Federal and postal workers retiring after September of this year stand to lose at least $80 million a year in benefits if they are eligible for both civil service annuities and social security. That is the proposal under a complicated pension offset plan President Carter will send Congress shortly.
The number of future federal retirees that would be hit by the partial pension offset is impossible to predict. But federal officials estimate that nearly 50 percent of the government work force now has some social security entitlement, or will have after they leave government.
The legislation is aimed at cutting back on "double dipper" benefits by future federal retirees who also qualify for social security payments based on service in the-private sector. President Carter announced the plan in his new budget, but did not spell out details. Insiders say it would work like this:
The idea is to reduce $1 in benefits from social security for every $3 the retiree receives from his or her federal pension "to the extent that the federal pension exceeds the mean (average) social security worker's benefit." That mean, or average, social security benefit as of now is $279 a month.It changes -- usually going up -- each year based on the cost of living.
Here is a purely hypothetical example: Suppose that a future retiree leaves government and is entitled to a civil service pension of $500. Because he or she also worked under social security, that individual would also -- for sake of the example -- get $200 monthly from social security. Under the present system the retiree would get two monthly checks from the government, one for the $500 federal pension (which is taxable) and $200 (nontaxable) from social security.
Under the Carter offset plan, the pension offset would be made on that portion of the federal annuity that exceeded the current social security average payment. For the moment, that figure would be $279. So the $3 for $1 offset in this case would reduce the retiree's social security check by $73 a month.
There is a guarantee in the proposed legislation that would protect retirees entitled to civil service and social security benefits from losing all social security money. It would come into play where the civil service pension was very high, and the social security payment very low. In that case the retiree would be guaranteed social security benefits based on 32 percent of his or her lifetime indexed wages under social security.
Carter's plan, if Congress approves it, would not affect anyone now retired and drawing both civil service retirement and social security. It would go into effect only for persons retiring after September of this year, and only for benefits commencing after that date.
Nevertheless, the offset plan will be a big jolt to everybody now in government. It will mean a minimum annual reduction in their social security benefits of between $77 million and $80 million when fully effective. And that amount of loss will increase as pensions and social security benefits rise.
Pay Protest: Federal workers and a coalition of employe unions are planning a noontime protest march today, blasting President Carter's plan to hold their October pay rise to 5.5 percent. Preliminary data indicates federal workers will be due a 10.25 percent increase to keep pace with inflation, and with industry wages.
The march wll start at HEW. Demonstration leaders say the parade route will go to the Housing and Urban Development building, then back to HEW. Union officials and Washington area politicians will be on hand.
National Treasury Employees Union continues its winning ways outside the Treasury Department. Last week it won exclusive bargaining right to represent Department of Energy's 3,600 headquarters workers. NTEU got 601 votes to 286 for the American Federation of Government Employees. One hundred Energy workers voted "no union."
Since last June, the NTEU (once composed exclusively of Internal Revenue Service workers has won representation elections at the Nuclear Regulatory Commission (field and headquarters), Federal Elections Commission, Federal Communications Commission and Pension Benefit Guarantee Corporation.