George Laugelli has the quintessential federal job: head of the directives management section of the paperwork management branch of the administrative services division of the Food Safety and Inspection Service of the U.S. Department of Agriculture.
Now he's got to make the quintessential federal decision: whether to stick with the traditional government retirement system or move to a new one similar to those widely used in private industry.
Laugelli is one of 2 million federal workers who must make an irrevocable retirement decision before Dec. 31 to stay in the old Civil Service Retirement System or to switch to the new Federal Employees Retirement System.
He's got to look ahead to the year 2000 and decide whether he'll still be working for the government, whether he will have been promoted, how many raises Congress will have approved, how big they will have been and whether he will want to retire at age 55 and start a second career.
The answers to these questions and other guesses about his future will determine which retirement system he should choose because it will provide him better benefits.
And the decisions made by him and others may begin to change the demographics of the federal government -- those who switch will find it easier to leave federal service early without sacrificing their pensions, and the career civil service will almost inevitably become less of a lifetime commitment.
Almost everyone hired since Jan. 1, 1984, is automatically covered by the new Federal Employees Retirement System (FERS) and has no choice, but the great majority of civil service and postal workers, about 300,000 in the Washington area, must choose between two systems that are quite different.
"The way I look at it," said Laugelli, "it's a win/win decision. I'm already in a good system and I may decide I can go into an even better system. There's no way to lose."
On the other hand, Laugelli assumes that "both systems will be tinkered with" by Congress. "CSRS will be the weaker political force, because no more people could enter after 1983," he said. "FERS will be growing and growing."
The Civil Service Retirement System (CSRS) is the federal government's long-established and generous retirement program that allows workers to retire at age 55 after 30 years of service with full (unreduced) benefits. For the "lifer," it's great.
But the worker who quits early may find almost nothing piled up for retirement. CSRS employes are not covered by Social Security, and if they leave before retirement age, they get back only what they paid in from their salaries, without interest. As a result, CSRS has tied some workers to hated or dead-end jobs with "golden handcuffs."
It also has helped shape the character of the federal work force. Today, the top career jobs are filled primarily by people who have worked their way up the ladder. Little fresh blood is injected into the middle ranks from business or academia.
"In the first five years, there is 40 percent turnover. Beyond five years, there is very little mobility in government," said Jamie Cowen, former chief counsel of the Senate subcommittee that wrote the FERS bill.
The new FERS plan is portable. It's a system patterned after private industry pension plans in which a worker is covered by Social Security, receives a less generous federal pension than under CSRS, and can participate in a voluntary tax-deferred thrift savings plan to increase retirement income.
As a general rule, workers are better off sticking with CSRS if they plan to work for the government for the rest of their lives or retire after 30 years while they're in their 50s. They're better off in FERS if they plan to leave before retirement age or are very early in their careers.
But the choice will not be easy because elements of the thrift plan, a principal reason to join FERS, remain up in the air, awaiting deci-sions by Congress.
"This is a fundamental lifetime decision that is being made more confusing and troublesome because of uncertainty," said Francis X. Cavanaugh, head of the Federal Employees Retirement Thrift Investment Board.
Under tax law, workers making more than $50,000 a year may contribute only 2 percentage points more of their salaries, on average, than workers making less than $50,000. Any excess must be refunded to the employe, who would owe taxes on the refund.
This "antidiscrimination rule" was designed to prevent pension plans from being tilted so that most benefits go to big earners at the top of a company. Cavanaugh said unless the law is changed, the antidiscrimination rule will have a "negative impact on the earnings of people in the plan because we will have to spend a lot of money on it."
New computer systems, he said, will have to be designed to gather such tax information about all eligible employes, whether they participate in the thrift plan or not. All 1,100 government payroll offices will have to collect the information and deliver it to the 570 reporting payroll offices in compatible form. It will require the retention and, in some cases, recreation of records for last year.
"It will run into the several hundreds of thousands of dollars," Cavanaugh said, with the money coming from the retirement pockets of participants in the plan.
The House Ways and Means Committee is considering proposals to exempt the federal plan from the antidiscrimination requirements, but the issue is tied with a reconciliation measure that calls for raising taxes.
Frank D. Titus, former director of the FERS Implementation Task Force, has pointed out that "only 5 percent of the work force makes more than $50,000."
He said he thinks the antidiscrimination rule should not hold up decisions for the great bulk of federal workers.
Still, only a "trickle" of workers have switched since the conversion season began on July 1, according to personnel department officials.
Voluntary enrollments for the thrift plan were also slow when the plan first began to accept contributions this spring but increased at the end of the sign-up period. Currently, 30.5 percent of employes covered by FERS voluntarily contribute to the savings plan.
For the American taxpayer, FERS is the better plan in the long run. The administration estimated last summer that FERS would be cheaper than the CSRS. CSRS costs about 25 percent of the government payroll, and FERS falls between 22.5 percent and 23 percent. The total annual federal payroll is about $70 billion, so the savings are considerable.
Titus said this overall estimated "saving" cannot be translated into savings for people who transfer from CSRS to FERS. "An employe who understands the choice will choose the greater benefits for himself," he said.
"Just because he goes into FERS doesn't mean the government saves money -- it may actually cost more."