[House Report 112-535]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-535
======================================================================
FEDERAL EMPLOYEE PHASED RETIREMENT ACT
_______
June 15, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Issa, from the Committee on Oversight and Government Reform,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 4363]
[Including cost estimate of the Congressional Budget Office]
The Committee on Oversight and Government Reform, to whom
was referred the bill (H.R. 4363) to amend title 5, United
States Code, to allow Federal employees to continue their
public service while partially retired, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
CONTENTS
Page
Committee Statement and Views.................................... 2
Section-by-Section............................................... 4
Explanation of Amendments........................................ 6
Committee Consideration.......................................... 7
Application of Law to the Legislative Branch..................... 7
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 7
Statement of General Performance Goals and Objectives............ 7
Federal Advisory Committee Act................................... 7
Unfunded Mandate Statement....................................... 7
Committee Estimate............................................... 7
Budget Authority and Congressional Budget Office Cost Estimate... 8
Changes in Existing Law Made by the Bill as Reported............. 13
Additional Views................................................. 23
The amendment is as follows:
At the end of the bill, add the following:
SEC. 3. CONTRIBUTIONS TO THRIFT SAVINGS FUND OF PAYMENTS FOR ACCRUED OR
ACCUMULATED LEAVE.
(a) Civil Service Retirement System.--Section 8351(b)(2) of title 5,
United States Code, is amended by adding at the end the following:
``(D)(i) A qualified phased retiree may, in addition to any
contributions otherwise allowable, contribute to the Thrift Savings
Fund by direct transfer any part of any amount otherwise payable to
such retiree for accumulated and current accrued annual or vacation
leave under section 5551 or 5552.
``(ii) For purposes of this subparagraph, the term `qualified phased
retiree' means a phased retiree (as defined by section 8336a) who has
completed at least 1 year of service as such a retiree.''.
(b) Federal Employees' Retirement System.--Section 8432(a) of title
5, United States Code, is amended by adding at the end the following:
``(4)(A) A qualified phased retiree may, in addition to any
contributions otherwise allowable, contribute to the Thrift Savings
Fund by direct transfer any part of any amount otherwise payable to
such retiree for accumulated and current accrued annual or vacation
leave under section 5551 or 5552.
``(B) For purposes of this paragraph, the term `qualified phased
retiree' means a phased retiree (as defined by section 8412a) who has
completed at least 1 year of service as such a retiree.''.
(c) Regulations.--The Executive Director of the Federal Retirement
Thrift Investment Board shall prescribe regulations to carry out the
amendments made by this section.
(d) Effective Date.--The amendments made by this section shall take
effect 1 year after the date of the enactment of this section, or upon
such earlier date as may be established by the Executive Director of
the Federal Retirement Thrift Investment Board under the regulations
prescribed under subsection (c).
Committee Statement and Views
PURPOSE AND SUMMARY
Under current law, Federal agencies may offer part-time
employment to retirement-eligible workers, but the employee may
not begin receiving accrued pension benefits. As a result, most
experienced Federal employees elect to retire. The purpose of
H.R. 4363, the ``Federal Employee Phased Retirement Act,'' is
to provide agency managers with an additional tool for
retaining valuable knowledge and expertise--a tool that also
gives Federal employees greater flexibility in planning their
careers and retirements.
H.R. 4363 provides the Office of Personnel Management (OPM)
the authority to establish a phased retirement program for
Federal employees. The bill allows Federal employees to retire
from a portion of their full time employment and receive a
prorated pension for that service. During phased retirement,
Federal employees would work 20 to 80 percent of their full-
time schedule and continue to receive a pro-rated salary and
pension credit for the time worked. At least 20 percent of the
time worked must be used to mentor, unless the individual is
employed by the U.S. Postal Service. When the phased retiree
fully retires, their annuity would be adjusted, increasing the
employee's lifetime retirement income.
BACKGROUND AND NEED FOR LEGISLATION
Approximately 550,000 full-time career Federal Government
employees and U.S. Postal Service employees are currently
eligible to retire.\1\ These retirement-eligible employees
represent approximately one quarter of the nearly 2.4 million
full-time Federal Government and postal employees. More
employees will become retirement eligible in the coming years.
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\1\http://www.washingtonpost.com/local/politics/how-many-Federal-
and-postal-employees-are-eligible-to-retire/2011/05/19/
AFusIP7G_story.html
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This potential ``brain drain'' represents a significant
cost and concern for the American public. First, many of these
employees have decades of experience and institutional
knowledge, and their retirements could significantly impact the
government's ability to serve the public. Second, upon
retirement, these former employees will start drawing from
their generous pension programs and the government will seek to
hire their replacements.
Currently, Federal employees face one of three choices upon
reaching retirement age:
1. Voluntarily retire and collect an annuity based on the
pension computation formula.
2. Continue to work full-time, in most cases increasing the
number of service years used in calculating their pension.
3. Voluntarily retire and return to Federal employment as a
reemployed annuitant. Unless the employee meets certain
requirements, their salary will be reduced by the amount of
annuity paid for the period of reemployment.
Most long-serving Federal employees elect retirement, where
they can begin receiving their pension.
In its September 2010 legislative proposal, OPM requested
phased retirement authority to improve the government's
capacity to ``retain and share institutional knowledge.''\2\
H.R. 4363 encompasses OPM's recommendation, and allows agencies
to offer phased-retirement to individuals nearing retirement.
Individuals would reduce their employment while continuing to
earn additional retirement benefits, pro-rated for the actual
hours worked. Individuals opting for phased retirement receive
only part of their annuity, resulting in lower annuity outlays
from the Civil Service Retirement and Disability Fund. These
same individuals would continue to make employee contributions
to the retirement fund for their part-time service. The
individual's income during partial retirement would be between
full retirement and full employment. At full retirement, the
individual would be appropriately compensated for the value of
both full-time and part-time service, with a pension greater
than if they had fully retired at the time of transition to
phased retirement. Non-postal phased retirees would be required
to spend a portion of their time mentoring other employees,
subject to a waiver.
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\2\http://www.opm.gov/news_events/congress/proposals/
Hiring_Reform.pdf
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As part of the Committee's effort to better align Federal
employee benefits with the private sector, H.R. 4363 allows
phased retirees to deposit lump-sum payments for unused annual
leave into their Thrift Savings Plan (TSP) accounts. These
contributions would be subject to the existing Internal Revenue
Service (IRS) annual contribution limits. For 2012, this limit
is $17,000.
LEGISLATIVE HISTORY
The Civil Service Retirement Act of 1920 (P.L. 66-215)
established pension benefits for civilian Federal employees.
Federal civilian employees hired on or after January 1, 1984,
were required to participate in Social Security (pursuant to
the Social Security Amendments of 1983, P.L. 98-21), which
contributed to the development of the Federal Employees'
Retirement System (FERS).\3\
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\3\See the Federal Employees' Retirement Act of 1986, P.L. 99-335.
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On March 14, 2012, the Senate passed S. 1813, a bill to
reauthorize Federal-aid highway and highway safety construction
programs. The bill included a provision to allow phased
retirements.
Section-by-Section
Section 1. Short title
Establishes the short title of the bill as the ``Federal
Employee Phased Retirement Act.''
Section 2. Phased retirement authority
Section 2(a) makes changes to chapter 83 of title 5, United
States Code, necessary to authorize phased retirement under the
Civil Service Retirement System (CSRS).
Subsection (a) of 5 U.S.C. 8336a defines the terms that are
used in the new section. Individuals subject to mandatory
retirement, such as law enforcement, firefighters, nuclear
materials couriers, air traffic controllers, customs and border
protection officers, or members of the Capitol Police or
Supreme Court Police, may not elect phased retirement.
Subsection (b) allows agencies to offer phased retirement
to retirement-eligible employees, subject to OPM regulations.
Subsection (b)(1) establishes the conditions under which a
Federal employee, with the concurrence of the head of the
employing agency, can enter phased retirement. It requires that
the employee be employed on a full-time basis for the three
year period prior to entering phased retirement status.
Subsection (b)(2)(A)-(C) requires that the phased retiree
be appointed to a position for which the working percentage is
50 percent. The Director of OPM may establish other phased
employment working percentages not less than 20 percent and not
more than 80 percent of a work period. The employee's working
percentage may not change during phased retirement.
Subsection (b)(2)(D)(i)-(iii) requires that phased retirees
spend a minimum of 20 percent of their working hours mentoring
unless exempted by OPM regulations. Phased retirees serving in
the United States Postal Service are exempt from the mentoring
requirement.
Subsection (b)(3)(A) prevents phased retirees from serving
in more than one position at a time. Subsection (b)(3)(B)
allows employees to transfer to another position as long as the
transfer does not result in a change in the working percentage.
Subsection (b)(4) limits retirement-eligible employees to
one working percentage election.
Subsection (b)(5) prevents phased retirees from selecting
alternative forms of annuity (such as lump-sum credit) under
section 5 U.S.C. 8343a.
Subsection (c) deals with the computation of a phased
retirement annuity. Subsection (c)(1) calculates the phased
retirement as 100 minus the working percentage multiplied by
the amount payable under normal retirement.
Subsection (c)(2) requires that the phased retirement
annuity be paid in addition to the basic pay for the position
to which a phased retiree is appointed during phased
employment.
Subsection (c)(3) applies cost-of-living adjustments to
phased retirement annuities in the same manner as full
retirement annuities under section 5 U.S.C. 8340.
Subsection (c)(4) prohibits phased retirement annuities
from being subject to reduction for any form of survivor
annuity, computation of any survivor annuity, or court order
requiring a survivor annuity to be provided to any individual.
Phased retirement annuities are still subject to court orders
providing for division, allotment, assignment, execution, levy,
attachment, garnishment, or other legal process on the same
basis as other annuities.
Subsection (c)(5) clarifies the rules for depositing
refunds of service credit.
Subsection (c)(6) requires any deposit, or election of an
actuarial annuity reduction in lieu of a deposit, be made at or
before the time the employee enters phased retirement. The
subsection also establishes rules for service credit if the
phased retiree dies in service.
Subsection (c)(7) makes clear the phased retirement annuity
begins on the date on which the individual enters phased
employment.
Subsection (c)(8) prohibits unused sick leave from being
used in the computation of the retirement annuity.
Subsection (d) provides that basic pay, not in excess of
the full-time rate of pay for the position, be used when
calculating the final annuity.
Subsections (e) and (f) address what happens when a phased
retiree elects to fully retire. Subsection (e) allows a phased
retiree to enter full retirement at any time at which time the
phased retiree shall be entitled to a composite retirement
annuity. The composite annuity consists of (1) the amount of
the phased retirement annuity on the date the individual fully
retires (before any reduction for redeposit) plus (2) the
percentage of work the employee completed during phased
retirement, multiplied by the amount of annuity that would have
been payable if the individual had remained employed full-time
instead of entering phased retirement (before any reduction for
survivor annuity or unpaid redeposit). The sum of these two
amounts would be adjusted for any required reductions for
survivor annuity or unpaid redeposit under 5 U.S.C. 8334(d)(2).
Subsection (g) allows a phased retiree to return to a full-
time work schedule under such procedures and conditions as the
Director of OPM may provide and with the concurrence of the
head of the employing agency. The subsection makes clear that
the phased retirement annuity ends, and the phased retirement
period is treated as part-time employment.
Subsection (h) states that, for purposes of survivor
annuity benefits, the death of a phased retiree shall be deemed
to be the death in service of an employee, and the phased
retirement period will be treated as a period of part-time
employment.
Subsection (i) makes clear that phased retirees are not
considered part-time employees, and thus not subject to the
part-time employment conditions under 5 U.S.C. 3401.
Subsection (j) makes phased retirees ineligible for
disability retirement.
Subsection (k) establishes the date the phased retiree
enters full retirement status as the date of retirement for
purposes of determining a survivor annuity.
Subsection (l) provides that a phased retiree is considered
to be an employee for purposes of the Thrift Savings Plan and
for voluntary retirement contributions under CSRS.
Subsection (m) makes clear that a phased retiree is not
subject to salary withholding for receiving an annuity.
Subsection (n) deems a phased retiree to be receiving basic
pay at the rate of a full-time employee in the same position
for purposes of the Federal Employees' Group Life Insurance
Program.
Section 2(b) makes changes to chapter 84 of title 5, United
States Code, necessary to authorize phased retirement under
FERS. New section 8412a of title 5 contains provisions that
parallel the provisions of new 5 U.S.C. 3336a with respect to
CSRS. Subsection 8412a(j) prevents a phased retiree from
receiving a FERS supplemental annuity.
Section 3. Contributions to Thrift Savings Fund of payments for accrued
or accumulated leave
Section 3 provides that a qualified phased retiree
(including postal employees and employees of the Postal
Regulatory Commission) may contribute in any pay period any
part of any payment that the employee or Member receives as a
lump-sum payment for accumulated and accrued annual or vacation
leave upon separation or entering active duty. The term
qualified phased retiree means a phased retiree who has
completed at least one year of service.
Explanation of Amendments
Mr. Cummings offered an amendment that cost savings from
H.R. 4363 be used towards the unfunded liability created by the
Civil Service Retirement and Disability Fund. The amendment was
defeated by voice vote.
Mr. Cummings offered an amendment that surplus retirement
contributions are returned to the U.S. Postal Service. Mr.
Cummings withdrew the amendment.
Mr. Lynch offered an amendment to allow Federal employees
to deposit all or part of the lump-sum payment they receive for
unused annual leave into their Thrift Savings Plan account. The
amendment was modified to apply only to phased retirees (to
make the amendment germane) and to incorporate Mr. Issa's
second-degree amendment to require individuals to complete at
least one year of service as a phased retire in order to
qualify as eligible to make a lump sum deposit. The amendment
was agreed to by voice vote.
Committee Consideration
On April 18, 2012, the Committee met in open session and
ordered reported favorably the bill, H.R. 4363, as amended, by
voice vote, a quorum being present.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch where the bill relates to the terms and conditions of
employment or access to public services and accommodations.
This bill provides OPM the authority to establish a phased
retirement program for Federal employees. Legislative branch
employees and their families, to the extent that they are
otherwise eligible for the benefits provided by this
legislation, have equal access to its benefits.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
(2)(b)(1) of rule X of the Rules of the House of
Representatives, the Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives are reflected in the descriptive portions
of this report.
Federal Advisory Committee Act
The Committee finds that the legislation does not establish
or authorize the establishment of an advisory committee within
the definition of 5 U.S.C. App., Section 5(b).
Unfunded Mandate Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandate Reform Act, P.L. 104-4) requires a statement as to
whether the provisions of the reported include unfunded
mandates. In compliance with this requirement the Committee has
received a letter from the Congressional Budget Office included
herein.
Earmark Identification
H.R. 4363 does not include any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Committee Estimate
Clause 3(d)(2) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs that would be incurred in carrying out
H.R. 4363. However, clause 3(d)(3)(B) of that rule provides
that this requirement does not apply when the Committee has
included in its report a timely submitted cost estimate of the
bill prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act.
Budget Authority and Congressional Budget Office Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause (3)(c)(3) of rule XIII of the Rules
of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has received
the following cost estimate for H.R. 4363 from the Director of
Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 17, 2012.
Hon. Darrell Issa,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4363, the Federal
Employee Phased Retirement Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Amber G.
Marcellino.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 4363--Federal Employee Phased Retirement Act
Summary: H.R. 4363 would allow eligible federal employees
to enter into a phased retirement, during which they continue
to work part time while drawing a partial salary and a partial
civil service retirement annuity. The bill also would allow
participating employees to contribute to their Thrift Savings
Plan (TSP) accounts any payment received at retirement for
accumulated and accrued annual leave.
CBO estimates that enacting the legislation would decrease
direct spending by $427 million and increase revenues by $24
million over the 2013-2022 period. Pay-as-you-go procedures
apply because enacting the legislation would affect direct
spending and revenues. Implementing H.R. 4363 would decrease
employer contributions to retirement accounts, thus reducing
discretionary spending for those activities; such reductions in
spending would be subject to future appropriation actions
consistent with the bill.
H.R. 4363 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 4363 is shown in the following table.
The impact of this legislation falls within nearly all
functions of the budget.
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By fiscal year, in millions of dollars--
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2017 2013-2022
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CHANGES IN DIRECT SPENDINGa
Estimated Budget Authority.............. -9 -26 -45 -54 -53 -52 -50 -49 -46 -42 -187 -427
Estimated Outlays....................... -9 -26 -45 -54 -53 -52 -50 -49 -46 -42 -187 -427
CHANGES IN REVENUESb
Estimated Revenues...................... 1 2 3 4 4 4 3 3 1 -1 14 24
NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES
Impact on Deficits...................... -9 -28 -48 -58 -57 -55 -54 -51 -47 -41 -201 -451
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level........... 0 -2 -3 -3 -3 -3 -2 -1 0 1 -11 -15
Estimated Outlays....................... 0 -2 -3 -3 -3 -3 -2 -1 0 1 -11 -15
Memorandum:
Reduction in Offsetting Receipts 0 2 3 3 3 3 2 1 0 1 11 15
Resulting from Lower Employer
Contributionsc.....................
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Sources: Congressional Budget Office and staff of the Joint Committee on Taxation.
aFor direct spending, negative numbers indicate a decrease in the deficit.
bFor revenues, positive numbers indicate a decrease in the deficit.
cEmployer contributions are intragovernmental transactions that do not affect the deficit; positive numbers indicate a decrease in receipts.
Basis of estimate: For the estimate, CBO assumed that about
1,000 federal employees per year--a mix of employees in the
Civil Service Retirement System (CSRS) and the Federal
Employees Retirement System (FERS)--would enter into phased
retirement for a period of three years before fully
retiring.\1\ During phased retirement, employees would move
from a full-time to a part-time work schedule while also
drawing a partial retirement benefit. Such employees would
continue to make contributions toward retirement and their
employing agencies would also continue their corresponding
contributions toward retirement on behalf of those employees.
To be eligible to participate in phased retirement, employees
must be eligible for full retirement.
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\1\The estimated number of participants is based on assumptions
used by the Office of Personnel Management for their evaluation of this
proposal.
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Because participants in phased retirement would draw a
lower retirement benefit than they would have if they had fully
retired, CBO estimates that direct spending would be reduced by
$427 million over the 2013-2022 period.
In addition, CBO estimates that H.R. 4363 would increase
revenues by $24 million over the 2013-2022 period. For this
estimate, CBO assumed that any employees who enter phased
retirement would have otherwise retired and that they would
have been replaced by FERS employees. Most CSRS employees pay a
rate of 7.0 percent of salary towards retirement, while most
FERS employees currently pay a rate of 0.8 percent. As a
result, more contributions would be collected from a CSRS
employee remaining employed while in phased retirement than
would have been collected from a replacement employee covered
by FERS. However, the same contributions would be collected
from a FERS employee who remained employed while in phased
retirement as would have been collected from a replacement
employee covered by FERS--except for a small decrease in
revenues in later years because of the implementation of
revised annuity contribution rates for employees hired after
January 1, 2013.\2\ Any participating agency's total
expenditures for salaries were assumed to remain the same as
under current law.
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\2\Under provisions of the Middle Class Tax Relief and Job Creation
Act of 2012 (Public Law 112-96), future federal employees in FERS will
eventually contribute 2.3 percent of their salary towards retirement.
CBO has incorporated that scheduled increase in its estimate of this
bill.
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Because the disparity in rates for CSRS and FERS employees
also affects the amount of employer contributions that agencies
must pay on behalf of their employees, H.R. 4363 would decrease
discretionary spending for those activities by $15 million over
the 2013-2022 period, CBO estimates. However, this bill--or any
legislation that would reduce the funds available for a
particular discretionary program--would only reduce projected
total appropriations if the caps on discretionary spending were
also lowered. Without a reduction in the caps, CBO assumes
funding for other discretionary programs would fill the gap
created by any specific reduction or savings.
H.R. 4363 would allow federal employees who participate in
phased retirement and who are eligible to make contributions to
the TSP to contribute to it any payment received for
accumulated annual leave. Such contributions would be subject
to the annual limits that otherwise apply--annual contributions
are currently limited to $17,000 for individuals ages 49 or
younger and $22,500 for individuals ages 50 or older.
Because income taxes are deferred on contributions to
regular (non-Roth) TSP accounts, and earnings within the
accounts would not be taxable, the anticipated increase in
contributions would initially result in lower revenues from
income taxes. The staff of the Joint Committee on Taxation
estimates that the legislation would reduce revenues by an
insignificant amount over the 2013-2022 period.
Pay-As-You-Go Considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4363 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM ON APRIL 18, 2012
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By fiscal year, in millions of dollars--
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2017 2013-2022
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NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact Statutory Pay-As- -9 -28 -48 -58 -57 -55 -54 -51 -47 -41 -201 -451
You-Go Impact....................................
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Intergovernmental and private-sector impact: H.R. 4363
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal Spending: Amber G.
Marcellino; TSP Contributions: Joint Committee on Taxation;
Impact on State, Local, and Tribal Governments: Elizabeth Cove
Delisle; Impact on the Private Sector: Paige Piper/Bach.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
SUBPART G--INSURANCE AND ANNUITIES
* * * * * * *
CHAPTER 83--RETIREMENT
SUBCHAPTER I--GENERAL PROVISIONS
Sec.
8301. Uniform retirement date.
* * * * * * *
SUBCHAPTER III--CIVIL SERVICE RETIREMENT
* * * * * * *
8336a. Phased retirement.
* * * * * * *
SUBCHAPTER III--CIVIL SERVICE RETIREMENT
Sec. 8331. Definitions
For the purpose of this subchapter--
(1) * * *
* * * * * * *
(30) the term ``air traffic controller'' or
``controller'' means--
(A) * * *
(B) a civilian employee of the Department of
Transportation or the Department of Defense who
is the immediate supervisor of a person
described in section 2109(1)(B); [and]
(31) ``customs and border protection officer'' means
an employee in the Department of Homeland Security (A)
who holds a position within the GS-1895 job series
(determined applying the criteria in effect as of
September 1, 2007) or any successor position, and (B)
whose duties include activities relating to the arrival
and departure of persons, conveyances, and merchandise
at ports of entry, including any such employee who is
transferred directly to a supervisory or administrative
position in the Department of Homeland Security after
performing such duties (as described in subparagraph
(B)) in 1 or more positions (as described in
subparagraph (A)) for at least 3 years[.]; and
(32) ``Director'' means the Director of the Office of
Personnel Management.
* * * * * * *
Sec. 8336a. Phased retirement
(a) For the purposes of this section--
(1) the term ``composite retirement annuity'' means
the annuity computed when a phased retiree attains full
retirement status;
(2) the term ``full retirement status'' means that a
phased retiree has ceased employment and is entitled,
upon application, to a composite retirement annuity;
(3) the term ``phased employment'' means the less-
than-full-time employment of a phased retiree;
(4) the term ``phased retiree'' means a retirement-
eligible employee who--
(A) makes an election under subsection (b);
and
(B) has not entered full retirement status;
(5) the term ``phased retirement annuity'' means the
annuity payable under this section before full
retirement;
(6) the term ``phased retirement percentage'' means
the percentage which, when added to the working
percentage for a phased retiree, produces a sum of 100
percent;
(7) the term ``phased retirement period'' means the
period beginning on the date on which an individual
becomes entitled to receive a phased retirement annuity
and ending on the date on which the individual dies or
separates from phased employment;
(8) the term ``phased retirement status'' means that
a phased retiree is concurrently employed in phased
employment and eligible to receive a phased retirement
annuity;
(9) the term ``retirement-eligible employee''--
(A) means an individual who, if the
individual separated from the service, would
meet the requirements for retirement under
subsection (a) or (b) of section 8336; but
(B) does not include an employee, described
in section 8335, after the date as of which
such employee is required to be separated from
the service by reason of such section; and
(10) the term ``working percentage'' means the
percentage of full-time employment equal the quotient
obtained by dividing--
(A) the number of hours per pay period to be
worked by a phased retiree as scheduled in
accordance with subsection (b)(2); by
(B) the number of hours per pay period to be
worked by an employee serving in a comparable
position on a full-time basis.
(b)(1) With the concurrence of the head of the employing
agency, and under regulations promulgated by the Director, a
retirement-eligible employee who has been employed on a full-
time basis for not less than the 3-year period ending on the
date on which the retirement-eligible employee makes an
election under this subsection may elect to enter phased
retirement status.
(2)(A) Subject to subparagraph (B), at the time of entering
phased retirement status, a phased retiree shall be appointed
to a position for which the working percentage is 50 percent.
(B) The Director may, by regulation, provide for working
percentages different from the percentage specified under
subparagraph (A), which shall be not less than 20 percent and
not more than 80 percent.
(C) The working percentage for a phased retiree may not be
changed during the phased retiree's phased retirement period.
(D)(i) Not less than 20 percent of the hours to be worked by
a phased retiree shall consist of mentoring.
(ii) The Director may, by regulation, provide for exceptions
to the requirement under clause (i).
(iii) Clause (i) shall not apply to a phased retiree serving
in the United States Postal Service. Nothing in this clause
shall prevent the application of clause (i) or (ii) with
respect to a phased retiree serving in the Postal Regulatory
Commission.
(3) A phased retiree--
(A) may not be employed in more than one position at
any time; and
(B) may transfer to another position in the same or a
different agency, if the transfer does not result in a
change in the working percentage.
(4) A retirement-eligible employee may make only one election
under this subsection during the retirement-eligible employee's
lifetime.
(5) A retirement-eligible employee who makes an election
under this subsection may not make an election under section
8343a.
(c)(1) Except as otherwise provided under this subsection,
the phased retirement annuity for a phased retiree is the
product obtained by multiplying--
(A) the amount of an annuity computed under section
8339 that would have been payable to the phased retiree
if, on the date on which the phased retiree enters
phased retirement status, the phased retiree had
separated from service and retired under section 8336
(a) or (b); by
(B) the phased retirement percentage for the phased
retiree.
(2) A phased retirement annuity shall be paid in addition to
the basic pay for the position to which a phased retiree is
appointed during phased employment.
(3) A phased retirement annuity shall be adjusted in
accordance with section 8340.
(4)(A) A phased retirement annuity shall not be subject to
reduction for any form of survivor annuity, shall not serve as
the basis of the computation of any survivor annuity, and shall
not be subject to any court order requiring a survivor annuity
to be provided to any individual.
(B) A phased retirement annuity shall be subject to a court
order providing for division, allotment, assignment, execution,
levy, attachment, garnishment, or other legal process on the
same basis as other annuities.
(5) Any reduction of a phased retirement annuity based on an
election under section 8334(d)(2) shall be applied to the
phased retirement annuity after computation under paragraph
(1).
(6)(A) Any deposit, or election of an actuarial annuity
reduction in lieu of a deposit, for military service or for
creditable civilian service for which retirement deductions
were not made or refunded shall be made by a retirement-
eligible employee at or before the time the retirement-eligible
employee enters phased retirement status. No such deposit may
be made, or actuarial adjustment in lieu thereof elected, at
the time a phased retiree enters full retirement status.
(B) Notwithstanding subparagraph (A), if a phased retiree
does not make such a deposit and dies in service as a phased
retiree, a survivor of the phased retiree shall have the same
right to make such deposit as would have been available had the
employee not entered phased retirement status and died in
service.
(C) If a phased retiree makes an election for an actuarial
annuity reduction under section 8334(d)(2) and dies in service
as a phased retiree, the amount of any deposit upon which such
actuarial reduction shall have been based shall be deemed to
have been fully paid.
(7) A phased retirement annuity shall commence on the date on
which a phased retiree enters phased employment.
(8) No unused sick leave credit may be used in the
computation of the phased retirement annuity.
(d) All basic pay not in excess of the full-time rate of pay
for the position to which a phased retiree is appointed shall
be deemed to be basic pay for purposes of section 8334.
(e) Under such procedures as the Director may prescribe, a
phased retiree may elect to enter full retirement status at any
time. Upon making such an election, a phased retiree shall be
entitled to a composite retirement annuity.
(f)(1) Except as provided otherwise under this subsection, a
composite retirement annuity is a single annuity computed under
regulations prescribed by the Director, equal to the sum of--
(A) the amount of the phased retirement annuity as of
the date of full retirement, before any reduction based
on an election under section 8334(d)(2), and including
any adjustments made under section 8340; and
(B) the product obtained by multiplying--
(i) the amount of an annuity computed under
section 8339 that would have been payable at
the time of full retirement if the individual
had not elected a phased retirement and as if
the individual was employed on a full-time
basis in the position occupied during the
phased retirement period and before any
reduction for survivor annuity or reduction
based on an election under section 8334(d)(2);
by
(ii) the working percentage.
(2) After computing a composite retirement annuity under
paragraph (1), the Director shall adjust the amount of the
annuity for any applicable reductions for a survivor annuity
and any previously elected actuarial reduction under section
8334(d)(2).
(3) A composite retirement annuity shall be adjusted in
accordance with section 8340, except that subsection (c)(1) of
that section shall not apply.
(4) In computing a composite retirement annuity under
paragraph (1)(B)(i), the unused sick leave to the credit of a
phased retiree at the time of entry into full retirement status
shall be adjusted by dividing the number of hours of unused
sick leave by the working percentage.
(g)(1) Under such procedures and conditions as the Director
may provide, and with the concurrence of the head of the
employing agency, a phased retiree may elect to terminate
phased retirement status and return to a full-time work
schedule.
(2) Upon entering a full-time work schedule based upon an
election under paragraph (1), the phased retirement annuity of
a phased retiree shall terminate.
(3) After the termination of a phased retirement annuity
under this subsection, the individual's rights under this
subchapter shall be determined based on the law in effect at
the time of any subsequent separation from service. For
purposes of this subchapter or chapter 84, at time of the
subsequent separation from service, the phased retirement
period shall be treated as if it had been a period of part-time
employment with the work schedule described in subsection
(b)(2).
(h) For purposes of section 8341--
(1) the death of a phased retiree shall be deemed to
be the death in service of an employee; and
(2) the phased retirement period shall be deemed to
have been a period of part-time employment with the
work schedule described in subsection (b)(2).
(i) Employment of a phased retiree shall not be deemed to be
part-time career employment, as defined in section 3401(2).
(j) A phased retiree is not eligible to apply for an annuity
under section 8337.
(k) For purposes of section 8341(h)(4), retirement shall be
deemed to occur on the date on which a phased retiree enters
into full retirement status.
(l) For purposes of sections 8343 and 8351, and subchapter
III of chapter 84, a phased retiree shall be deemed to be an
employee.
(m) A phased retiree is not subject to section 8344.
(n) For purposes of chapter 87, a phased retiree shall be
deemed to be receiving basic pay at the rate of a full-time
employee in the position to which the phased retiree is
appointed.
* * * * * * *
Sec. 8351. Participation in the Thrift Savings Plan
(a) * * *
(b)(1) * * *
(2)(A) * * *
* * * * * * *
(D)(i) A qualified phased retiree may, in addition to any
contributions otherwise allowable, contribute to the Thrift
Savings Fund by direct transfer any part of any amount
otherwise payable to such retiree for accumulated and current
accrued annual or vacation leave under section 5551 or 5552.
(ii) For purposes of this subparagraph, the term ``qualified
phased retiree'' means a phased retiree (as defined by section
8336a) who has completed at least 1 year of service as such a
retiree.
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
SUBCHAPTER I--GENERAL PROVISIONS
Sec.
8401. Definitions.
* * * * * * *
SUBCHAPTER II--BASIC ANNUITY
* * * * * * *
8412a. Phased retirement.
* * * * * * *
SUBCHAPTER II--BASIC ANNUITY
* * * * * * *
Sec. 8412a. Phased retirement
(a) For the purposes of this section--
(1) the term ``composite retirement annuity'' means
the annuity computed when a phased retiree attains full
retirement status;
(2) the term ``full retirement status'' means that a
phased retiree has ceased employment and is entitled,
upon application, to a composite retirement annuity;
(3) the term ``phased employment'' means the less-
than-full-time employment of a phased retiree;
(4) the term ``phased retiree'' means a retirement-
eligible employee who--
(A) makes an election under subsection (b);
and
(B) has not entered full retirement status;
(5) the term ``phased retirement annuity'' means the
annuity payable under this section before full
retirement;
(6) the term ``phased retirement percentage'' means
the percentage which, when added to the working
percentage for a phased retiree, produces a sum of 100
percent;
(7) the term ``phased retirement period'' means the
period beginning on the date on which an individual
becomes entitled to receive a phased retirement annuity
and ending on the date on which the individual dies or
separates from phased employment;
(8) the term ``phased retirement status'' means that
a phased retiree is concurrently employed in phased
employment and eligible to receive a phased retirement
annuity;
(9) the term ``retirement-eligible employee''--
(A) means an individual who, if the
individual separated from the service, would
meet the requirements for retirement under
subsection (a) or (b) of section 8412; and
(B) does not include--
(i) an individual who, if the
individual separated from the service,
would meet the requirements for
retirement under subsection (d) or (e)
of section 8412; but
(ii) does not include an employee,
described in section 8425, after the
date as of which such employee is
required to be separated from the
service by reason of such section; and
(10) the term ``working percentage'' means the
percentage of full-time employment equal to the
quotient obtained by dividing--
(A) the number of hours per pay period to be
worked by a phased retiree as scheduled in
accordance with subsection (b)(2); by
(B) the number of hours per pay period to be
worked by an employee serving in a comparable
position on a full-time basis.
(b)(1) With the concurrence of the head of the employing
agency, and under regulations promulgated by the Director, a
retirement-eligible employee who has been employed on a full-
time basis for not less than the 3-year period ending on the
date on which the retirement-eligible employee makes an
election under this subsection may elect to enter phased
retirement status.
(2)(A) Subject to subparagraph (B), at the time of entering
phased retirement status, a phased retiree shall be appointed
to a position for which the working percentage is 50 percent.
(B) The Director may, by regulation, provide for working
percentages different from the percentage specified under
subparagraph (A), which shall be not less than 20 percent and
not more than 80 percent.
(C) The working percentage for a phased retiree may not be
changed during the phased retiree's phased retirement period.
(D)(i) Not less than 20 percent of the hours to be worked by
a phased retiree shall consist of mentoring.
(ii) The Director may, by regulation, provide for exceptions
to the requirement under clause (i).
(iii) Clause (i) shall not apply to a phased retiree serving
in the United States Postal Service. Nothing in this clause
shall prevent the application of clause (i) or (ii) with
respect to a phased retiree serving in the Postal Regulatory
Commission.
(3) A phased retiree--
(A) may not be employed in more than one position at
any time; and
(B) may transfer to another position in the same or a
different agency, if the transfer does not result in a
change in the working percentage.
(4) A retirement-eligible employee may make only one election
under this subsection during the retirement-eligible employee's
lifetime.
(5) A retirement-eligible employee who makes an election
under this subsection may not make an election under section
8420a.
(c)(1) Except as otherwise provided under this subsection,
the phased retirement annuity for a phased retiree is the
product obtained by multiplying--
(A) the amount of an annuity computed under section
8415 that would have been payable to the phased retiree
if, on the date on which the phased retiree enters
phased retirement status, the phased retiree had
separated from service and retired under section 8412
(a) or (b); by
(B) the phased retirement percentage for the phased
retiree.
(2) A phased retirement annuity shall be paid in addition to
the basic pay for the position to which a phased retiree is
appointed during the phased employment.
(3) A phased retirement annuity shall be adjusted in
accordance with section 8462.
(4)(A) A phased retirement annuity shall not be subject to
reduction for any form of survivor annuity, shall not serve as
the basis of the computation of any survivor annuity, and shall
not be subject to any court order requiring a survivor annuity
to be provided to any individual.
(B) A phased retirement annuity shall be subject to a court
order providing for division, allotment, assignment, execution,
levy, attachment, garnishment, or other legal process on the
same basis as other annuities.
(5)(A) Any deposit, or election of an actuarial annuity
reduction in lieu of a deposit, for military service or for
creditable civilian service for which retirement deductions
were not made or refunded, shall be made by a retirement-
eligible employee at or before the time the retirement-eligible
employee enters phased retirement status. No such deposit may
be made, or actuarial adjustment in lieu thereof elected, at
the time a phased retiree enters full retirement status.
(B) Notwithstanding subparagraph (A), if a phased retiree
does not make such a deposit and dies in service as a phased
retiree, a survivor of the phased retiree shall have the same
right to make such deposit as would have been available had the
employee not entered phased retirement status and died in
service.
(6) A phased retirement annuity shall commence on the date on
which a phased retiree enters phased employment.
(7) No unused sick leave credit may be used in the
computation of the phased retirement annuity.
(d) All basic pay not in excess of the full-time rate of pay
for the position to which a phased retiree is appointed shall
be deemed to be basic pay for purposes of sections 8422 and
8423.
(e) Under such procedures as the Director may prescribe, a
phased retiree may elect to enter full retirement status at any
time. Upon making such an election, a phased retiree shall be
entitled to a composite retirement annuity.
(f)(1) Except as provided otherwise under this subsection, a
composite retirement annuity is a single annuity computed under
regulations prescribed by the Director, equal to the sum of--
(A) the amount of the phased retirement annuity as of
the date of full retirement, including any adjustments
made under section 8462; and
(B) the product obtained by multiplying--
(i) the amount of an annuity computed under
section 8412 that would have been payable at
the time of full retirement if the individual
had not elected a phased retirement and as if
the individual was employed on a full-time
basis in the position occupied during the
phased retirement period and before any
adjustment to provide for a survivor annuity;
by
(ii) the working percentage.
(2) After computing a composite retirement annuity under
paragraph (1), the Director shall adjust the amount of the
annuity for any applicable reductions for a survivor annuity.
(3) A composite retirement annuity shall be adjusted in
accordance with section 8462, except that subsection (c)(1) of
that section shall not apply.
(4) In computing a composite retirement annuity under
paragraph (1)(B)(i), the unused sick leave to the credit of a
phased retiree at the time of entry into full retirement status
shall be adjusted by dividing the number of hours of unused
sick leave by the working percentage.
(g)(1) Under such procedures and conditions as the Director
may provide, and with the concurrence of the head of employing
agency, a phased retiree may elect to terminate phased
retirement status and return to a full-time work schedule.
(2) Upon entering a full-time work schedule based on an
election under paragraph (1), the phased retirement annuity of
a phased retiree shall terminate.
(3) After termination of the phased retirement annuity under
this subsection, the individual's rights under this chapter
shall be determined based on the law in effect at the time of
any subsequent separation from service. For purposes of this
chapter, at the time of the subsequent separation from service,
the phased retirement period shall be treated as if it had been
a period of part-time employment with the work schedule
described in subsection (b)(2).
(h) For purposes of subchapter IV--
(1) the death of a phased retiree shall be deemed to
be the death in service of an employee;
(2) except for purposes of section 8442(b)(1)(A)(i),
the phased retirement period shall be deemed to have
been a period of part-time employment with the work
schedule described in subsection (b)(2) of this
section; and
(3) for purposes of section 8442(b)(1)(A)(i), the
phased retiree shall be deemed to have been at the
full-time rate of pay for the position occupied.
(i) Employment of a phased retiree shall not be deemed to be
part-time career employment, as defined in section 3401(2).
(j) A phased retiree is not eligible to receive an annuity
supplement under section 8421.
(k) For purposes of subchapter III, a phased retiree shall be
deemed to be an employee.
(l) For purposes of section 8445(d), retirement shall be
deemed to occur on the date on which a phased retiree enters
into full retirement status.
(m) A phased retiree is not eligible to apply for an annuity
under subchapter V.
(n) A phased retiree is not subject to section 8468.
(o) For purposes of chapter 87, a phased retiree shall be
deemed to be receiving basic pay at the rate of a full-time
employee in the position to which the phased retiree is
appointed.
* * * * * * *
SUBCHAPTER III--THRIFT SAVINGS PLAN
* * * * * * *
Sec. 8432. Contributions
(a)(1) * * *
* * * * * * *
(4)(A) A qualified phased retiree may, in addition to any
contributions otherwise allowable, contribute to the Thrift
Savings Fund by direct transfer any part of any amount
otherwise payable to such retiree for accumulated and current
accrued annual or vacation leave under section 5551 or 5552.
(B) For purposes of this paragraph, the term ``qualified
phased retiree'' means a phased retiree (as defined by section
8412a) who has completed at least 1 year of service as such a
retiree.
* * * * * * *
ADDITIONAL VIEWS
As co-sponsor, along with Chairman Darrell Issa and
Subcommittee Chairman Dennis Ross, of H.R. 4363, the Federal
Employee Phased Retirement Act, I strongly support this
legislation, as ordered reported by the Committee on April 18,
2012.
In light of the many bills introduced in this Congress
attacking the pay and benefits of our middle class federal
workers, it is noteworthy that Committee members on both sides
of the aisle were able to come together to support this pro-
federal workforce and good government bill. This bill is a win-
win for our dedicated civil servants and for the federal
government and the American people. The legislation would allow
our federal employees to continue to serve the public while
they transition to retirement at the end of their careers. The
federal government and the American public would also benefit
through cost savings and the efficient transfer of knowledge
from one generation of federal workers to another.
I appreciate the Committee's bipartisan approval of the
amendment I offered to allow phased retirees to deposit lump-
sum payments for unused annual or vacation leave into their
Thrift Savings Plan accounts upon separation. However, I
strongly believe that this option should be expanded and made
available to all federal employees as well as members of our
armed forces. I will continue to work with my colleagues to
support and advance legislation that would help all federal
civilian and military personnel achieve their retirement
savings goals.
Stephen F. Lynch.