Federal retirement benefits would be frozen, then trimmed, the lump-sum pension benefit would disappear, and workers and retirees would have to pay more for less health insurance coverage under a budget plan tentatively approved yesterday at the Andrews Air Force Base budget summit.
If Congress and the White House agree to the plan, the federal fringe benefit package would take a $3.6 billion hit in the fiscal year starting Oct. 1. Over the next five years it would make up about one-quarter of the amount the group proposes to trim the deficit.
The budget compromise, designed to eliminate the need to furlough federal workers next month, proposes:
Freezing federal and military pensions through January 1992. The cost-of-living adjustment freeze would affect Social Security raises. Retirees are now in line for a January 1991 COLA of more than 4 percent.
Starting in 1992, retirees would get COLAs that would be 1 percentage point less than the actual rise in living costs. That formula already applies to the pensions of people retiring under the new Federal Employees Retirement System. Two-thirds of the members of Congress have cosponsored a bipartisan bill promising a full COLA next January to the retirees.
An apparent change that would limit future retiree raises to people who are 62 and older. The typical federal worker retires at 61, but many go out sooner. Under the plan, nobody would get a COLA until age 62. Then it would be less than the rise in inflation.
The popular lump-sum pension payment option would be eliminated. Currently, retirees can take reduced pensions and get a lump-sum pension payment, an amount of money equal to all their contributions to the retirement plan. About 70 percent of all retirees take the lump-sum payments even though they are taxable and reduce lifetime benefits. If Congress ends the lump-sum option, only employees who retired by Sept. 3 would be eligible for the lump-sum payments.
Vincent Sombrotto, head of the Fund for Assuring an Independent Retirement (an umbrella group of federal, postal, management and retiree groups), said he expects workers and retirees to swamp Congress with calls, mailgrams and letters. He said the proposed cuts are "patently unfair and discriminatory" and would break congressional promises not to single the federal family out for rough treatment. Washington Runaround
More than 600 of Washington's federal and media heavies -- made temporarily equal by their tights and running shorts -- do their annual three-mile sprint around Haines Point at 8 a.m. today. Each five-member team is headed by a Supreme Court justice, Cabinet officer, senator, federal agency head or a print or electronic journalist. The idea is to see which teams are fastest and which came up with the best and worst team names. Nike sponsors the event to raise money for the D.C. Special Olympics and to give official Washington a chance to lighten up.