In 1983, Congress passed a law to take the civil service retirement system down a peg and make it more like retirement plans in the private sector. New federal employees -- those hired beginning in 1984 -- were made subject to Social Security. To supplement the Social Security benefits Congress then also set about designing the federal equivalent of a private pension plan.
Earlier this year House and Senate conferees finally agreed on such a plan. Their proposal is a sensible compromise in which both sides gave ground. The interests of the civil service and the taxpayers who support it both are served. But the White House is threatening to scotch it, on grounds it would remain too generous. A deadline has passed, creating a sense of emergency of which both sides are trying to take advantage. The issue is not that, but what kind of retirement system there should be in the future. Our sense is that the conferees have worked that out fairly well.
Civil service retirement now costs about $25 billion a year, triple the figure of 10 years ago. Federal employees are able to retire with full benefits much earlier than most in the private sector (at age 55 if they have 30 years' service). Their retirement benefits are also fully indexed; they lose no ground to the cost of living.
The House-Senate compromise would leave the retirement age pretty much as it is; it would slowly rise to 57. But it would make the right to retire early less valuable (and costly) by denying cost-of- living increases until a retiree reached age 62. It would also keep the retirement program from being driven so thoroughly by inflation. Instead of rising the same percentage as the consumer price index each year, benefits would rise one percentage point less. A lot of the budget is now tied to the CPI, and some people think too slavishly. This would be an important step back from that.
The proposal would cut future federal costs by about 10 percent, mainly by transferring more of the financing burden to employees. But this would be deftly done. To achieve a certain level of Social Security and pension benefits combined, lower-paid employees would have to contribute less than higher-paid employees.
Ted Stevens is the leading sponsor of this legislation on the Senate side, William Ford in the House. These are men of very different persuasions; they and their fellows have produced a bill that is fair. The White House ought to honor that.