Federal workers would be penalized for retiring before age 65, and federal pay and pension checks would be frozen next year, under the compromise budget approved last week by the Senate.
The Senate plan requires the Governmental Affairs Committee to come up with $12 billion in savings during the next three years from federal pay and retirement programs. The Democratic-controlled House is expected to balk at many of the suggested civil service savings in the Senate's deficit reduction budget.
This is what the Senate budget suggests for civil servants:
A penalty for federal and postal workers who retire before age 65. Under the plan there would be a 5 percent annuity reduction for each year an employe was under age 65 when he or she retired. Currently federal workers can retire at age 55 with 30 years' service without penalty. The Senate did not spell out when the changes would go into effect, although the administration earlier said that employes who are 55 or older would not be hit by the penalty.
There would be no pay raises or cost-of-living adjustments next year for federal workers, civilian and military retirees or persons drawing Social Security benefits.
Within-grade (longevity) raises that employes now earn every one, two or three years would be delayed for one year starting in 1986. That means that if you were due a within-grade raise (worth 3 percent) next year you would have to wait until 1987 to get it.
An increase in the amount of money federal and postal workers contribute to their retirement fund. Employes now kick in 7 percent of salary. That would be raised to 9 percent. That would amount to a permanent pay cut for federal workers.
The Senate budget plan has a long way to go before it becomes reality. The Senate Governmental Affairs Committee can, and probably will, make some changes, although it must come up with approximately the same dollar savings as required in the budget.
On the House side, Democrats are likely to balk at the early-retirement penalty and the increase in retirement contributions. It will be several weeks, or longer, before the Senate and House reach agreement on a compromise budget.