OPM Issues Guidance on How to Partially Retire

The Office of Personnel Management has released additional details on the phased retirement option for eligible federal employees, spelling out implementation plans for the proposal signed into law nearly one year ago.

Phased retirement -- which allows eligible federal employees to work part time while collecting prorated pension payments -- was included as a provision in last year’s transportation bill. OPM guidelines -- which will be officially published Wednesday in the Federal Register -- regulate eligibility, compensation, benefits and hundreds of additional facets of the new retirement option.

All retirement-eligible employees working full time in federal service for the previous three years are eligible for phased retirement, OPM said, though the agency must consent to the arrangement. An employee “does not have an entitlement” to partially retire.

Partially retired employees will spend half their time working, according to OPM, meaning they will work 20 hours per week. These employees will receive half of the normal pay of the position, as well as half their normal retirement annuity. Salary increases will be calculated based on normal pay raises, while annuity payments would increase proportional to cost of living adjustments.

Most other benefits -- such as health benefits, the Federal Employee Group Life Insurance benefit, survivor benefits and annuity garnishment protection -- are calculated as if the partial retiree were still a full-time employee.

Employees in phased retirement can return to full-time work with their agency’s approval, but they can only work half-time while partially retired except in “rare and exceptional circumstances.”  

The federal government can use phased retirement as “a tool to ensure continuity of operations and to facilitate knowledge management,” OPM said. The new partial retirement rules will provide departing workers with financial incentive to stay on part time and train new employees; partial retirees will earn more than those in full retirement.

Partial retirees must dedicate at least 20 percent of their working hours to “mentoring activities as defined by an authorized agency official.” 

Interested parties have 60 days from Wednesday to submit comments to OPM before the new guidance takes effect. 

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