As I mentioned last week, if you are approved for phased retirement, you’ll receive additional credit for that service toward your full retirement. While you are working half-time, you’ll still receive 50 percent of the annuity you would have received if you had simply retired.
Just be aware that if you owe any deposits or redeposits to get service credit, including for active duty service in the armed forces, you’ll either have to pay up before the period of phased retirement begins or have your annuity reduced, just as it would be if you simply retired. If you decide to make a deposit of redeposit you can indicate that when you apply for phased retirement. Then you’ll have the time between that filing and its approval to pay up. Note: Not to sound a macabre note, but if you were to die while in phased retirement, your survivors could make a deposit or redeposit for you.
If you accept the annuity reduction and return to full-time employment, you will have another crack at making any of those deposits and redeposits. It’s entirely up to you whether you do that. However, if your phased retirement career ends and you fully retire, it will be too late to make a deposit or redeposit.
While you are on phased retirement, your enrollment in the Federal Employees Health Benefits and Federal Employees’ Group Life Insurance programs will stay with your agency. Your FEHB premiums will be the same as they were when you were a full-time employee. Your FEGLI coverage will be based on the full-time salary of your position.
When you retire from your period of phased retirement, you’ll receive a "composite retirement annuity." At this point, I’m going to rely on what OPM has written because I need to do a little more study to be sure I understand what they are saying. Here goes. "The composite retirement annuity will be the amount of phased retirement annuity as of the commencing date of full retirement, plus one-half of the amount of annuity that would have been payable at the time of full retirement if the individual had not elected phased retirement and as if the individual was employed on a full-time basis in the position occupied during the phased retirement period."
When you fully retire, your FEHB and FEGLI enrollments will transfer from your agency to OPM. That’s assuming that you’ve met the participation requirements to do that. As a rule this means that you must have been continuously enrolled for the five consecutive years before you retire.
There’s more coming, so keep tuned.