How would you like up to 36 months of tax-free pension checks when you retire? That would happen under a bill sponsored by Rep. Mary Rose Oakar (D-Ohio) and certain to get wide bipartisan support.
Oakar's measure would restore the three-year recovery rule. Before it was eliminated in 1986, it gave retirees up to 36 months to recover their previously taxed contributions to the Civil Service Retirement System.
Nearly 2 million workers (mostly pre-1984 hires) are under the CSRS plan. They contribute 7 percent of their pay to the pension fund. A return to the three-year rule would mean an average of 18 monthly tax-free pension checks upon retirement. That's how long it takes the typical retiree to get back those contributions. After recovery, the pension would be fully taxed.
Congress retroactively repealed the recovery rule in 1986. It briefly substituted a system allowing retirees to take reduced pensions in return for a lump-sum payment. That payment was an amount equal to the pension plan contributions, but most of it was taxable and retirees argued that the program amounted to double taxation.
However, they've lost the first round of what is expected to be a long legal fight leading to the U.S. Supreme Court. In the meantime, Congress eliminated the lump-sum option last year.
The recovery rule would help most retirees. Many have high incomes the year or two after retirement because they get lump-sum annual leave payments or sell stocks, bonds or a home. That extra income, added to their pension income for the year, can mean an unusually heavy tax bite. Getting a tax-free pension for up to three years would ease the transition to retirement.
That's why the Oakar bill, which the White House will fight, is going to be a hot ticket item. Natural Gas Sippers
A key congressional committee is delighted with the Postal Service's conversion of 500 vehicles to run on either compressed natural gas or regular gasoline. U.S. Oil Week Newsletter says the House Government Operations Committee's glowing report on the conversion effort is intended to encourage the service to make its giant fleet more fuel-flexible.
The government has more than 300,000 nonmilitary vehicles and is the single largest buyer of U.S.-made cars and trucks. Any significant shift of the federal motor pool toward alternate fuel sources would cause ripples in Detroit, among gas station owners and among policy-makers seeking to cut dependence on foreign oil. Early Out a Wasted Effort?
The Federal Times Newspaper says in an editorial that too much time and effort is being wasted on the early- retirement bill by Sen. William V. Roth (R-Del.).
The newspaper says that a government-wide early out wouldn't be cost-effective and that selective early-out authority is available now to agencies that can justify it.
The Times also says that Roth's bill has been blocked for years (by congressional Democrats and unions) and that it isn't going anywhere this year either.