The bipartisan Senate-House compromise that will produce a 4.8 percent federal pay raise in January has other good news for federal workers who hope to retire someday--in their forties and fifties--with inflation-proof pensions and lifetime health coverage at group rates.

Senate-House conferees on the Treasury, Postal Service and general government appropriations bill have agreed to give federal civilian employees the same 4.8 percent raise Congress already has cleared for active-duty military personnel. That undercuts President Clinton, who this year proposed an average 4.4 percent pay raise for the 1.2 million feds.

The White House may be able to decide how much of the increase is an across-the-board raise and what part will be allocated to locality raises on a city-by-city basis. Either way, feds in the Washington-Baltimore area are looking at a total raise of 4.8 percent or slightly higher.

The pay raise, while not directly linked to wage board pay (for blue-collar feds such as carpenters, electricians and other skilled craft personnel), is likely to serve as a ceiling for their 2000 adjustments. Sen. Ted Stevens (R-Alaska) and Rep. Steny H. Hoyer (D-Md.) inserted the higher civilian federal pay raise language in the conference report. Hoyer is famous for his last-minute successes in getting feds more than proposed by presidents of both political parties.

As chairman of the Senate Appropriations Committee and a staunch backer of federal civilian and military personnel, Stevens is the ideal guy to have in your corner in any legislative fight. In this case, Hoyer plus Stevens equals 4.8 percent!

Hoyer also added conference report language allowing federal agencies to keep offering "targeted" early retirements to employees indefinitely.

Authority to offer early-outs to selected employees--based on job, location or grade level--is due to expire Sept. 30. If that happened, agencies would have the choice of offering all eligible employees early-outs or canceling their early-retirement programs. Most would probably stop early-outs altogether.

Hoyer's plan would save the early-out program in most agencies by allowing them (with Office of Personnel Management approval) to select employees by grade, job or geographic location for early-outs during times of downsizing or reorganization.

Agencies would not, under the Hoyer language, have to ask OPM to reauthorize early-outs each year and would retain the right to decide who gets an early-retirement offer. Most agencies now deny early-outs to employees paid special rates and to others because of the critical nature of their jobs.

Most workers who would qualify for regular or early retirement over the next decade are under the old Civil Service Retirement System. Under it, regular retirement is reached at one of three tiers: when the employee is age 55 with 30 years of service, at age 60 with 20 years' service or at age 62 with five years' service. Those employees are eligible for full annuities--based on their salary and service time--and can take health insurance coverage with them into retirement.

During an early-out, an employee can retire at age 50 with 20 years' service, or at any age after 25 years of federal service. That means some feds can and do qualify for early-outs in their early forties. An early-out permits employees to get an immediate (but reduced) annuity and to continue health coverage for themselves and family members in retirement. The 2 percent reduction early retirees take for each year they are younger than 55 is much less severe than most private companies, which sometimes impose penalties of 4 percent to 10 percent for people retiring 10 years later, at age 65.

Postal Employees and RetireesPostal employees, who bargain through their unions over wages, will not be included in the January pay adjustment for white-collar civil servants.

And federal retirees--whose annuities are linked to the cost of living--will be getting a January cost-of-living adjustment much smaller than the white-collar pay raise. With one more month left in the COLA countdown, retirees are now due a raise of about 2.1 percent.

Mike Causey's e-mail address is

Sunday, Sept. 12, 1999