Federal Employees' Optional Early Retirement Act of 1986

Federal Employees' Optional Early Retirement Act of 1986 - Authorizes early retirement during the period beginning July 1, 1986, and ending January 1, 1987, for certain Federal employees after: (1) completing 25 years of service; (2) becoming 50 years of age and completing 20 years of service; (3) becoming 55 years of age and completing 15 years of service; or (4) becoming 57 years of age and completing 5 years of service. Specifies those employees who are not eligible for such retirement. Subjects such retirement annuities to the applicable reduction for employees who retire under the age of 55.

Directs the President to extend the early retirement provisions of this Act to: (1) participants in the Central Intelligence Agency Retirement and Disability System; (2) participants in the Foreign Service Retirement and Disability System; and (3) if determined appropriate, employees of the executive branch who are participants in any other Federal retirement system.

Prohibits agencies from hiring civilian employees from the period beginning July 1, 1986, and ending October 1, 1991, if such appointments would exceed the maximum authorized number of employees for such an agency. Authorizes the Director of the Office of Personnel Management to waive excess hiring for essential positions and for those positions financed by user fees. Authorizes agencies to transfer employees during such period to fill vacancies.

Directs the President to ensure that there is no increase in contract procurement of personal services by reason of enactment of this Act.