Part-time Work and Retirement

Over the last two weeks, I’ve written about two provisions hidden in HR-1256, the Family Smoking Prevention and Tobacco Control Act, and made explicit in HR-1804, which affect the benefits of federal employees. The first of these would allow FERS employees to get credit for their unused sick leave when they retire. The second would allow FERS employees who leave the government and receive a refund of their retirement contributions to make a redeposit, plus accumulated interest, if they return to work for the government and get retirement credit for that time.

Now I want to write about another provision in both bills, both of which have passed the House. It’s a provision that would alter the way in which part-time service is credited when an employee retires.

As it stands now, the law requires that the annuity of an employee who has performed any part-time service before April 7, 1986 be computed in two different ways. The first is based on the employee’s creditable service before April 7, 1986 (including any unused sick leave on the date the employee retires). The second is based on the difference between full-time and part-time service performed after April 6, 1986.

You can learn what these computations produce by going to http://opm.gov/retire/pubs/handbook/C055.pdf. Suffice it to say that the retiree’s annuity would be greater if the part-time service were performed before April 7, 1986 than it would if it were performed after that date. The purpose of the House language is to allow the earlier formula to be used for all part-time service, regardless of when it was performed.

As before, it remains to be seen whether this provision will become law. There is no similar language in the Senate tobacco bill. Further, the Senate has not yet voted on its version of that bill. If it does, then the differences between the two bills would have to be reconciled in conference. Further there is no companion bill in the Senate for HR-1804. Stay tuned for further developments.