Last week, the House and Senate approved a plan to allow federal employees to “phase” into retirement.  The authority for phased retirement is included in the Transportation authorization bill (Sec. 100121 of H.R. 4348), which the House and Senate passed before beginning the July 4th recess.  The president is expected to sign the bill.

Under the so-called “phased retirement” plan, federal employees approaching retirement would be able to continue working, while beginning retirement.  Phased retirement authority was supported by the administration and federal employees’ labor organizations and received bipartisan support in Congress.

Participants in the program would receive income from a combination of part-time salary and a reduced pension.  For example, an employee participating in the phased retirement program would receive retirement pay reduced proportionally by the amount of time worked.  The bill would allow an employee to work from one to four days per week.  Employees under the plan would also accrue future retirement benefits proportional to the time they work

As a condition of participation in this plan, 20 percent of  an employee’s time would be spent mentoring other employees.  Proponents of phased retirement believe that this mentoring could help ease the “brain drain” effect from the loss of experienced personnel due to an expected high rate of retirements over the next few years.

President Obama requested phased retirement authority in the FY2013 budget request, citing reduced pension costs and retention of high-value, experienced employees as benefits to the government.