FEDERAL EMPLOYEE groups have reacted so negatively to a federal pension redesign proposed by Sen. Ted Stevens of Alaska, chairman of the civil service subcommittee, that Stevens has decided to delay introduction of the bill. The senator is right in his belief that the press of budget business is unlikely to allow thoughtful consideration of the measure this year, but employee groups should use the delay to reconsider whether their opposition is really in the best interest of their members.
Federal pensions, as everyone knows, are a terrific deal--for those who finally get them. But some facts about the system are not widely advertised by its defenders. One is that the system is so weighted in favor of the relatively few federal workers who work continuously for the federal government until retirement that 75 percent of contributors receive little or no return on their contributions. The system treats relatively short-term workers so unfairly that federal laws controlling private pensions would prevent a private employer from operating such a plan.
Another little-discussed fact is that federal pensions have become a large and growing burden on the general taxpayer. It has been years since 7 percent of the salary contributed by workers and the matching amount from employing agencies covered system costs. Total retirement costs have now reached 36.5 percent of payroll, considerably higher than the cost of private-sector plans. The retirement system is not currently in trouble because taxpayers have been willing to cover the extra costs, but as the system's liabilities grow, younger workers should worry whether that willingness will go on.
The proposed system would allow current workers to keep their present coverage. New workers would be covered by a private-sector type retirement plan--financed completely by the government --built on top of Social Security coverage. The plan would provide equal or superior benefits to any worker who spends a full 40-year career in government. Workers, moreover, would no longer be locked into their jobs by fear of losing retirement benefits. Anyone leaving government after five years' service could take with him full benefits--including government contributions and accrued interest. Workers would also benefit from the superior disability coverage provided by Social Security as well as the assurance that their benefits were fully funded and beyond the reach of the voters' whim.
Federal workers are right to be skeptical about attempts to erode their benefits. But they are not right to oppose blindly any change that is not a simple augmentation in benefits. It is true that some workers would lose from the change--particularly those who now retire early and reap windfall Social Security benefits from relatively few years of private-sector work. But that is a reform that is likely to be made in any case. The Stevens plan is the result of many years of study, and it is a good deal for most federal workers.