The percentage of older workers—those age 55 and older—is growing faster than that of any other age group, and they are expected to live and work longer than past generations. Labor force participation for this cohort has grown from about 31 percent in 1998 to 38 percent in 2007. In contrast, labor force participation of workers under age 55 has declined slightly. (See fig. 1.) Many factors influence workers’ retirement and employment decisions, including retirement eligibility rules and benefits, an individual’s health status and occupation, the availability of health insurance, personal preference, and the employment status of a spouse. The availability of suitable employment, including part-time work or flexible work arrangements, may also affect the retirement and employment choices of older workers. As the government’s human capital leader, OPM is responsible for helping agencies develop their human capital management systems and holding them accountable for effective human capital management practices. One such practice is strategic workforce planning, which addresses two critical needs: (1) aligning an organization’s human capital program with its current and emerging mission and programmatic goals, and (2) developing long-term strategies for acquiring, developing, and retaining staff to achieve these goals. In developing these strategies, we have reported that leading organizations go beyond a succession-planning approach that focuses on simply replacing individuals. Rather they engage in broad, integrated succession planning and management efforts directed to strengthening both current and future organizational capacity. In implementing its personnel policies, the federal government is required to uphold federal merit system principles in recruiting, engaging, and retaining employees. Among other provisions, the merit system principles require agencies to recruit and select candidates based on fair and open competition, as well as treat employees fairly and equitably. Federal agencies can recruit skilled or experienced workers, many of whom tend to be older, to fill positions requiring demonstrated expertise. OPM is also responsible for administering retirement, health benefits, and other insurance services to government employees, annuitants, and beneficiaries. It develops implementing regulations when Congress makes new options available to federal employees and often takes the lead in advocating for new legislative options. We and others have highlighted the need to hire and retain older workers to address the challenges associated with an aging workforce. In so doing, we have called upon the federal government to assume a leadership role in developing strategies to recruit and retain older workers. At our recommendation, Labor convened a task force composed of senior representatives from nine federal agencies and issued its first report in February of this year. The report provides information on strategies to support the employment of older workers, strategies for businesses to use that leverage the skills of an aging labor pool, individual opportunities for employment of older workers, and legal and regulatory issues associated with work and retirement. While the task force’s focus was the private sector, some of the strategies it identified are relevant for federal agencies as well, for example, providing flexible work arrangements and customized employment options that include alternative work schedules and part time work. As we and other organizations have previously reported, the federal workforce is aging, with an increasing number of employees eligible to retire. Many of the workers who are eligible to retire in the 24 CFO agencies are in executive and supervisory positions, as well as in mission- critical occupations. These trends point to the importance of strategic workforce planning to help agencies forecast, with greater precision, who might retire, when they might retire, and the impact of their retirement on an agency’s mission, and, using this information, develop appropriate strategies to address workforce gaps. The percentage of older workers and workers nearing retirement eligibility varies across the federal government, with some agencies employing more such workers than others. For example, as shown in figure 2, the percentage of career federal employees in the 24 CFO agencies age 55 or older ranged from about 9 percent at the Department of Justice to about 38 percent at the Small Business Administration and Department of Housing and Urban Development in fiscal year 2007. Importantly, about than one-third of federal workers will be eligible to retire over the next 5 years. Thirty-three percent of federal career employees on board as of the end of fiscal year 2007 will be eligible to retire during fiscal years 2008 through 2012. In comparison, about 20 percent of federal career employees on board as of the end of fiscal year 1997 were projected to be retirement-eligible during fiscal years 1998 through 2002. Many workers projected to become retirement eligible by 2012 are concentrated in certain agencies. As figure 3 shows, the agency rates range from a low of 20 percent at the Department of Homeland Security (DHS) to a high of 46 percent at four agencies—the Agency for International Development (AID), the Department of Housing and Urban Development, the Small Business Administration (SBA), and the Department of Transportation (Transportation). Estimated retirement eligibility rates will also likely vary at the component level—that is, by bureau or unit. Thus, even those agencies that have relatively low overall percentages of retirement eligible employees may have components that have higher percentages of retirement-eligible staff, which, in turn could affect the accomplishment of mission tasks and strategic goals for agency components and for the agency as a whole. Certain occupations have particularly high rates of workers eligible to retire. As shown in figure 4, 50 percent or more of the workers in 24 of the 315 occupations with 500 or more staff we reviewed are eligible to retire by 2012. Several of these occupations, such as air traffic controllers, customs and border protection interdiction agents, and administrative law judges are considered mission critical. Federal law requires mandatory retirement at specified ages for some occupations, such as air traffic controllers who must retire at age 56. Retirement eligibility will be especially pronounced among the agencies’ executives and supervisors (see fig. 5). Of the approximately 7,200 career executives as of the end of fiscal year 2007, 64 percent are projected to be retirement eligible by 2012, up from 41 percent in 2008. For supervisors who are not career executives, 45 percent will be eligible to retire by 2012. Although most federal employees do not retire immediately upon becoming eligible, the increasing number of employees becoming retirement eligible in the near future points to the need for agencies to examine how these trends will affect them. In so doing, agencies should take into account location, occupation, and grade level of potential retirees, and develop appropriate succession planning strategies, which may include retaining older, experienced workers, to address the likely impact. At the same time, it will be important for agencies to consider their organization’s strategic goals and the critical skills and competencies needed to meet future program outcomes, and to develop strategies to address any gaps in the number, skills, and competencies needed to achieve those outcomes. Federal agencies have a range of flexibilities at their disposal to help them engage and retain mission critical staff, including older, experienced workers. SSA, an agency that stands to lose a relatively large proportion of its experienced workforce in the upcoming retirement wave, is using many of the available governmentwide flexibilities to address workforce shortages. Some other federal agencies have developed alternative approaches that facilitate hiring and retaining older workers to meet their workforce needs. Despite the availability of recruitment, retention, and other flexibilities, agencies still face human capital challenges. In our past work, we found that agencies are not always able to make full use of available flexibilities, in part because they did not fully understand them. As the government’s human capital leader, OPM sets human capital policies for federal agencies. In many cases, OPM serves as the gatekeeper by approving or disapproving an agency’s request to use some hiring authorities or other flexibilities. Other authorities do not require OPM’s approval. While only one of the available flexibilities is largely focused on older workers—dual compensation waivers—many, such as flexible and part time work, are particularly appealing to older workers. OPM does not specifically target older workers in its policies. Instead, efforts are focused on workers who possess the right skills and experience to meet agencies’ workforce needs, without regard to age. Governmentwide Hiring Authorities. Under existing rules and regulations, agencies have the authority to use a number of different approaches to hire workers, including older workers, without obtaining OPM approval. Among other approaches, they include using temporary appointments for short-term needs; temporary assignees from state and local governments, colleges and universities, Indian tribal governments, and qualified not-for-profit agencies under the Intergovernmental Personnel Act (IPA); commercial recruiting firms and nonprofit employment firms; consultants for temporary or intermittent employment; contractual arrangements: commercial temporary help for brief periods of time, and contracts for services, as long as the contracts follow federal procurement regulations. Agencies can also use additional hiring authorities by obtaining OPM’s approval or by notifying OPM on a case-by-case basis of their intent. These include the following: Dual compensation waivers to rehire federal retirees—OPM may grant waivers allowing agencies to fill positions with rehired federal annuitants without offsetting the salaries by the amount of the annuities. Agencies can request waivers on a case-by-case basis for positions that are extremely difficult to fill or for emergencies or other unusual circumstances. Agencies can also request from OPM a delegation of authority to grant waivers for emergencies or other unusual circumstances. These waivers by their nature are largely for older workers; Special authority to hire for positions in contracting— agencies can rehire federal annuitants to fill positions in contracting without being required to offset the salaries.