The federal pension fund temporarily lost $160 million in interest payments in 1984 and 1985, and will lose more each time the government goes through its annual debt ceiling crisis, according to a General Accounting Office report released yesterday.
GAO audits said that while the $158 billion fund is sound, taking in almost twice as much as it pays out each year, the government should take steps to protect it from losing some of the $13 billion it earns each year in interest.
The civil service pension fund pays benefits to nearly 2 million government retirees and survivors, and covers about 2.7 million civilian workers. Employes hired before 1984 contribute 7 percent of their salaries to the fund, with matching contributions from their agencies. For example, in 1985, the fund had income of $40.2 billion and paid about $23.2 billion in benefits. That year was the most recent for which figures were available.
Money in the fund is invested in Treasury securities at interest rates that can change monthly. But regular investments are halted annually when the government reaches its legal debt ceiling limit. They cannot be resumed until Congress raises the limit on the amount of money the government can borrow by issuing securities. Although recent legislation requires the government to make up lost interest the pension account frequently fails to recoup all of its losses, GAO reported.
The congressional watchdog agency said the Treasury Department couldn't invest pension funds during a two-week period in the fall of 1984 and a two-month period in 1985 because Congress had not approved an increase in what amounts to Uncle Sam's line of credit. Such extensions of the debt ceiling limit frequently become a political tug-of-war between the House and Senate, and a war of nerves between Congress and the White House.
Although Treasury reimbursed the pension fund for the lost interest in 1984-85, GAO said the fund still came up short because some of the investments were made in securities with a lower interest rate than was offered earlier, when the funds should have been invested. GAO said this will happen again unless debt ceiling fights can be avoided or settled quickly, and/or special care is taken to see that the pension fund is completely reimbursed for all losses because of halted or delayed investments.
None of the above is of immediate concern to the typical federal worker or retiree, because the government is legally and morally bound to pay them pension benefits. But it is certainly irritating to federal workers (one of the few groups in the nation who help finance their own pension fund) to have that fund subject to political action -- or inaction -- or to lose money because Congress can't meet its own deadlines on major economic issues.Postal Salad Days
The U.S. Postal Service will beef up revenues thanks to a mass mailing planned by McDonald's. Later this month the Big Mac folks will make their first mass-mailing, sending 35 million redeemable coupon cards, offering a dollar off to folks who try a new line of salads. If the program clicks the Postal Service will share a major chunk of McDonald's massive advertising budget, which previously has been reserved for the electronic and print media.
Speaking of money, the Postal Service says that Tuesday's item here, about executive salaries, overstated the pay of Postmaster General Preston Tisch. He didn't get the last raise granted to other Cabinet-rank officials, the Postal Service says, leaving his annual pay at $88,800 rather than the $99,500 figure for other department heads.