Phased Retirement Reality

The moon goes through a full set of its phases about once a month, but it seems that a federal employee is allowed to enter phased retirement only once in a blue moon.

One definition—there are others—of a blue moon is the second occurrence of a full moon within a month, which happens every other year or so. The phased retirement program has that beat, but not by much.

To recap, phased retirement is an arrangement in which an employee who is already retirement-eligible is allowed to switch to half-time work, receiving a proportionate salary plus half of the annuity accrued to that point. The individual is treated like an employee, not a retiree, for benefits and other workplace policy purposes and is to spend 20 percent of working hours in mentoring activities. On later full retirement, the full annuity is paid, with an adjustment for the part-time work.

When the authority was enacted in 2012, it was widely hailed by the White House, both parties in Congress and the good-government community as benefitting both agencies and employees.

Then it took OPM a year to put out proposed rules.

Then it took OPM another year to finalize those rules.

Then it was up to agencies to put out their own guidance.

Around the fourth anniversary of the law’s enactment, OPM put out data showing that a grand total of 80 federal employees were on phased retirement and another seven had finished such periods and were now fully retired.

The agency that is using phased retirement the most—and that is clearly a relative term here—is NASA, with 17 employees. EPA and Library of Congress are next with 14, then Smithsonian with 11. None of the other dozen agencies currently using the authority have allowed it for more than four employees.

That includes the FTC, Labor, and Federal Housing Finance, each of which has one phased retiree.

It’s a legitimate question to ask whether it’s even worth having a policy when you are going to use it so sparingly. Since issuing its final rules, OPM has not been urging agencies to use the authority, saying it’s their call, and even among agencies that do use it, there’s no sense that this is anything but an outlier exception to the way things are done.

All this provides a context for considering the recent announcement by DoD that it will start a phased retirement program there. That could be the breaking of the dam—as the largest federal agency, DoD is often the leader in federal personnel policies, setting precedent-and providing cover—for other agencies to do the same.

The potential is there. DoD has nearly 80,000 employees who already are retirement-eligible. It now has a set of guidelines in place that add relatively few restrictions to the basic policies required of all agencies under the law and the OPM regulations.

For example, they specify that there must be an agency need for mentoring, and the employee must be willing and able to do it. That’s hardly a high bar, really going little beyond the basic definition of the program.

Yet even at that, it would be wise not to expect too much. Here’s how the official DoD news announcement characterized the development:

“Participation in the DoD phased retirement program is voluntary and requires the approval of an authorized DoD component official based on written criteria that comply with the Office of Personnel Management regulations. DoD components may opt to develop implementation guidance specific to their organizational structures and establish timeframes for accepting phased retirement applications.”

Does that strike you as the sound of floodgates opening?

If you already are retirement-eligible, or will be soon, and phased retirement seems like it would be attractive to you, DoD or not, about all you can do is raise your hand and express interest. Review your agency’s policies and make a case for how it would benefit the agency.


Just don’t hold your breath until you turn blue.