Congress is expected to set up a new federal retirement system this fall.
It will have some of the good -- and some of the not-so-good -- features of pension plans offered workers in industry.
The new plan will be mandatory for the 300,000 feds hired since January 1984, and will be optional for those hired earlier. All federal workers below the rank of executive need to watch developments carefully, however.
Congress has until the end of the year to establish a new system for new hires, who are already under Social Security. Feds hired before 1984 are covered only by the Medicare portion of Social Security. They wouldn't have to join the new plan that is to go into effect in January.
Nothing in any new plan will have a direct impact, either in benefits or retirement age requirements, for post-1984 workers. But it could become a model for future legislative changes in the current system.
Typically, private-sector pension plans require employes to work longer before they can receive unreduced benefits than does the current civil service pension plan. Any new plan will almost certainly carry a higher retirement age.
On the other hand most private pension plans require no employe contributions for basic benefits. Most feds kick in 7 percent of their salaries to help pay for their benefits. In addition, many private firms offer employes optional tax-deferred savings plans that are not available to civil servants.
Nobody knows what kind of plan Congress will finally approve. But the starting point for it already has been introduced by Sen. Ted Stevens (R-Alaska). House Democrats will also come up with a model to work with.
Although most federal and postal unions are withholding comment on the Stevens bill, which they expect Congress to improve on, Moe Biller of the American Postal Workers calls it "positively inadequate." He said the union will "remind" Democratic congressional leaders of their 1983 promise that any new plan would provide essentially the same benefits as the current program.
Because Stevens' bill is the starting point, here is a thumbnail sketch of what it provides:
*Annuities would be based on the employes' length of service and their highest five-year salary averages. Current benefits are based on length of service and the employes' high-three-year average salaries.
*Federal workers would pay the Social Security tax, but nothing for their basic retirement plan.
*Employes retiring at age 55 with 30 years service would have pensions docked 2 percent for each year they were under age 62. Those retiring at 55 with 10 years service would take a 5 percent per year reduction. Under the present plan, employes may retire at 55 after 30 years on unreduced benefits equal to 56 1/4 percent of their high-three year average salaries.
*Cost-of-living adjustments, now fully indexed to the inflation rate, would be limited to 60 percent of the increase in the consumer price index.
*The thrift plan, more generous than those available to most private sector workers, would allow feds to shelter 10 percent of their salaries in savings or investment plans, with the government adding another 5 percent.