The typical federal worker--according to government data--is 45.6 years old and has had 16.6 years of service.

While most civil servants are under the newer Federal Employees Retirement System, most are at least four to five years from being eligible to retire.

Workers under the older pension program, the Civil Service Retirement System, may be outnumbered by those in FERS, but they represent 90 percent of the employees who are eligible for retirement immediately or in the near future.

More than 2.2 million people have retired (or are drawing survivor benefits) under the CSRS system, compared with only 83,000 FERS retirees and survivors.

Downsizing and buyouts pushed many CSRS employees out of government. It also shrank the ranks of personnel and benefits offices. Many who remain in those functions are younger, less experienced employees who are under FERS, but who deal with people who are mostly under the old CSRS system.

The differences between CSRS and FERS have spawned a cottage industry: private organizations that provide brochures and handbooks on the two programs, or that conduct retirement and pre-retirement seminars for federal agencies. The USDA Graduate School, for example--once a giant night school for thousands of area residents--now says it is the largest company in this area providing retirement and benefits training.

FEDweek, a Richmond-based federal employee newsletter, publishes a 62-page "FERS Retirement Planning Guide" as well as a 62-page "CSRS Retirement Planning Guide." They cost $9.95.

Federal agencies and private individuals use firms such as Government Retirement Benefits in Alexandria and the National Institutes of Transition Planning in Rockville to do much of their retirement counseling.

The growing number of people under FERS requires more help and guidance for employees than CSRS, an "automatic pilot" retirement system that promises a fixed level of benefits based on salary and service. FERS is more complicated, being similar to a private-sector retirement program. It combines a modified pension (supplied by the civil service) plus Social Security and earnings from tax-deferred investments, which--if workers are lucky--will provide half or more of the money they have to spend in retirement.

The CSRS plan employees receive a more generous retirement benefit (better than almost anything available in the private sector) and pension inflation protection that is unknown in the private sector. CSRS retirees get regular cost-of-living adjustments each January to keep pace with living costs. The COLAs begin as soon as they qualify for retirement even if workers leave--in some cases as early as age 43--by taking early retirement.

CSRS employees are more likely to be "lifers," that is, to put in a full career with government. After a dozen years on the job, many workers couldn't afford to leave--even if they wanted to--because of their investment in the retirement program.

FERS, because of its potentially higher (and portable) 401(k) benefits, doesn't lock employees into lifetime employment and makes it easier for workers to take jobs outside government.

A 5.75 Percent CD

Most financial planners recommend that employees make maximum contributions to their 401(k) plan before they do any other investing. That's especially true when their employer provides a tax-deferred match.

But federal workers have another option, in addition to their Thrift Savings Plan. It is called the "voluntary contributions" program, and it is the equivalent of a government-backed certificate of deposit, which, this year, is paying 5.75 percent interest. Accounts are set up through the Office of Personnel Management. Employees can invest the equivalent of 10 percent of their lifetime federal salary in addition to participating in the Thrift Savings Plan.

The Reston-based Federal Employees Almanac explains it this way: "Voluntary contributions are option payments employees make to the retirement fund. . . . The contributions to the fund earn market-rate interest. The interest earned is tax-deferred. On retirement the contributions plus interest can be used to purchase an additional annuity." But most voluntary contribution participants take another option, which is to withdraw "all contributions" before retiring. Only earnings--not contributions--are taxable.

For details, ask your human resources offices about the voluntary contributions plan.

Mike Causey's e-mail address is causeym@washpost.com

Tuesday, Aug. 24, 1999