The plan to merge the civil service retirement system into Social Security took an important, if shaky, step forward yesterday.
After heated debate, the subcommittee that has been wrestling with the controversial pension link-up plan decided to send it to the full House Ways and Means Committee to decide.
Backers of the merger say it would form the basis for a more equitable national retirement program for practically all American workers. And, they contend, it would eliminate pension "double-dipping" by state employees and federal workers whose retirement system is considered the nation's best.
Opponents charge the merger is a cynical, short-sighted Political ploy. They assert that the House is trying to duck the tax increase by pumping money from the solvent, pay-as-you-go federal pension program into the financially troubled Social Security system.
Under the proposal, the civil service retirement system and the retirement plans of state and local government workers and employees of nonprofit organizatons who aren't covered by social security would be merged into the system by January, 1980.
There are about 2.6 million active federal workers in the government's civil service pension plan. Merger also would include about 4 million state and local government workers who now have their own retirement programs and about 1 million people who work for nonprofit groups.
Unless federal-state and nonprofit employees are brought into the system, committee sources say, individuals under Social Security could find their payroll tax doubled by 1982.
Federal and postal employees now contribute 7 per cent of their annual income into their retirement fund. The government matches that 7 per cent contribution to finance benefits that, for a worker retiring today, average out of $670 a month.
Persons under Social Security now contribute 5.85 per cent of their earnings up to $16,500 (both the rate and amount of income taxed to go up next year). For that they qualify for monthly payments of $234 at the age of 65.
Federal and postal unions contends that the House is trying to avoid the political unpopular prospect of raising Social Security taxes by bringing federal workers into the system. That way it would be 10 or 12 years before the first big crop of federal workers began retiring. And during most of that period - because money from the civil service fund would be available to pay social secutiry benefits - members of Congress could hold down the tax rate for social security.
Legislators who want to merge the system claim that it would not undermine civil service pension benefits. They talked about establishing a two-tier system whereby employees would get primary payments from Social Security with lesser benefits - based on their contributions - from the civil service system.
Some comgressmen also argue that the merger would eliminate the practice of allowing federal workers to "moonlight" or work minimum periods after retiring from the government to qualify for a basic monthly social security benefit of $114 in addition to their federal retirement.
Sources on the House Ways and Means Committee say that about half of all government workers now - or will - qualify for minimum payments from social security by virtue of minimal contributions to the system. To qualify for a minimum benefit individuals need earn only $50 a quarter for 40 quarters (about 10 years).
Insiders say the pension merger plan has a "long, long road to travel" before Congress approves it or anything like it. But federal employee groups are mustering all the opposition they can now before the idea gathers steam in the House.
Even union officials who have received detailed briefings of the complicated "two-tier" system under the merger plan fear that it would result in a watering-down of future federal retirement benefits.
This could become one of the hottest political items of the 1978 election year, with the many millions of people now under Social Security being told that it is the only way to avoid regular, major tax increases over the next decade.