Flexible-retention adds new option to agencies' retirement toolkit

Thursday - 3/15/2012, 12:16pm EDT

Ron Sanders, senior executive adviser, Booz Allen Hamilton

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The Senate passed a provision this week that lets federal workers go part-time as they enter retirement.

Sen. Max Baucus (R-Mont.) offered the provision, which has been called flexible-retention, as part of the Senate's transportation bill, which now moves to the House for approval.

Ron Sanders, senior executive adviser at Booz Allen Hamilton and former chief human capital officer at the Office of the Director of National Intelligence, said the objective of the provision is to enable agencies to capture the institutional knowledge and expertise of feds as they retire.

"Heretofore, it's been a fairly dramatic break," Sanders told The Federal Drive with Tom Temin Thursday. "You're here one day and you're gone the next."

"When you leave federal service, you take with you years and years of experience and lore of how we do things around here, nuances in the law or program and I think this is a very effective way of ensuring that that transition for the agency and the employee is much smoother," he said. "I think everybody wins with something like this."

Ron Sanders, senior executive adviser, Booz Allen Hamilton (BAH)

Agencies can already bring back annuitants using dual-compensation waivers. In most cases, the Office of Personnel Management has to approve them and that's not always an easy — or ideal — option for retirees, Sanders said.

"An annuitant faces the choice of coming back and literally paying a penalty to do so," he said. "If an agency can't get an annuity offset waiver, there are still provisions that would allow a retiree to work part time, but through quirks in the retirement law, all unintended, there's actually a penalty for doing that. It actually hurts your annuity."

With flexible-retention, OPM has come up with a solution that allows the combination of annuity and salary for retirees as they move from full-time service to something less.

"This would be a very, very important tool for agencies as retirements surge," Sanders said. "This would be particularly timely because a long-awaited retirement tsunami has begun to crest. As folks retire, they take priceless institutional knowledge with them."

Not for every retiree

Flexible-retention wouldn't be a fit for everyone, though. "There are some people who just want to go relax at the beach," Sanders said. "There are others that want to start a second, full-time career. This option wouldn't be for them."

Bringing back re-employed annuitants full time on dual compensation waivers would still remain a useful tool for agencies who may need a retiree's critical skills on a full-time basis.

"I don't think this will supplant all the other tools," Sanders said. "But I can tell you, I wish I had this back at DoD in the '90s with Base Realignment and Closure (BRAC). This would've been invaluable."

While it was difficult to say how many retiring feds would opt for flexible-retention, Sanders pointed to demographic trends that suggested it would be an appealing option for many soon-to-be-retirees.

"As we've seen career patterns change over time, people who retire today, let's say at 55 or 60, are probably interested in continuing to work," Sanders said. "Being able to continue public service post-retirement would be an especially attractive option for many of them. The days when somebody retired at 55 or 60 and literally left the labor force are long gone. This way, federal civil servants will have an option of continuing to give."

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