Pension plan deductions could jump by nearly 7 percent next week for 300,000 of the government's newest and youngest employes unless agreement is reached on a supplemental retirement system for workers hired since January 1984.
Such a change, depending on the employe's salary, would reduce annual take-home pay of affected workers by several hundred to several thousand dollars without any improvement in pension benefits.
Leaders of the Senate Governmental Affairs Committee will meet with administration officials today and tomorrow to seek approval of a new retirement package for all workers -- secretaries, scientists, letter carriers, civilian astronauts and the like -- hired since January 1984.
They are currently covered by Social Security (which costs them 7.15 percent of salary) and the civil service retirement program; under an interim agreement, they pay only 1.3 percent of salary for civil service pension coverage.
Persons hired before 1984 who are covered only by the Medicare portion of Social Security pay 1.45 percent for Medicare and put at least 7 percent of their salaries into the regular civil service retirement program.
That interim system expires May 1. If agreement is reached on a new pension plan for the newest workers, the contribution system will be extended for a month. That, presumably, would give Congress time to approve a new supplemental retirement plan and put it into effect in June.
But Senate sources say that if the White House doesn't agree by midweek to a compromise retirement plan, which has received the tentative approval of the Senate and House, then post-January 1984 hires will have to pay the full cost of Social Security and civil service benefits, starting May 1.
Paying the full cost for civil service coverage would mean a new deduction of about 6.7 percent for those workers. There would be no change in contributions for employes hired before 1984.
The Senate and House have approved supplemental retirement plans for post-January 1984 hires. The plans base retirement benefits on Social Security, a modified civil service benefit and earnings from an optional, tax-deferred savings plan that would be set up.
The latter plan, similar to 401(k) programs available to many private-sector workers, would allow employes to set aside up to 10 percent of salary (with the government matching up to 4 percent of it) in investment accounts. Those contributions and any earnings from the savings plan would be tax-deferred until the worker retired or withdrew the payments.
The Senate package provides a less generous civil service benefit, and it would cost an estimated 21.9 percent of payroll.
The House plan, which continues early retirement options and fully indexed cost-of-living payments for future retirees, would cost an estimated 25 1/2 percent of payroll. Although the percentage difference seems slight, it amounts to several billion dollars a year.
The existing civil service retirement plan -- which would be maintained for anyone hired before 1984 -- costs 25 percent of payroll.
The White House has opposed any new retirement plan that costs more than the current pension plan and would prefer the less costly Senate version.