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As a result of Public Law 112-141 (''Moving Ahead for Progress in the 21st Century Act'' or ''MAP–21''), beginning November 6, 2014 federal employees will be able to apply for a new Federal Program, "Phased Retirement". It has been suggested that more than 40% of eligible employees above age 55 may apply for this new federal retirement option.

Phased Retirement will impact on divorce settlements involving members of both Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS). Among the immediate concerns of the family practitioner who has represented clients or their spouses who are federal employees, is the fact that no survivor benefits can be based upon a Phased Retirement annuity. [1] This fact alone should cause the practitioner to review her or his files to evaluate the possible ramifications of a Federal Employee's post-divorce entry into Phased Retirement.

ALERT: Employees Not Eligible for Phased Retirement:

  • Air Traffic Controllers
  • Foreign Service Employees
  • Law Enforcement & Firefighters

Simplified Explanation of Phased Retirement.

Upon entering Phased Retirement, the participant's pension will be calculated and then reduced by 50%. This "pension" is then paid for the Phase Period. In addition the participant will receive 50% of her or his pay.

At the end of the Phase Period and upon entry into formal retirement, the retiree's pension is computed based on the entire time of employment and then reduced by 50%. This pension is added to the initial "Phased Retirement Benefit" (increased for COLA) that was computed at the time of entry into Phased Retirement.

Goal of Phased Retirement.

To enhance mentoring and training of the employees who, but not for Phased Retirement would be filling the positions of more experienced employees who would otherwise have opted for full retirement. A major objective of this Program is to avoid a significant depletion of the performance capabilities of the federal government through loss of its most experienced employees. Toward that end experienced workers are encouraged not to leave federal service. Instead this experienced cohort is encouraged to remain, as part-time employees (mentors) during this transition period.

Significant Distinction. PHASED RETIREE IS NOT A RETIREE.

A Phased Retirement participant is not treated as a retiree. Rather this program permits the employee to transition from full time employment to part time employment and at the end of the "Phase" to full retirement. The employee is treated as a part time employee.


At this time the Office of Personnel Management (OPM) has not offered Guidance as to how this form of Federal "Retirement" will impact on earlier Court Ordered Settlements that awarded a Former Spouse of a Federal Employee a portion of the employee's retirement benefits and or a Former Spouse Survivor Annuity. The result is that the administration of a Court Order Acceptable (COAP) prepared prior to the advent of Phased Retirement is an unresolved issue. [2]


The subject covered in this article is complex and the absence of detailed clarifying Regulations exacerbate the complexity of the impact of Phased Retirement upon divorced Federal Employees and their spouses. We have endeavored in presenting this article to keep it basic. Yet, this Phased Retirement may affect up to 40% of the current federal workforce. For this reason alone the family practitioner will seek to acquire a greater knowledge of this subject.

Commentary Regarding the Statistics That Follow.

To follow the discussion of the impact of Phased Retirement on federal divorces settled prior to November 6, 2014 some values are essential. We apologize for this numerical interruption, but hope you will find it useful in clarifying the issues and concepts herein presented.


Listajo Pacaro

Date of Birth 9/1/1957

Date of Marriage 9/1/1983

Date of Hire 9/1/1984

Date Action Commenced 9/1/2013

Age When Action Commenced 56.00

Normal Retirement Age 60

His Marital YOS @ 9/1/2013 29

Listajo's High Three Yr. Pay @ 9/1/2013 $75,000.00

Additional Factors at Listajo's Age 60.

His YOS @ 9/1/2017 33

Listajo's High Three Yr. Pay @ 9/1/2017 $82,785.97 [3]

Coverture Fraction @ 9/1/2017 87.88%

(29 ÷ 33 = 87.88%)

Annual Benefit if Listajo retired at 60 $30,051.31

Marital Annual Benefit if Listajo retired at 60 $26,408.72

At Listajo's Age 65

His YOS @ 9/1/2022 38

Listajo's High Three Yr. Pay @ 9/1/2022 $93,664.72

Coverture Fraction @ 9/1/2022 76.32%

(29 ÷ 38 = 76.32%)

Annual Benefit if Listajo retired at 65 $39,151.85

Marital Annual Benefit if Listajo retired at 65 $29,879.05


Do not view this exercise as so far in the future as to be irrelevant. At the time you read this recall the key consideration annuity date is not 2022, but 2017. The key consideration date for Death and Survivor Benefits is today.

Based on the above facts a Court Order Acceptable for Processing (COAP) is prepared in 2013. [4] The COAP provided that Jane is to receive one-half of the Coverture Fraction of Listajo's pension (at the time of his retirement).

The COAP was accepted by OPM and Jane's attorney advised that she simply had to wait for Listajo to retire for her to begin to collect her monthly benefit. Her attorney informally advised Jane that her monthly benefit could be about $1,100.00.

Additionally, Jane' attorney advised that if Listajo dies subsequent to retirement, the COAP provided that Jane is awarded a Former Spouse Survivor Annuity in the same amount as her monthly pension benefit.

At the time of divorce it was widely believed that upon attaining age 60 Listajo would retire and Jane would begin to collect her monthly portion of Listajo's pension. Even if Listajo did not retire at his age 60, the Coverture Fraction method to compute Jane's monthly benefit at the time of Listajo's retirement was memorialized in the Final Judgment of Dissolution of Marriage and the ensuing COAP. Thus, deferral of Listajo's retirement would only increase Jane's benefit.[5] Based on her attorney's comforting words, Jane has an expectancy to a monthly benefit of at least $1,100.00 when Listajo retires.


Jane's attorney's words of comfort and reassurance were given prior to the advent of Phased Retirement. In June 2014 news of the new Phased Retirement Program was widely disseminated. In August 2014 the Office of Personnel Management (OPM) announced applications for Phased Retirement would be accepted beginning on November 6, 2014. Listajo applied for Phased Retirement on August 1, 2017 (one month prior to his normal retirement date) and entered Phased Retirement on September 2, 2017. [6]


Because of the perceived benefits of the Phased Retirement Program, Listajo did not retire at his age 60. Instead at age 60, he entered into the Five Year Phased Retirement Program. As indicated above, Jane's pension expectancy was based on the Property Settlement Agreement as understood on September 1, 2013. It was thus anticipated by Jane and her attorney that when OPM makes the calculation of Jane's portion of the pension the calculation will be akin to:

Coverture Fraction at Listajo's age 60 87.88%

Annual Benefit if Listajo retired at 60 $30,051.31

Marital Annual Benefit if Listajo retired at 60 $26,408.72

Half of Annual to Jane $13,204.36

Monthly Benefit to Jane $1,100.00


Listajo does not retire at his age 60. Instead, Listajo enters the Phased Retirement Program. As a result of this Program, Listajo starting at his age 60, will work half as much as before, but will collect almost 70% of what he was previously earning. According to OPM, Listajo has not retired, he is a part time employee. As a result for the five year Phased Retirement period Jane will receive NOTHING!

  • Moreover, if Listajo dies in the Phased Retirement period the survivor benefit component termed: Basic Employee Death Benefit is not payable [7]
  • Moreover, the procedure to compute the Former Spouse Survivor Annuity produces a significantly reduced benefit

As a result of Phased Retirement, is it possible to know the amount of pension Jane Pacaro will receive? We have illustrated Jane's expectancy. Upon Listajo's retirement she anticipated receipt of a monthly benefit of $1,100.00. When Listajo enters this Program, Jane hears not Phased Retirement, but simply "Retirement" and expects her first monthly check in the amount of $1,100.00 on or about October 1, 2017. Did her attorney not informally advise that her monthly pension interest was approximately $1,100.00?


When Listajo entered the Phased Retirement Program, OPM, based on the Statutes, deemed Listajo an "active" employee.[8] As result, upon Listajo's entry into Phased Retirement on September 2, 2017, Jane will receive NOTHING! Yes, this is more than three years hence, and there was no reasonable basis for her attorney to anticipate the advent of Phased Retirement at the time of divorce. Nevertheless, there is a high probability that Jane Pacaro, who expected $1,100.00 per month from Listajo's pension and who then discovers she will receive $00.00 (for five years), will focus her vitriol on her divorce attorney. This is the person who indicated that upon Listajo's "Retirement", Jane would receive each month about $1,100.00. To Jane, $66,000.00 of expected pension benefits simply evaporated.

At This Time, There is Little the Attorney Can Do By Way of Mitigation.

If your matter was settled prior to the enactment of P.L. 112-141 on July 6, 2012, it was unlikely that the family practitioner had knowledge that on November 6, 2014, Phased Retirement would begin. This sequence is not likely to mollify a financially distressed Former Spouse.

Now, that the practitioner has been made aware of Phased Retirement, she or he may wish to advise the Former Spouse of Phased Retirement and it's potential to delay the commencement of retirement benefits to her. The problem with early notification is the fact that neither Office of Personnel Management or any other Federal Entity has at this time presented Guidance regarding the operation of a pre-Program C.O.A.P. Nor, is it certain that the employee (in your matter) will in fact enter Phased Retirement. Nor is it possible, prior to entry into Phased Retirement to estimate the benefit that will be paid to Jane.

Pending publication of relevant Regulations, you are likely to find it difficult to be responsive to the potential problems generated by Phased Retirement.

Troyan, tracks the Federal Register, the Code of Federal Regulations and the Office of Personnel Management. As Guidance is published, we will make it known by a writing on our website.

[1] The period of Phased Retirement will be treated as a period of part-time service in the computation of the survivor annuity. However, the Basic Employee Death Benefit will be based upon the full-time salary of the position.

[2] Regulations were published on August 8, 2014, but COAP issues were not addressed.

[3] Assuming annual increased at 2.5%. Same for period from 2017-2022.

[4] COAP: the Federal Equivalent of a QDRO.

[5] The Coverture Fraction provides the Alternate Payee with a decreasing percentage of an increasing retirement annuity. In virtually all cases the result is the benefit increases faster than the percentage decreases.

[6] September 1, 2017 is a Sunday.

[7] Based on the facts of this case that would be a loss to Jane of nearly $100,000.00.

[8] 5 U.S.C. 8412(a).