To understand the concept of Phased Retirement,
consider two half-time employees who fill one
full-time job. Employee one retires while employee
two continues working. Employee one receives an
annuity based on half-time employment, and employee
two continues to work half-time for half-pay.
Eventually, employee two retires, and receives an
annuity based upon half-time service, including
credit for the time worked after employee one
retired. Now assume that employee one and employee
two are the same person. That is in essence how
Phased Retirement operates.
While there are additional computational details,
these are the basics. At entry into Phased
Retirement, the employee’s annuity will be completed
as if fully retired and then divided by two. That
annuity would be paid while the individual worked a
half time schedule receiving half pay.
When the Phased Retiree fully retires, there will
be a computation of the annuity that would be
payable if the employee had been employed full time
and then divided by two prior to adjustment for
survivor benefits. That amount would then be added
to the original Phased Retirement Annuity, and that
combined amount would then provide the basis for
survivor annuity adjustment and benefits.
The individual’s income during partial and full
retirement appropriately reflects the individual’s
situation. During the partial retirement period, the
income will be between full retirement and full
employment, and the Phased Retiree would be
increasing their lifetime retirement income. At the
time of full retirement, the individual would be
appropriately compensated for the value of both
full-time and part-time service, with an annuity
greater than if they had fully retired at the time
of transition to Phased Retirement, but less than if
the individual had continued employment on a
full-time basis during the period of Phased
To make this workable and avoid intractable
administrative problems, no survivor benefits can be
based upon a Phased Retirement annuity. If the
individual dies prior to full retirement, survivor
benefits will be those applicable for an employee
who died in service, with provision for minor
computational adjustments necessitated by the unique
nature of Phased Retirement.
Participation is entirely voluntary, and requires
the mutual consent of both the employee and
employing agency. In order to participate, an
individual must have been employed on a full-time
basis for the preceding three years. Under CSRS, the
individual must be eligible for immediate retirement
with at least 30 years of service at age 55, or with
20 years of service at age 60. Under FERS, the
individual must be eligible for immediate retirement
with at least 30 years of service at MRA (minimum
retirement age 55-57 depending upon year of birth),
or with 20 years of service at age 60.
The law provides that employees subject to
mandatory retirement (including Law Enforcement
Officers, Firefighters, Nuclear Materials Couriers,
Air Traffic Controllers, Customs and Border
Protection Officers, or members of the Capitol
Police or Supreme Court Police) may not participate.
However, “grandfathered” Customs and Border
Protection Officers who are not subject to mandatory
retirement may participate.
Phased Retirement Annuities will be subject to
court orders providing for division, allotment,
assignment, execution, levy, attachment,
garnishment, or other legal process on the same
basis as other annuities.
No unused sick leave can be used in the
computation of the Phased Retirement annuity.
However, at full retirement the unused sick leave
will be taken into account. While the computational
provisions are somewhat complex, the value of the
sick leave in that computation will be the same as
for an individual retiring from a full-time
FEHB and FEGLI will stay with the employing
agency. FEGLI benefit coverage amounts will be based
upon the full time salary for the position. The FEHB
employer contribution will be the same as for
Initially, individuals will only be able to
transition to a half-time schedule. After there is
experience with the program, OPM may by regulation
provide for other work and retirement proportions.
Yes, if the employing agency agrees to the
change. The Phased Retirement annuity will then
terminate. Upon retirement, the individual’s
retirement will be calculated under the laws then in
effect, with the period of Phased Retirement treated
as part-time service. Once an individual has gone
back to full-time employment, they cannot elect to
go back into Phased Retirement.
Deposits and redeposits (including for military
service) must be satisfied (either by payments or
annuity reduction as applicable) prior to entry into
Phased Retirement status. Any reduction in annuity
or loss of service credit at the time of entry into
Phased Retirement will be permanent for the
employee. No deposits or redeposits can be made by
the employee at a later time, including at the time
of full retirement.
However, in the case of a Phased Retiree’s
death-in-service, the survivors can make deposits or
redeposits on the same basis as if the decedent had
not been a Phased Retiree.
The program will become effective at the time set
in the regulations to be issued. Implementation of
the program is an important goal of OPM, and this
will be accomplished as soon as possible.
The Office of Personnel Management (OPM) is proposing to implement
phased retirement, a new human resources tool that
allows full-time employees to work a part-time
schedule while beginning to draw retirement
benefits. Section 100121 of the “Moving Ahead for
Progress in the 21st Century Act,” or “MAP-21,”
authorizes phased retirement under the Civil Service
Retirement System and the Federal Employees'
Retirement System and requires OPM to publish
regulations implementing phased retirement. The
purpose of phased retirement is to allow the Federal
Government to continue to benefit from the services
of experienced employees who might otherwise choose