Government employes --who enjoy one of the nation's best retirement programs--are in shock because of the pension "reforms" President Reagan has recommended in his new budget.
He also proposed a zero pay raise this year for the area's 400,000 federal and military personnel, plus a freeze next year for the 100,000 government/military retirees here.
If the retirement proposals survive in Congress, most U.S. workers would have to stay on the job longer and put more of their salary into the retirement fund for benefits that would be smaller in relation to salary than those paid to persons retiring today.
For example federal employes today can retire at age 55 with 30 years service and draw an annuity equal to 56.25 percent of salary. When the Reagan plan is in full operation, an employe retiring with the same age and service would get an annuity equal to only about 28 percent of salary.
In his message to Congress the president said that despite last year's cuts in the retirement program (shaving cost-of-living raises for some retirees and delaying them for all retirees) the U.S. plan "still has far more generous benefits and is much more costly than retirement programs in the private sector or in state and local governments."
Accordingly, the president asked Congress to raise the age for retirement on full benefits to 65, and force employes to pay a bigger share of the retirement program. Under his plan, contributions (now 7 percent of gross salary) would amount to up to 9 percent next year, and 11 percent in 1985.
Retirement benefits would be reduced 5 percent a year, for each year an employe was under age 65. Those who are 55 or older at the time of enactment would not be subject to the new rules.
The program would be phased in gradually over a 10-year period. For example an employe age 53 at the time of enactment who later retired at 55 with 30 years service would be hit with "only" a 10 percent annuity reduction, an employe now 52 would take a 15 percent reduction and so on.
But employes who are 45 or younger would be subject to the full 5 percent per year reduction unless they stayed on the job for another 20 years.
The administration also wants to change the annuity computation formula and base it on the employe's highest five-year salary average (currently it is the high three-year average). Employes within three years of retirement eligibility would not be affected by that change.
Shifting to the high-5 system, plus other proposals under consideration to change the annuity computation formula would lower, in most cases, the annuity due at retirement.
Reagan also endorsed recommendations of the bipartisan Social Security reform panel, which wants to bring all federal workers hired after Jan. 1, 1984, under Social Security. Several members of Congress are working on legislation that would produce a scaled-down civil service retirement system for those workers to supplement Social Security benefits.
Federal and postal unions, and retiree groups, are fighting mad. But the number of proposals, dealing with pay, pensions and Social Security, will make it harder to concentrate their efforts on Capitol Hill. The House hopes to have Social Security financing reforms (including those to cover new federal workers) wrapped up by Easter.
Under the new budget procedures used on Capitol Hill many of the proposals could be approved as part of the reconciliation process by May of this year.
Some Congress watchers believe that the proposals--particularly those that would revamp the federal retirement system--will fall on their face. They think it is likely that Congress will go along with a federal pay freeze this year, although the military might get some kind of increase.
"The idea of raising the retirement age to 65 is too wild," a top Senate aide said. "I've heard a lot of senators talking against it." But he said it was possible that the Congress and the administration might reach a compromise, say either age 62 or 60.