Individual civil servants and retirees could easily lose hundreds of dollars each year in future pay and pension adjustments under plans to bring government pay and pensions in line with industry.
The Carter administration intends to play serious hard-ball to get the bureaucratic reforms through Congress. Two major items are now pending:
Most immediate is the plan to revamp pension payments. Both the Senate and House have approved budget language calling for elimination of one of the two cost-of-living raises government and military retirees get each year. Instead of regular six month adjustments - March and September - the plan would give retirees a single raise per year. It would go into effect in July 1980, putting federal retirees under the same cost-of-living cycle as people under Social Security.
That budget plan has not been translated into specific language - yet. But as he pointed out here a couple of weeks back, the tactic will be to tack the cost-of-living cutback as an amendment or rider to a piece of noncontroversial legislation in the Senate. If approved, the House would be hard-pressed to ignore the idea of a single cost-of-living raise each year, especially since it would also cover retired members of Congress.
Item two is President Carter's federal compensation "reform" package. Backers say it is aimed at making sense out of the government salary system which now pays clerks and boses the same pay whether they live in New York City or a small town where local industry rates are well below the $19,000 per year federal average. In Washington the average is about $22,000.
The current national rate system, Carter aides say, results in some big city feds in lower level jobs working at or near the poverty line while their counterparts in small towns are among the best-paid in the entire community.
Carter's plan, aides say, would allow government to peg pay (and fringes) to local industry rates for the same job. That would mean bigger future raises for some employes, smaller increases for others.
Overall, the White House claims the pay reforms now in Congress would save the taxpayers about $3 billion in the next few years. Statisticians for the American Federation of Government Employees say it translates into an average reduction of about $1,500 in future raises for the typical civil servant.
The one-shot pension adjustment proposal would eliminate the benefits retirees get from having raises compounded each six months. But more important, according to NARFE (the National Association of Retired Federal Employees) is the short-changing retirees would get because they would have to wait twice as long for inflation catch-ups.
Judy Park, chief lobbyist for NARFE, says under the current system (two raises a year) the typical retiree drawing $654 per month befor taxes can expect a minimum $39 raise in September and another $39 next March. She assumes the current inflation rate of 12 percent. The total annual increase would be slightly in excess of $732 with compounding.
Under the single annual raise, retirees would get almost the same dollar adjustment, Park says. But they would have to wait twice as long for it, thereby losing the purchasing power of $39 extra dollars per month for six months.