DoD Opens Door for Its Employees to Phase Into Retirement

The Defense Department on Tuesday opened the door for allowing its civilian employees to phase into retirement, potentially jump-starting a government-wide program announced to much fanfare several years ago but little used since.

Guidance from the Pentagon’s personnel office lays out the policies it will use for the hybrid arrangement in which retirement-eligible employees cut back to part-time work for a time before retiring fully.

The policies in general repeat the basic requirements set by law and government-wide regulations, while listing factors the department will consider when deciding to offer the arrangement to an eligible employee.

Phased retirees work half time while collecting half of their salaries, plus half of the annuities they have accumulated to that point. When they fully retire, their annuities are recalculated to take the part-time work into account.

The program, touted as one of the more significant changes in federal personnel policies in recent years, was a reaction to the loss of expertise that agencies face as an aging workforce retires. Generally, phased retirees are to spend a fifth of their working time mentoring their successors. Meanwhile, many employees have expressed interest in keeping a hand in their work for a time, passing along their knowledge, and enjoying a higher income than they would receive as full annuitants.

Putting it into practice, however, has given new meaning to the word “phased.” The authority was enacted into law in mid-2012, proposed rules were not issued until a year later, and final rules a year after that, effective in late 2014.

Even at that, phased retirement was not actually available to anyone until it was offered to a handful of employees at the Library of Congress in the spring of 2015.

According to the Office of Personnel Management, only 80 federal employees — out of a workforce of 2.1 million outside the independent U.S. Postal Service — currently are on phased retirement, while another seven have completed such periods and are now fully retired.

Those employees are spread across only 15 agencies, with the largest number at NASA, 17, followed by the Library of Congress and the Environmental Protection Agency, 14 each. Ten of the others have three or fewer phased retirees. The Commerce Department recently announced that it would start the program there.

The Defense Department move, however, holds the potential to boost the program significantly; it employs about a third of the non-postal executive branch workforce.

About 77,000 employees, more than a tenth of the DoD total, already are eligible for retirement but “We don’t know yet how many employees will be interested in or request approval for phased retirement,” a Pentagon spokesman said.

Richard G. Thissen, president of the National Active and Retired Federal Employees Association, called the DoD announcement “long overdue.”

“Since phased retirement became law four years ago, NARFE’s phones have rung off the hook with calls from federal employees wondering when phased retirement will be available at their agencies,” he said in a statement. “For many other federal employees, however, this news will add to their frustration because the future of phased retirement at many agencies is still uncertain. I urge every federal agency to join DoD, Commerce and a handful of other federal agencies and embrace this innovative human resources tool.”

Phased retirement is voluntary for the employee and is available only to those who already are retirement-eligible, have worked full-time for at least the last three years, and are not in one of the few federal occupations, such as law enforcement, where retirement is required at a certain age.

The employing agency controls whether to grant a request from someone meeting those criteria, however, and it is uncertain how widely DoD will use it. Use of the authority will be up to individual DoD components, which will have to first write their own policies for approving or denying requests, the Pentagon spokesman said in an email.

“The Department sees phased retirement as a mutual benefit for employees and organizations and is another option in the management tool box to support knowledge transfer and the development of the next generation of employees and leaders,” he said.

Under the department-wide policy, if an employee expresses interest, management would consider factors including whether:

— The nature of the work requires that it be done more than half-time;

— There are needed mentoring activities and whether the employee is willing and able to perform them;

— The employee has knowledge that needs to be transferred in that way; and

— Money is available to pay for both the phased retiree and a replacement.