The Congressional Research Service is completing a report for Sen. Ted Stevens (R-Alaska) that could lead to legislation putting all newly hired federal and postal workers under Social Security rather than the civil service retirement program.
Stevens, assistant majority leader of the Senate and head of the Post Office-Civil Service subcommittee, is working on a bill to put future hires into the Social Security system that covers most other American workers. Federal employes -- and members of Congress -- are not under Social Security although about half the federal work force eventually gets Social Security benefits by virtue of work performed in the private sector before, during or after their federal careers.
CRS' report will spell out benefits under the federal retirement program vs. those of Social Security, the costs to government and invididuals of each program and the pros and cons of bringing new civil servants under the latter, bigger program. Aides to Stevens say the legislation is still in the draft stage. It will not be introduced until next year, if he decides to go with it.
There is the possibility (as reported by the Federal Employees News Digest) that the legislation could be expanded to require short-term federal and postal workers -- with less than five years government service -- to also go under Social Security, with perhaps a carrot-and-stick benefits change to encourage long-term workers to voluntarily move over to Social Security.
Benefits under the civil service staff retirement program generally are higher than those paid under Social Security. They also are taxable, whereas Social Security benefits are tax-free.
Government workers contribute 7 percent of their full salary into the civil service retirement fund. People under Social Security now pay 6.65 percent on earnings up to a maximum of $29,700 a year. Next month, the rate goes to 6.70 percent and the salary maximum rises to $32,400.
The average primary benefit paid to those under Social Security is now $384 monthly. People retiring this year will get an average monthly benefit of $426. The average benefit paid to persons already retired under the civil service system is $962 per month. The average benefit for persons retiring this year actually will be lower (at $946) because the September cost-of-living raise was eliminated, according to the Office of Personnel Management.
Federal and postal unions, and retiree groups, are nervous about any switch to Social Security -- even if confined to new workers. They fear it could be a first step to merging the entire civil service system with Social Security further down the road.