House committee approves phased retirement plan for federal employees

Thursday, April 19th, 2012

A key House committee signaled that the House may be ready to agree with the Senate on a plan to allow federal employees to “phase” into retirement. 

Yesterday, the House Oversight and Government Reform Committee unanimously approved a bill (H.R. 4363) that would provide authority for federal agencies to allow federal employees to continue to work part-time, while being partially retired.   Under the plan (sponsored by committee chairman Rep. Darrell Issa (R-CA), 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.

President Obama requested phased retirement authority in the FY2013 budget request.  The administration originally proposed a phased retirement plan in 2010 to reduce pension costs and retain high-value, experienced employees. 

The House bill is similar to language included in the Senate-passed surface transportation bill (S. 1813).  The provision in the Senate bill would use these savings as a bill payer for transportation programs.  However, the House bill makes no mention of how the estimated $465 billion in savings from the proposal would be used. 

The National Active Retired and Federal Employees (NARFE) expressed support for the House action.  This legislation would provide personal flexibility for federal employees who wish to cut back on their hours but not fully retire,” NARFE president Joseph Beaudoin said in a press release.  However, NARFE opposes the use of the savings to pay for “unrelated spending provisions.” Instead NARFE supports crediting these savings “to the Civil Service Disability and Retirement Fund (CSRDF) or other civil service improvements.”

The House committee also approved an amendment to the bill that would allow federal employees to put the value of their unused vacation leave into their Thrift Savings Plan (TSP) when they retire.  This proposal was addressed by Congress in 2010, but no final action was taken.  It is unclear how much support this proposal would have in the Senate.

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