Thousands of federal retirees who had military service after 1956 will have their civilian annuities adjusted upward, thanks to the Budget Reconcilation Act signed into law Sept. 8.

Many of those retirees -- who combined their military and civilian federal service time for retirement purposes -- lost credit for their military service time under Social Security (time served since 1956) because of the Catch 62 formula. It provides for a recomputation of their civilian annuities to exclude military service time when they hit age 62 if they are eligible for Social Security.

The Reconciliation Act (Public Law 97-253) eliminated the Catch 62 provision for persons retired from federal service before Sept. 8.

For current employes, who will sometime be subject to the Catch 62 provision, the act allows them to pay the equivalent of 7 percent of their military salaries into the civil service retirement fund. Those who do it will not be subject to the military time offset when they reach age 62.

Office of Personnel Management is coming out with a Federal Personnel Manual letter next week that explains how the Catch 62 changes are to be handled. Retirees will not have to pay anything into the civil service fund to benefit from the new recomputation formula.