It’s been over 11 years since Congress enacted the Advances for Progress in the 21st Century Act, which created new phased retirement options for certain employees covered by the Civil Service Retirement Plan or Federal Employee Retirement Plan. .
Federal employees can apply for phased retirement starting in November 2014. The number of people who applied is still small, but for those who took advantage of her two-step retirement, it could be an easy way to move on. life. It also provides an opportunity to serve as a mentor to the next generation of employees.
In a phased retirement, employees work half-time, receive half of their full-time salary, and also receive about half of their pension. A phased retiree (excluding post office retirees) is required to spend 20% of his working time on instructional activities.
Employees must meet certain criteria to take advantage of phased retirement.
- Must be employed full-time for three years immediately prior to entering phased retirement.
- CSRS employees must be 55 or older with at least 30 years of service and 60 or older with at least 20 years of service.
- FERS employees must be of minimum retirement age (55-57, depending on year of birth) and have at least 30 years of service, or be 60 and have at least 20 years of service.
- Employees who are eligible for mandatory retirement (law enforcement officers, firefighters, air traffic controllers, etc.) are not eligible for phased retirement.
Schedule and Limits
Employees who have phased out continue to work at 50% of their full-time work schedule. Gross salaries are cut in half and are still subject to employee withholding. Health and life insurance premiums are the same as withheld from full-time employees.
Agencies can set a time limit for how long employees can continue to phase out. FERS phased retirees do not receive additional pensions.
An employee’s pension is determined based on the employee’s total merits up to the effective date of the phased retirement and the highest three-year average salary. Security deposits for post-1956 military service must be paid before the phased retirement begins. Security deposits due for private services must also be paid. Employees in phased retirement status will no longer be able to pay these deposits once they are fully retired.
thrifty savings plan
Phased retirees are still eligible to participate in TSP. They can contribute to her TSP account and are subject to normal restrictions on TSP loans, financial hardship withdrawals, and withdrawals while in employment based on age.
Employees in phased retirement status are not eligible to withdraw from the TSP after employment. Not subject to minimum required distributions or withdrawal deadlines on her TSP.
All sources of contributions to the TSP (employee contributions, government agency automatic 1% contributions, agency matching contributions) are determined using the employee’s base salary. If an employee elects her TSP contribution based on full dollars and that amount is greater than her available salary after deducting other mandatory deductions, no employee contribution will be paid during the payroll period. . In this situation, FERS employees are not eligible to receive matching contributions from government agencies during payroll periods.
return to full-time work
In phased retirement, the idea is that employees go through a three-step process: full-time employment, half-time employment with half retirement benefits, and then full retirement. However, with the agency’s permission, the employee can end the phased retirement and return to full-time work.
In this case, the phased retirement would be treated as a period of part-time employment. The phased retirement pension will be terminated immediately.
Comprehensive retirement allowance
If an employee in phased retirement status decides to fully retire, their full pension (called a combined retirement pension) is equal to the sum of:
- A graduated retirement pension renewed by a cost of living adjustment.
- The amount of the final stage portion of the full retirement pension. This is the percentage of the full pension that the employee would have received had he not taken the phased retirement.
Next week, we’ll look at some examples of how phased retirement might play out. During this time, the Human Resources Department More information about phased retirement and documents required for application.