Putting new federal workers under Social Security will not cut off new payments to the civil service retirement fund that now pays $2.8 billion a year in benefits to the District, Maryland and Virginia's nearly 240,000 U.S. retirees and survivors.
Senate-House conferees yesterday agreed to a Social Security financing reform measure that would--among other things--require government employes hired after Jan. 1, 1983, to pay full Social Security taxes.
The action was a setback for federal/postal and retiree groups who mounted their most extensive lobbying effort, and spent millions of dollars, trying to convince Congress that putting new feds under Social Security would wreck the civil service pension program.
They claimed it would cut off the flow of contributions to the civil service plan from the 190,000 new workers government hires each year, and bankrupt the federal pension fund in less than 20 years.
But Senate and House leaders rejected the barrage of radio and TV ads and the massive lobbying effort. They say they have plans to set up a supplementary civil service retirement program that will not let the current system die out.
If the bipartisan Social Security financing plan becomes law, as expected, feds hired next year will pay the 7 percent Social Security tax on income up to $37,800 a year, plus put 7 percent of their gross salary into the civil service retirement fund.
The CS fund, financed by matching employe and agency contributions and direct annual appropriations from the Treasury, is used to pay retirement benefits to more than two million retirees in this country and in more than two dozen nations. so
House Democrats, who favored Social Security coverage for new feds, are working on a supplementary civil service retirement program. If modeled on private sector pension plans which are geared to provide benefits along with Social Security, it could result in a less generous civil service retirement program for workers hired in the future.
It could be a year or more before any supplemental system is cleared by Congress. Until then, new employes would pay 14 percent of salary into the two systems--Social Security and civil service. Present employes would stay exclusively under the federal retirement plan.
On the Senate side, Assistant Majority Leader Ted Stevens (R-Alaska) has a bill ready to go.
Stevens' plan would set up a new three-tiered retirement program. The base would be Social Security. The second layer would be a modified civil service program paid for entirely by government. This non-contributory system, similar to many plans in private industry, would not guarantee a certain level of benefits. The third feature would be a voluntary thrift plan. The government would match some of the money employes put into the plan.
Current feds would have the option of joining the new system. Or they could in the present retirement program and outside of Social Security.
Unions blasted Stevens' bill when it was introduced two years ago. Their main complaint was that it does not define benefit levels. Opposition was so great that Stevens, who is up for reelection next year in a state with a lot of federal workers, withdrew the bill.
But times change. With Social Security almost a reality for new government employes, the question is no longer whether to have a supplementary pension system, but what kind of supplementary system to have.