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Developments at OPM: Final Rule on Phased Retirement

by | Aug 11, 2014 | Others

Developments at OPM: The Office of Personnel Management (OPM) published a Final Rule in the August 8, 2014 edition of the Federal Register (79 Fed.Reg. 46,608-46,638). The Final Rule contains OPM’s final regulations for implementing the phased retirement created by Section 100121 of Pub.L. 112-141, as previously analyzed in this blog. The effective date for the rule is November 6, 2014. 

Under the new “phased retirement” system, a retirement-eligible employee can make a one-time election to work part-time and begin collecting part of their federal pension at the same time. The proposed regulations only allow the employee the option of working half-time while receiving 50% of the pension. Pub.L. 112-141 gave OPM the option of allowing retirement percentages other than the default 50%, but OPM opted not to invoke that authority at this time–although it left the door open for later amendments to its regulations to make other partial retirement percentages available in the future. Phased retirement participants outside of the Postal Service are required to spend 20% of their work time in mentorship activities (subject to a limited waivers by the employing agencies), and continue to accrue pro rata retirement service credit for the time that they still work. Participants then may elect to fully retire at any time, at which point their pension is recomputed to reflect their additional phased retirement work. Alternatively, participants can elect to return to full-time work with the consent of their employing agency, and then receive partial retirement service credit for the phased retirement period when the employee later decides to fully retire.

Despite receiving over 200 comments on the Proposed Rule on phased retirement issued in 2013, OPM only made four small changes to the Final Rule.  Two of the changes were technical edits.  The other two implemented a requirement that agencies establish written criteria for grant or denial of phased retirement applications before they start issuing decisions on individual employees’ phased retirement applications.  OPM also noted that it would be issuing further guidance to cover a variety of topics concerning how phased retirement would interact with other aspects of federal personnel law. 

If you are a current federal employee who would like to discuss your rights under the new phased retirement regulations, or other issues concerning your federal employee retirement benefits, please contact the law firm of [nap_names id=”FIRM-NAME-6″] & [nap_names id=”FIRM-NAME-4″], P.C. to request a consultation.