Federal Retiree Rehire Provision Survives Senate Filibuster

July 27, 2009 (PLANSPONSOR.com) - A measure allowing federal agencies to rehire retirees without a cut in annuity payments passed the U.S. Senate last week as part of the Defense Authorization bill.

Govexec.com reports that after an amendment to the Defense authorization bill that would have allowed federal employees under the Federal Employees Retirement System (FERS) to get credit in their pension calculation for unused sick leave was withdrawn (see Senate Shoots Down Fed Employee Sick Leave Credit ), Senator Susan Collins (R-Maine) offered the language dealing with rehiring federal retirees as a separate amendment, which was approved by voice vote.

According to the news report, under current Office of Personnel Management regulations, federal retirees can return to work part time, but in most cases their annuities are reduced by the amount they earn on the job, unless they receive a waiver from OPM. Agencies say this makes it harder to bring back experienced staff, especially if they’re needed on short notice.

The bill now goes to a conference committee, but faces opposition. The House version of the Defense authorization, passed in late June, does not include the rehire language, and the American Federation of Government Employees and other federal labor unions have spoken out against changing the policy on rehiring annuitants, saying it would put current employees at a disadvantage and circumvent fair hiring practices.

In response to union concerns, Govexec.com says, the legislation includes several limitations on how long rehired annuitants could work for the government, such as a cap of 1,040 hours in a 12-month period. Also, the number of rehired retirees could not exceed 2.5% of an agency’s workforce.