implement phased retirement. While nothing will happen until those regs are final, at least two months from now after a comment period expires, I thought it would be a good idea to give you a jump on what it is and how it will be handled.
To refresh your memory, phased retirement allows you to retire but continue to be employed on a part-time basis and earn additional retirement benefits based on that part-time service. If you are approved for phased retirement, you’ll work half-time and receive half of what your annuity would have been had you retired completely. While on phased retirement, you’ll be a part-time employee, not a reemployed annuitant.
It’s important to understand up front that you don’t have an entitlement to phased retirement. While participation is entirely voluntary, it does require the mutual consent of both you and your agency. Translation: If you want it and they don’t – or vice versa – it can’t happen.
To be eligible for phased retirement, you have to have been employed on a full-time basis for the preceding three years. If you are a CSRS employee, you must also meet the age and service requirements for immediate retirement: age 55 with at least 30 years of service or 60 with 20. If you are a FERS employee: at your minimum retirement age (MRA) with 30 years or 60 with 20.
While most employees hitting one of those combinations are eligible for phased retirement, other are not. Specifically excluded are employees subject to mandatory retirement, such as law enforcement officers, firefighters, air traffic controllers, customs and border protection officers, nuclear materials couriers, or members of the Capital or Supreme Court police.
If you and your agency reach an agreement about phased retirement, you’re not stuck with that decision. If you change your mind, you can apply for full retirement, just like any other employee at retirement eligibility. You don’t need to get your agency approval to do that. However, beware that your period of phased retirement will be treated as part-time service.
On the other hand, if you want to return to being a regular employee, you can’t do that unless your agency agrees to it. If it does, you can’t later elect to go back to phased retirement.
Next time, I’ll dig into the details of the proposed regs and how they would affect you.