As if concerns over sequence-of-return risk weren’t enough, now add a government shutdown to the list of worries for the soon-to-be-retired.
So, what, exactly, happens to federal workers planning to head for greener pastures (and fairways) only to have the government grind to a halt?
Guidance for Shutdown Furloughs from the Office of Personnel Management, the latest version of which was created following the shutdown during the Obama Administration, sheds light.
Thankfully, OPM Retirement Services, which handles retirement matters for federal workers, is funded by the trust fund it manages and not appropriations, and OPM Retirement Services employees will still be working normal operating hours during a government furlough.
For employees who would have retired during a shutdown furlough, those that submitted some notice of their desire to retire, agencies should, when the lapse in appropriations ends, make the retirement effective as of the date requested.
“The retirement request may be informal (such as a letter requesting retirement) and can be either mailed or personally submitted to the agency,” it notes. “Any additional required paperwork, such as the formal retirement application form, may be completed when the agency reopens. No time spent by the retiree in such actions after the effective date of the retirement may be considered as duty time, since the individual would no longer be an employee of the agency.”
Will retirement application be delayed?
“If the agency or payroll center to which the pre-retiree worked submitted the retirement application to OPM, they will begin receiving interim annuity payments while OPM Retirement Specialists process the application.”
And another important question—if a shutdown furlough occurs during the three years of service prior to retirement, what effect will time in a furlough status have on an employee’s high-3 average pay?
“Generally, there will be no effect on the high-three average pay unless the furlough causes the employee to be in a non-pay status for more than six months during the calendar year.”
So, everything is awesome on that side of the process, but as Government Executive notes, when government agencies are furloughed, so too are their HR and benefits representative, something that could cause a further delay in processing.
But take heart, even if in arrears, the timing and amount of employee benefits should be made whole.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
