The Senate will consider a White House-approved alternative budget this week that could make federal and postal workers who take early retirement subject to penalties that would halve their pensions.
Federal union leaders and congressional defenders of the federal retirement system have been assured that the language calling for early retirement penalties in the compromise budget plan -- worked out by the administration and Senate Republican leaders -- is a mistake and will be dropped, budget committee sources said.
But many opposed to the provision are nervous because of the mystery and confusion surrounding the whole budget process.
There are at least three budget proposals kicking around: the one the president made earlier this year, the one approved by the Senate Budget Committee and the White House-leadership compromise.
The budget issue will be taken up by the Senate tomorrow, or whenever it finishes work on the White House request for funds for the Nicaraguan rebels. Leaders hope to substitute the White House-leadership package for the list of spending cuts approved earlier by the Budget Committee.
The budget committee plan is much kinder to federal workers than the budget originally proposed by President Reagan. The committee plan calls for a federal pay freeze next year (rather than a 5 percent cut) and ignores the president's request that federal workers retiring in the future before age 65 have their annuities reduced 5 percent a year.
In lieu of the pay cut proposed by the president, the committee has recommended raising the amount of money employes contribute to their pension plan from 7 percent to 9.
Feds may now retire at age 55 (with 30 years service) on an annuity equal to about 53 percent of their final years' salary. The Reagan plan with its penalties would reduce that annuity to about 26 percent of salary.
But the White House-leadership compromise, worked out April 5, calls for "gradually reducing benefits for early retirement" without being any more specific. Insiders say that could mean the 5 percent per year reduction requested by the president, or adopting the standard private industry practice of reducing employe pensions 4 percent each year for anyone retiring before age 62.
A federal union lobbyist who has been following the budget process says he is "skeptical" about promises that the penalty language will be dropped. It was in the White House compromise as of Monday, he said.
If the Budget Committee sources are correct, federal workers looking toward early retirement are okay. But if they are wrong, or if the Senate decides to push for a penalty plan that would cut the cost of the federal retirement program, people who had hoped to pull the plug before age 65 have reason to worry. Job Mart
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