Government workers who miss the Dec. 31 deadline for switching into the new Federal Employees Retirement System may get another chance next year to make the all-important pension choice.
If Congress decides on a new pension open season -- and the key word is "if" -- the action would be good news for the majority of federal employes who are still undecided, and a bonanza for private firms that have been providing pension advice to confused workers for a fee.
Coverage under FERS is automatic for most people hired since the start of 1984. But workers hired before then -- approximately 2 million people -- are still under the old Civil Service Retirement System.
FERS benefits come from Social Security, a modified federal annuity and earnings from an optional tax-deferred thrift savings plan. It lets workers invest up to 10 percent of pay and get a matching 5 percent contribution from the government. CSRS, the older system, offers a more generous civil service benefit but a less attractive investment option.
Congress launched the open season in April. At one time congressional experts figured that as many as 30 percent of all eligible employes would come into FERS. But barring a last-minute stampede to sign up, it appears that fewer than 2 percent will make the switch.
The Office of Personnel Management supplied eligible workers with information on the old and new plans, and private firms have been offering workers computer work-ups -- at prices ranging from $12 to $32 -- showing what benefits would be under each plan. Generally, people who plan to make government a full career would be better off remaining under the CSRS plan while those who don't plan to retire from government would do better to switch to FERS. But there are exceptions to that general rule. Making the choice a tough one.
To make things tougher, Congress is still considering some changes in the FERS program -- changes that would affect Social Security coverage for many employes and spouses -- and has yet to act on requests to guarantee that the percentage of salary that upper-income workers can contribute to the thrift plan won't be reduced next year.
The uncertainty over FERS benefits and the slow signup have lead to speculation that Congress will either extend the current open season or have a new open season sometime later next year. Recently the Postal Employees Newsletter quoted Rep. William Ford (D-Mich.), chairman of the House Post Office and Civil Service Committee, as saying he would oppose any extension of the open season, but might agree to a new open season in 1988. Now federal and postal union leaders are speculating that a new open season is likely.Investment Return
Money invested in the tax-deferred thrift plan option this month will earn 9 percent interest. That is the same interest rate that the fund -- which now has nearly $1 billion in assets -- paid in November.
Employes may sign up for the thrift option whether they are covered under the CSRS or FERS plan. Those under CSRS may put in 5 percent of pay; those under FERS may contribute 10 percent of pay, up to a maximum of $7,000 this year.