The typical Washington area civil servants who convert early to the new federal pension plan will have $1,400 or more in their tax-deferred savings plans at the end of the year than a coworker who waits until the last minute to make that all-important decision. Actual amounts would depend on the employe's salary and rate of contributions. Some top-paid civil servants could have more than double those amounts in their accounts.
Between now and Dec. 31, more than 2 million federal employes -- including nearly 300,000 in this area -- must decide whether to stick with the old Civil Service Retirement System, or move into the new Federal Employees Retirement System. Most employes hired before 1984 are now covered by the older plan, and they are the ones who must make the pension choice.
Both plans allow workers to take part in a tax-deferred investment program similar to 401(k) plans in the private sector.
Workers under the FERS system can invest twice as much (10 percent of salary up to $7,000 this year) as employes under the older system. Also workers under FERS can get government contributions to their accounts of up to 5 percent.
Federal workers who stay in the CSRS program can contribute only 5 percent of salary to the thrift plan.
Although most workers will need a lot of information before making a decision, those who think FERS is the way to go have a financial incentive to join quickly. Reason:
There are 12 biweekly pay periods between July 1 and Dec. 31. If the average federal employe here (earning $32,000 a year) signed up for FERS this month and put in 5 percent of pay, that would be just over $61 per pay period. Anyone investing 5 percent or more would get a matching contribution from the government.
Money invested into the thrift plan this year goes into the so-called G Fund. It is made up of long-term Treasury securities offerings. The interest rate changes monthly. The June interest rate was 8 5/8 percent.
A hypothetical employe who began investing $61.54 per pay period in July would, including the government contribution and interest, have $123.30 in that account at the end of the month. By the end of August, the account would have grown to $370.33; by September it would be $618.28; by October, $867.01; by November, $1,116.67, and by Dec. 31, it would be $1,409.51, more or less, depending on the actual monthly interest rate.
Pension plan experts do not advise any federal or postal worker to make a decision based solely on the thrift plan. But for those who have already decided to convert to FERS, an early move into FERS has obvious investment advantages this year. People
The Training Officers Conference has given its distinguished service award to Holly Schneider, Naval Ordnance Station; Elnita P. Larsen, Evelyn Esmacher, Ernest Thomas and Betty Burry, Bureau of Alcohol, Tobacco and Firearms; Patricia Fisher, Mary Kim, Anita Knisbacher, Edward L. Frankland and Susan Webb, National Security Agency; Joan Burr, Agriculture, and Defense Mapping Agency's Ellen M. Roderick and Kathy G. Hagedorn. Pension Planning Help
WETA (Channel 26) will show the government videotape that explains the differences between the Civil Service Retirement System and the new Federal Employees Retirement System. The pension open season runs through Dec. 31. WETA will show the tape at 11 p.m. Thursday and at noon Sunday.