Human Resources Policies

HR29 Voluntary Phased Retirement Program

Policy Status: 

Under Review

Policy Steward: 

Vice President for Human Resources

POLICY'S INITIAL DATE: May 22, 1997 

THIS VERSION EFFECTIVE: July 1, 2021

NOTE: The implementation of SIMBA requires the review of many University Human Resource Policies and Guidelines. After consultation with key constituencies, work has been underway to update, consolidate, and improve our policies and guidelines to better serve the Penn State community. However, please be aware that due to the volume of the impacted policies and guidelines, not all policies are currently updated to reflect changes which have been communicated; however, the policies will be updated soon and have appropriate and applicable effective dates listed. We appreciate your patience as we work through this review process. Any questions can be directed to HR Services at 814-865-1473 or submit an inquiry via WorkLion.

Contents:

PURPOSE:

The Voluntary Phased Retirement program is intended to meet the needs of a faculty or staff member who would like to transition into full retirement and still provide service to the University in fulfilling its objectives. The program allows a faculty or staff member to have a gradual work commitment reduction over a defined period of time of no less than tweleve (12) months and no longer than three (3) years, at a reduced compensation level, based on the percentage of work commitment. Voluntary Phased Retirement should enhance succession planning and the mentoring of junior faculty and staff members as more senior faculty or staff members transition from strategic roles in the University.

ELIGIBILITY:

Full-time faculty and staff are eligible to request Voluntary Phased Retirement if they meet the following criteria: 

  1. For those hired prior to Janurary 1, 2010 and at the end of the phased retirement program, age 60 or older with at least 15 years of continuous full-time service, or 25 years of continuous full-time service regardless of age; 
  2. For those hired on January 1, 2010 or later, and are eligible for the Retirement Healthcare Savings Plan at the end of the phased retirement period (age 60 with 25 years of continuous full-time service, or age 65 with 15 years of continuous full-time service); or
  3. Those not covered by #1 or #2 above, but are eligible for "full Social Security benefit" as defined by the Social Secuirty Administration, at the end of the phased retirement period. 

AGREEMENTS:

Voluntary Phased Retirement Program Agreements are to be in accordance with the following:

  1. In consideration of the reduced work commitment, the participant agrees to reduce compensation. Staff participants will also continue to accrue sick, vacation, and holiday time in proportion to their reduced work commitment. Participants in the Penn State Alternate Retirement Plan will be offered the option to begin to access retirement accumulations prior to full retirement. A balance of 1% must be maintained in their retirement account during the phased retirement. It is the responsibility of the participant to consider the tax implications (if any) of accessing retirement funds. Participants who are members of the Pennsylvania State Employees' Retirement System (SERS) or members of the Public School Employees' Retirement System (PSERS) cannot withdraw retirement funds from SERS/PSERS until full retirement has commenced. Penn State Alternate Retirement Plan participants will continue to receive employer contributions to their retirement plan based on their reduced work commitment and salary. Those who are members of the SERS/PSERS will ear reduced service credit in proportion to the percent reduction in work commitment.  
  2. Once approved, the agreement to participate is irrevocable and may not be rescinded at a future date. Full retirement will commence at the agreed upon date that designates the end of the phased retirement period. A participant may accelerate the retirement date during phased retirement, if approved. Extensions must be reviewed and approved annually. 

 

All employee benefits are retained during the phased retirement at the regular employee contribution rate. In addition, Short- and Long-Term disability coverage will be continued on the reduced salary. 

 

Any changes to this policy, including the suspension or eliminiation of the program, will not affect participants already in the program at the time of the change. 

 

Updates:

July 1, 2021 - Updated policy to reflect Funding Model Changes, including removal of gender pronouns. 

June 14, 2016 - Added "or designee" to the Procedure section.

July 11, 2012 - Added extension provision.

April 28, 2011 - Extensive revisions.

January 26, 2011 - Added "or designee" throughout policy.

Date Approved: 

June 14, 2016

Date Published: 

June 14, 2016

Effective Date: 

June 14, 2016