Federal employees would be allowed to phase into retirement if a provision approved (82-16) by the Senate last week became law. Under an amendment to the surface transportation bill (S.1813) a federal employee would be able to continue to work part-time, while being partially retired. A final Senate vote on the bill could occur in the next few days, after which it will move to the House.
The Senate’s phased retirement provision is similar to a legislative proposal included in the president’s FY2013 budget request (for the Office of Personnel Management) to allow “federal employees to transition into retirement.” The administration originally proposed a phased retirement plan in the “Federal Hiring Modernization Act of 2010.” However, Congress did not take final action on that proposal.
Under “phased retirement” authority, federal employees approaching retirement would be able to continue working, while beginning retirement. Participants in the program would receive income from a combination of part-time salary and a reduced pension, while accruing future retirement benefits proportional to the time they work.
However, not all federal employees could elect to participant in phased retirement. The proposal excludes federal law enforcement officers, firefighters, nuclear courier couriers, air traffic controllers, and customs and border protection officers could not participate.
The administration sees reduced pension costs and retention of high-value, experienced employees as benefits to the government. As a condition of participation in this plan, part of the employee’s time would be spent mentoring other employees. This mentoring could ease the “brain drain” effect from the loss of experienced personnel due to a high rate of retirements over the next few years.
The Senate amendment, sponsored by Sen. Max Baucus (D-NM) and others, would save an estimated $465 billion. This amount would be used in the bill to pay for roads and economic development in rural areas. The use of this program to serve as a bill payer for other programs in the bill has stirred some criticism from supporters of a phased retirement program. These critics say the savings would be better used to prevent federal pension cuts or forego increased retirement contributions for federal workers.