More than 350,000 of the federal government's newest and relatively lowest-paid workers may feel 5.7 percent poorer next week because of a new payroll deduction to cover their membership in the civil service pension plan.
The change affects about 42,000 Washington-area workers hired since 1984 and reduces government-wide take-home pay by $500 million a year.
Paychecks reflecting the change, which took effect last Thursday, will appear next week for about one in every seven Washington-area federal workers. Take-home pay for the typical employe will drop by $17 a week.
Although the new deduction applies primarily to new civil service hires, who often are in the lower steps of their pay grades, it also affects the pay of about half the members of Congress -- who had elected to join a new pension system -- and all political appointees. No change was made for the 2.3 million federal workers hired before 1984.
The higher retirement contribution took effect when Congress and the White House failed to agree last week on the design and cost of a new pension plan for those new workers, also covered by Social Security. The new plan, in the drafting stage for more than two years, was supposed to be approved by May 1.
When the deadline was reached, Congress refused to approve a 30-day extension requested by the White House, which objected to the cost and early-retirement benefits in the proposal.
The new deductions are being computed and applied by 1,000 federal payroll offices, which are scattered nationwide for reasons of security, efficiency and politics.
When Congress put U.S. workers under Social Security in 1984, it exempted new hires from making the full 7 percent civil-service retirement contribution. Instead, they paid the Social Security tax -- 7.15 percent of salary on amounts to $42,000 -- but only 1.3 percent toward their federal pension program.
During that interim, the government made the remainder of their civil-service retirement contributions.
The changeover is being handled in different ways by different agencies, depending on size, payroll structure and pay days.
At two of the government's smallest agencies, the Susquehanna River Basin and Delaware River Basin commissions, the payroll change presents no problem because all four of their civil service workers were hired before 1984.
At the Veterans Administration, however, about 44,000 of 240,000 employes are affected. Because the VA's pay period straddled the effective date, 30 percent of the next paycheck of affected employes will not be reduced by the new deductions, but 70 percent of the paycheck will be subject to the new 5.7 percent bite.