Within the next couple of weeks Congress must get down to the business of designing and approving a new retirement system for the 300,000 federal and postal employes hired since January 1984.
Those new feds are now in a pension no-man's land belonging both to Social Security and the current Civil Service retirement system. The new feds pay the full 7.05 percent Social Security tax but are required to contribute only a token amount of their salaries to help run the current Civil Service pension plan.
So-called old feds, those hired before 1984, contribute 7 percent of their salaries to the Civil Service plan, but pay only the Medicare portion of Social Security.
When Congress folded newly hired feds into the Social Security system almost two years ago, it anticipated setting up a new retirement program for them by the end of this year. If it is not ready in time, the new feds will, starting in January, have more than 14 percent deducted from their checks to cover the full Social Security and Civil Service contributions. Feds hired before 1984 will continue to pay at the current level.
There are several proposals floating around that could form the basis of a new federal pension system. They have several things in common: a penalty for workers retiring before age 65, a voluntary tax-sheltered thrift plan, partial (rather than full) cost-of-living protection, optional coverage for feds hired before 1984 and mandatory coverage for persons hired since 1984.
Although time is running short because Congress plans a number of work breaks this year, insiders predict that a new pension program will be in place by 1986, sparing new workers from a 14 percent paycheck bite next year.