6/28/12: A conference committee working on the Transportation bill, H.R.4348, has reached agreement on that bill. The NTEU-supported phased retirement proposal for federal employees is included in that conference agreement. Under this proposal, which was also included in the President’s FY 2013 budget, federal agencies would have the discretion to permit employees who are eligible for retirement to work a reduced schedule while simultaneously collecting a portion of their retirement benefit.
Under the pending conference agreement, federal employees opting for phased retirement (with their agency’s approval) could work a reduced schedule, receive a reduced paycheck commensurate with the hours worked, and collect a portion of their annuity. They would continue to earn retirement benefits for their part-time service and continue to be eligible to contribute to the Thrift Savings Plan. When an individual working a phased retirement schedule fully retires, his or her pension would be recalculated and the retiree would receive the full annuity he or she would have received when entering phased retirement plus an additional pension accounting for the period of phased retirement.
The phased retirement provision in the original Senate-passed bill would have excluded employees under early retirement programs from participating. The language inadvertently would have prevented all CBPOs, including those hired before 2008, who will not get the full benefit of early retirement and are not subject to a mandatory retirement age from eligibility for phased retirement. NTEU worked with Congress and the administration to change this provision, and the final language makes all federal employees eligible for phased retirement, with the caveat that those who are subject to a mandatory retirement age, must meet regular retirement eligibility (usually age 55 with 30 years service or age 60 with 20 years service) before they reach their mandatory retirement age in order to take advantage of the phased retirement program.
The original Senate transportation bill also reinstated parity between the transit and parking portions of the commuter benefit through 2012, however, the final conference agreement does not include this language. As you know, Congress did not extend the transit benefit before it expired at the end of 2011, and the monthly maximum transit amount was reduced to $125 per month on January 1, 2012. Unfortunately, the transit subsidy amount will remain at $125 monthly for the present time. NTEU will continue to fight to increase this benefit going forward.
During early consideration of the transportation legislation, there were attempts to fund the legislation by increasing federal employee retirement contributions and changing some of the federal retirement program’s parameters. NTEU successfully fought these proposals, and they were not included in the final legislation.
Finally, the legislation includes language holding federal student loan interest rates steady for one year. Absent Congressional action, interest rates were scheduled to increase dramatically on July 1. Proposals had been made to use increased pension contributions from federal employees to offset the cost of this legislation. NTEU was successful in defeating this proposal as well.
Congress is expected to pass the final transportation bill in the coming days, and OPM has been charged with issuing implementing regulations for the phased retirement program. As soon as there is additional information on the effective date for phased retirement, we will let you know.