President Reagan is expected to sign legislation today creating a new private sector-style pension plan for federal employes.
Although designed for the 400,000 federal workers hired since January 1984, congressional sources predict that up to one-third of the employes in the current pension program may decide to switch to the new plan after it starts next year.
Everyone hired since January 1984 is automatically covered. Workers hired before that date have the option of staying in the current plan until they retire or switching to the new system during a five-month open enrollment period that starts in mid-1987.
Benefits under the new plan will come from three sources: Social Security, a modified civil service pension and earnings from an optional, tax-deferred thrift plan that is the equal of some of the most generous 401(k) programs available to private-sector employes.
Workers covered by the new plan can shelter up to 10 percent of their salary from taxes by investing it in one of three options. Those investments and earnings won't be taxed until employes leave government or retire. If the plan goes into effect, the government will also contribute up to 5 percent of employes' salaries to investment accounts.
Explaining the Plan
Jamie Cowen will be on WNTR radio from 1 to 2 p.m. tomorrow to explain details of the new pension plan and answer questions from callers about benefit levels, investments and the age of retirement eligibility. Cowen, who helped draft the plan, is leaving the Senate Governmental Affairs Committee today. He has formed a consulting firm that will advise agencies and employes on how the complex new pension plan operates.
Nothing new to report on the Senate plan to allow thousands of federal workers to take early retirement between July and December this year.
The legislation, introduced by Sens. William V. Roth Jr. (R-Del.) and Ted Stevens (R-Alaska), has excited many federal workers. But the White House and federal and postal unions would like to see it modified.
They are concerned because the bill would allow agencies to replace only a few of the people who retire early. All this means that there is almost no chance the bill will become law in time to allow early-outs this summer.
The Senate has had one hearing on the bill. The House doesn't plan any action until the Senate comes up with a bill that unions and the administration can support.
Under current rules, about 250,000 federal workers are eligible to retire. The Roth-Stevens bill would extend that eligibility to cover a total of 700,000 of the government's 2.8 million workers.
The bill would allow workers to retire on pensions after 25 years of federal service, regardless of age. Employes could also take early retirement at age 50 after 20 years' service, at 55 after 15 years, or at 57 after five years.
Ed Hugler, a veteran of 42 years with Uncle Sam, is retiring this month after 14 years as an investigator for the House Post Office-Civil Service Committee. He started out at the General Accounting Office.
The National Association of Government Communicators is in the midst of a major recruiting drive, and hopes to sign up its 1,000th member this month. Don Finley is president of the Alexandria-based organization of government writers, editors, artists and media types.