GAO: Phased retirement programs uncommon
- By FederalSoup Staff
- Jul 25, 2017
Although many older workers were expected to take advantage of phased retirement, fewer than 15 percent thus far have reported gradually retiring from their jobs, a Government Accountability Office report finds.
Phased retirement, where employees approaching retirement age reduce their work hours and gradually transition into retirement, was expected to help mitigate a mass exodus of baby boomers leaving the workforce.
GAO found that most employees ages 61 to 66 who were still working maintained a full-time work schedule.
According to GAO’s review of studies and interviews with retirement experts, formal phased retirement programs remain relatively uncommon, but of those that are offered, they are more common among technical and professional workforces, such as education, consulting, and high-tech.
Out of 16 experts interviewed by GAO, 9 said that industries with highly skilled workers or with labor shortages are more inclined to offer phased retirement because their workers are more difficult to replace.
Furthermore, some employers are reluctant to offer phased retirement because of complexities with age discrimination and federal tax laws. “Experts and employers said programs that target highly skilled workers, who are often highly paid, could violate rules that allow for favorable tax treatment that generally prohibit qualified pension plans from favoring highly compensated employees,” the report notes. “Despite these challenges, most employers GAO interviewed who reported having phased retirement programs found them beneficial.”
Read the full report here.