House Committee Does Right by Retirees

Rep. James P. Moran Jr.
Rep. James P. Moran Jr. (Lucian Perkins - The Washington Post)
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Thursday, March 19, 2009

The House Committee on Oversight and Government Reform won kudos from federal employee and retiree organizations yesterday, as it approved measures designed to improve retirement programs for Uncle Sam's workers.

One issue that made those covered by the Federal Employees Retirement System sick was their inability to count unused sick leave toward their annuity, as can their colleagues in the Civil Service Retirement System.

Not allowing that time to be credited toward retirement can generate problems in the workplace. Productivity falls when workers approaching retirement take sick time in an attempt to use it before their last day on the job. Permitting those days to be counted toward retirement, as the committee approved, provides an incentive to conserve them instead of using the time when it's not really needed.

"The FERS 'use-it or lose-it' system for sick leave hampers productivity and increases training costs," said Rep. James P. Moran Jr., the Northern Virginia Democrat who has long pushed the measure along with Rep. Frank R. Wolf (R-Va.). "We need to be incentivizing the accrual of sick leave, not encouraging employees to call in sick in the weeks leading up to retirement. Our federal workforce is the best in the world; they deserve a benefit designed to reward, not punish, those who play by the rules."

Assuming the measure becomes law, FERS workers no longer will feel cheated when compared to their CSRS co-workers. "The inequity between the two retirement systems has been a serious concern both for workers and managers," said an American Federation of Government Employees statement, which also noted that the current arrangement gives FERS employees "no financial recognition for a career with exemplary attendance."

A Congressional Research Service study found that "nearly 85 percent of CSRS employees and retirees said they would or did conserve as much sick leave as possible, [while] more than 75 percent of FERS employees and retirees said they planned to use as much sick leave as possible during their last year before retirement."

With passage of the measure, they can plan to work every day they are not actually sick. There will be less reason to take a "mental health day."

The Congressional Budget Office estimated that about three months would be added to an employee's length of service with the government as a result of the provision. That would result in boosting the average annual retirement payment for FERS people by about $150.

The committee also approved a measure that would create a Roth-style investment option in the Thrift Savings Plan for federal employees. This would allow them to make contributions to the plan after they pay income taxes and withdraw their earnings tax-free when they retire.

"Federal employees would want this feature so that they would have the same options available to private sector workers in some 401(k) plans," said Margaret L. Baptiste, president of the National Active and Retired Federal Employees Association.

One important by-product of the Roth measure is the funding it generates for Uncle Sam's piggy bank. The Budget Office estimated the Treasury would get a boost of $2 billion to $3 billion over 10 years, because the contributions would be made with after-tax income.

That amount isn't much, certainly not compared to the really big bucks that American International Group got from taxpayers, but it is enough to cover the boost to retirement payments under the FERS sick leave provision. That would come to just over a half-billion dollars during the next decade, the congressional number crunchers estimated.

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