To allow agencies to offer certain Federal employees an opportunity to take early retirement without having to remain subject to the otherwise applicable reduction, based on age, after attaining age 55.

SECTION 1. AUTHORITY.

    (a) In General.--In order to avoid or minimize the need for 
involuntary separations due to a reduction in force, reorganization, 
transfer of function, or other similar action, the head of an agency 
may offer early retirement under this section to employees of such 
agency--
            (1) in any component thereof;
            (2) in any occupation;
            (3) in any geographic location; or
            (4) on the basis of any combination of factors under 
        paragraphs (1) through (3).
    (b) Treatment of Employees Taking Early Retirement Under This 
Section.--
            (1) In general.--In the case of an employee who takes early 
        retirement under this section, the reduction under the first 
        sentence of section 8339(h) of title 5, United States Code, 
        shall be equal to the reduction that would otherwise apply, 
        subject to paragraphs (2) and (3).
            (2) Modified reduction.--Effective with respect to any 
        benefits accruing for any month beginning after any birthday of 
        the employee occurring after the commencement date of such 
        employee's annuity, any annuity payable based on the service of 
        such employee shall be redetermined such that it shall be equal 
        to the amount that would then be payable, assuming the 
        circumstance described in paragraph (3).
            (3) Circumstance described.--The redetermined amount under 
        paragraph (2) as of any date is the amount that would then be 
        payable based on the reduction that would then be required 
        under the first sentence of section 8339(h) if, at the date of 
        separation, such employee had attained the age attained by such 
        employee as of the birthday referred to in paragraph (2).
    (c) Conditions.--
            (1) In general.--In order to be eligible to take early 
        retirement under this section, an employee--
                    (A) may not accept any voluntary separation 
                incentive payment in connection with the same 
                separation; and
                    (B) must separate from service before the end of 
                the relevant election period under paragraph (2), 
                except as provided in paragraph (3).
            (2) Election period.--
                    (A) In general.--An election to take early 
                retirement under this section shall not be valid unless 
                it is made during an election period offered by the 
                employee's employing agency under this paragraph, if 
                any.
                    (B) Duration; Expiration.--An election period under 
                this paragraph--
                            (i) shall be 3 months in duration;
                            (ii) shall end not later than 1 year after 
                        the date of the enactment of this Act; and
                            (iii) may not be repeated.
            (3) Exception relating to required separation date.--If 
        necessary to ensure the effective performance of the agency's 
        mission, in the judgment of the head of the agency, the 
        required date of separation under paragraph (1)(B) may be 
        deferred for a period mutually agreed upon by the employee and 
        the agency, but not later than 1 year after the last day of the 
        relevant election period.
    (d) Employment Backfill Prevention.--Subsections (f) and (g) of 
section 5 of the Federal Workforce Restructuring Act of 1994 (Public 
Law 103-226; 5 U.S.C. 3101 note) shall apply with respect to any 
vacancy created by the separation of any employee who has taken, or who 
is due to take, early retirement under this section.
    (e) Eligibility Not Limited to Those Under CSRS.--This section 
applies with respect to any employee who is eligible for--
            (1) an annuity under subchapter III of chapter 83 of title 
        5, United States Code; or
            (2) an annuity any part of which would be subject to 
        reduction under the first sentence of section 8339(h) of such 
        title.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary in order to finance the 
unfunded liability created by this section, to the extent attributable 
to benefits accruing during the 5-year period beginning on the date of 
the enactment of this Act, either--
            (1) in 5 equal annual installments, with interest computed 
        at the rate used in the then most recent valuation of the Civil 
        Service Retirement System and with the first payment thereof 
        due as of the end of the fiscal year in which this Act is 
        enacted; or
            (2) in a single installment an amount equivalent to the 
        present value (at time of payment) of the installments referred 
        to in paragraph (1), and with such payment due by the end of 
        the fiscal year next beginning after the date of the enactment 
        of this Act.

SEC. 2. HEALTH AND LIFE INSURANCE BENEFITS.

    (a) In General.--In the case of an employee who takes early 
retirement under section 1--
            (1) such employee shall not, by reason of any requirement 
        under section 8905(b)(1) of title 5, United States Code, be 
        considered ineligible for continued enrollment as an annuitant 
        under chapter 89 of title 5, United States Code, if the 
        otherwise applicable requirements are met; and
            (2) subject to subsection (b), such employee shall not, by 
        reason of any requirement under section 8706(b) of such title, 
        be considered ineligible for continued life insurance coverage 
        under chapter 87 of such title, if the otherwise applicable 
        requirements are met.
    (b) Individual Not Eligible for Government Contributions.--Life 
insurance coverage under subsection (a)(2) shall be afforded in 
accordance with applicable provisions of title 5, United States Code, 
except that any Government contributions otherwise payable with respect 
to an annuitant shall be the responsibility of the former employee.

SEC. 3. DEFINITIONS.

    As used in this Act:
            (1) Agency; employee.--The terms ``agency'' and 
        ``employee'' have the respective meanings given those terms by 
        section 3 of the Federal Workforce Restructuring Act of 1994 
        (Public Law 103-226; 5 U.S.C. 5597 note).
            (2) Voluntary separation incentive payment.--The term 
        ``voluntary separation incentive payment'' means--
                    (A) a voluntary separation incentive payment under 
                section 3 of the Federal Workforce Restructuring Act of 
                1994; and
                    (B) any similar payment as may be identified under 
                section 4.

SEC. 4. REGULATIONS.

    Any regulations necessary to carry out this Act may be prescribed 
by the President or his designee.

Summary: Authorizes the head of a Federal agency to offer early retirement to employees of such agency: (1) in any component thereof, (2) in any occupation, (3) in any geographic location. Or (4) in any combination of the three. Redetermines the reduction in retirement benefits for such employees caused by such early retirement based on the age the employee attains on his or her next birthday after the commencement of such employee's annuity. Sets forth conditions for early retirement under this Act, including acceptance of early retirement during an election period chosen by the employer. Makes eligible for such early retirement election employees under both the Civil Service Retirement System and the Federal Employees' Retirement System. Authorizes appropriations. Provides for continued eligibility of such employees for Government health and life insurance benefits as retired Federal employees. Places on the retiree responsibility for any Government contributions otherwise payable with respect to an annuitant.