Rules Spell Out Specifics

The final rules in the August 8 Federal Register make few changes from the proposed version. OPM said it needed time to coordinate with other agencies and to work through hundreds of comments—although many suggestions were outside its authority, since the main terms of the program are set by law. For example, by law phased retirement cannot be made available to those eligible only under the age 62 with five years of service eligibility combination, although it will be available under the other standard voluntary combinations of age 60 with 20 years under both CSRS and FERS, and with 30 years of service at age 55 under CSRS and minimum retirement age (currently 56) under FERS. It also will not be available to early retirees, those eligible for other forms of retirement such as disability retirement, nor to those subject to mandatory retirement. The final rules also reflect the original policies for treating phased retirees as active employees for benefits purposes (since they will not separate from service), including: continued eligibility to pay their share of FEHB premiums with pre-tax money and with the full government share continuing; eligibility to continue to invest in the TSP and take loans and in-service withdrawals, but ineligibility for post-separation withdrawal options such as purchasing an additional annuity; the specifics of how the additional time will translate into an increase in the annuity when the individual later retires fully; continued accrual of annual and sick leave but at the prorated rate for half-time work; and the requirement that phased retirees spend at least a fifth of their working time in mentoring activities, preferably involving individuals who will take over for them when they fully retire. Also, while only half-time work will be allowed for now, that could change at some point to allow other amounts of working time.