Retirement Benefits

The phased retirement program has not been much used across the government but still, it does exist. When it is used, it’s largely because the employee took the initiative to request it and make a case for it to agency management. You’d need to know what value it might have to you in deciding whether to make that effort.

Under that program, people who are eligible to retire under one of the combinations other than the age 62 with five years of service combination, or subject to mandatory retirement, cut back to half-time work while also receiving half of the annuity accumulated to that point. That’s without the offset the typically applies to rehired annuitants.

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What kind of case would you have to make? Essentially it would be that rather than losing you to immediate retirement, the agency would benefit by keeping you on part-time as an experienced employee for a period during which you would add value by spending part of your time mentoring other employees. Meanwhile you would benefit by keeping your hand in work that you likely feel is important while easing, rather than jumping, into retirement.

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 have to pay up before the period of phased retirement begins to get that service credit. Note: If don’t make the deposit and you were to die while in phased retirement, your survivors could make a deposit or redeposit in order to capture that time for a survivor benefit.

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. You will be allowed to continue paying FEHB premiums on a pre-tax basis, which is allowed for employees but not retirees. Your FEGLI coverage will be based on the full-time salary of your position.

When you retire from your period of phased retirement, the full originally calculated annuity will be paid, and a second benefit will be calculated reflecting the period worked as a phased retiree and credit for unused sick leave at that time. The high-3 salary base used for that additional benefit will be that of the full-time rate of the position.

Also at that time, your FEHB and FEGLI enrollments will transfer from your agency to OPM as they do on a regular retirement. 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.

Report: Phased Retirement for Federal Employees

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FERS Retirement Guide 2021