We do something similar at my job for the greybeards that were very influential on our current projects. They "retire" but are retained as a very part time employee that only get paid if we need to bring them in for a day or two to help answer some questions. The managers love it because they don't need to find work for this person, pay for any benefits, or need to get approvals to pay them like contractors. As long as we keep doing relevant work to their expertise, they will continue being retained. There is a limit for how many hours they can put in because these people are incredibly expensive as they usually retire at the top engineer level and retain the equivalent hourly wage for that position.
Paying someone as sporadically as you would a contractor but they’re only getting their usual hourly wage? Doesn’t sound expensive to me. Sounds like a ridiculously good deal for the employer.
