Federal workers and retirees did very well, considering what might have been, in the White House-congressional budget plans approved last week.
Although Congress pulled some last-minute rabbits out of the hat, it could have been worse.
Originally, budget cutters toyed with the idea of eliminating the 1988 federal white-collar pay raise, and slapping a one-year freeze on within-grade pay raises.
They also considered delaying or cutting the cost-of-living adjustment for federal-military retirees. At one point, conferees planned to limit lump-sum retirement payments to half the amount actually due retirees.
Plans to freeze federal hiring for a one-year period were also batted about, as were schemes to trigger layoffs to cut the budget.
In the end, thanks to tremendous pressure from federal and postal unions and retirees groups, and some extra-hours lobbying by all concerned, none of the above happened. But some of it could have, and some of it almost did happen.
Now that the dust has settled, this is what the new budget package does:
Authorizes a 2 percent raise for white-collar federal workers. The increase is effective the first pay period that begins on or after Jan. 1.
Permits a 4.2 percent cost of living adjustment for federal, postal and military retirees and their survivors effective in their January checks.
Allows workers who move into the new Federal Employees Retirement System by Dec. 31 to escape the effects of the Public Pension Offset law. That law says that anyone who draws a federal or public pension who also claims an (unearned) Social Security spouse or survivor benefit will have that Social Security benefit reduced $2 for every $3 they get in a federal or public pension. Workers who move into FERS before the end of this year will be entitled to draw unreduced spousal or Social Security benefits. Those who join FERS later -- should there be another open season next year -- will have to remain under FERS for five years before they are exempt from the offset.
Gives people the option of retiring by or on Jan. 2 and still get a full lump-sum payment equal to the amount of money they contributed to the retirement fund. To be on the safe side, anyone who wants the full lump-sum payment should have his or her retirement approved by Dec. 31. For retirees whose annuities begin after Jan. 2, the lump-sum payments will be spread over two years. The first year (1988) they will get 60 percent of the lump sum, with the remainder payable in 1989. This, Congress said, is a temporary measure. The full lump-sum option will be available to persons retiring after Oct. 1, 1989.
Exempts the federal Thrift Investment Plan (TSP) from antidiscrimination rules that cover similar tax deferred plans in the private sector. This change will allow upper income workers to continue to contribute the maximum amount to the TSP without having their contribution rate reduced later because lower income employes failed to contribute the maximum.