The special Social Security benefits break Congress gave workers who switched to the new Federal Employees Retirement System last year isn't likely to be offered again, even if people who didn't join FERS in 1987 are given a second chance this year.
From April through last month the 2 million federal workers hired before 1984, who are covered by the old civil service pension plan, had the option to move into FERS. Less than 3 percent of those who could switch did. Ten days before the transfer deadline, Congress made the new plan much more attractive to thousands of federal workers, ranging from lower-paid employees to upper-income executives. Many who probably would have switched, had they known of the last minute changes, missed the deadline because they were out of town or didn't read newspapers the week before Christmas.
The first change, covering the biggest group, said that anyone joining FERS by Dec. 31, 1987, would be exempt from the Public Pension Offset Law. That law reduces the amount of a spousal or survivor Social Security benefit claimed by an individual who is also drawing a federal or public pension. The offset or reduction is $2 in the Social Security benefit for each $3 the retiree gets in federal or other public pensions. Those who joined FERS after Dec. 31, Congress said, must work under FERS to escape the offset.
The second change involved the percentage of pay that upper income federal workers (those making $50,000 per year or more) can contribute to the federal Thrift Savings Plan. Congress exempted the savings plan from so-called nondiscrimination rules that apply to similar plans in the private sector. Because of the exemption to the federal savings plan, workers under the FERS pension plan can continue to contribute up to 10 percent of salary to the tax-deferred investment option and get a 5 percent match from the government. Workers under the old CSRS plan will still be able to contribute 5 percent. Without the exemption, the amount upper-income workers could have contributed to the savings plan would have been reduced dramatically based on the percentage of pay contributed by lower-paid workers.
Congressional insiders say there is a good chance that the FERS plan may be opened up again by Congress to employees hired before 1984. But all the people we've talked with predict that opposition from the House Ways and Means Committee to exempting new FERS members from the public pension offset law will probably keep that attractive feature out of any new FERS membership offer.
The Northern Virginia Chapter, Association of Government Accountants, will have its dinner meeting Jan. 20 at the Sheraton National Hotel in Arlington. For information call Sophie Jasinski at 523-8401.
Disability benefits for veterans and dependents have gone up 4.2 percent retroactive to Dec. 1. March checks will contain the cost-of-living adjustment plus the retroactive raise. It will increase monthly benefits for single veterans with 100 percent service-related disabilities from $1,355 to $1,411 per month, with other raises based on the percentage of disability. The 4.2 percent raise also will go to spouses and children of service personnel who died on active duty or from service-connected illness or injury.