Rep. James L. Oberstar (D-Minn.) says the government is overcharging many of its 1 million employes with post-1956 military service who are trying to buy their way out of a future cut in their retirement checks.
Under present law, federal workers who credit their post-1956 military service toward civil service retirement have their retirement benefits cut at age 62 if they become eligible for Social Security. At that time they lose credit for those years of military service and, in most cases, take a reduction in their lifetime civil service benefit.
Congress said last year that federal workers who wanted to avoid the offset could do so by reimbursing the civil service retirement fund an amount equal to 7 percent of their post-1956 military earnings.
In effect, the employes would be buying into the retirement system for the years they were in uniform. Currently U.S. workers pay 7 percent of their gross salary into the civil service retirement system.
But Oberstar says that from 1957 until 1968, federal and postal workers kicked in only 6 1/2 percent of salary into the fund. The 7 percent contribution started in January 1969.
Oberstar is sponsoring a bill that would base payments the veterans must make on the going rate for the civil service retirement system at the time they were in the military.
Changing the formula would not make much of a dent in the amount that veterans have to pay back to avoid this so-called Catch-62. But it would mean a lot less money would be coming into the civil service retirement fund, which now pays benefits to more than 2 million retirees and survivors.
Employes now have until October 1984 to make the contributions. But Congress is working on legislation to extend that deadline to October 1985. That is because of the complexity of figuring out how much each federal worker with post-1956 military service would have to pay to avoid the Catch-62.
If the Oberstar bill becomes law, the calculations will be even tougher. Could be the deadline will have to be extended even further.