Issa Pushes for Retirement System Reform

Rep. Darrell Issa 's office on Capitol Hill sports a copy of a poster advertising "Hellcats of the Navy," the only film in which Ronald Reagan starred with his wife, then known as Nancy Davis . Hellcats was the nickname of U.S. submarines that braved minefields to breach the Sea of Japan, also known as the East Sea, during World War II.

It's easy to see why Issa, the top Republican on the House Committee on Oversight and Government Reform, might identify with the hellcats. Issa, the former owner of a vehicle security company that made him rich, is aggressive, ambitious and not afraid to confront the enemy, which he defines as "a nonpartisan federal bureaucracy that is resistant to reform."

Policies and programs affecting the employees who staff that bureaucracy fall under the committee's jurisdiction. Issa isn't shy about targeting those that, in his view, don't deliver, as he did when he called on Treasury Secretary Timothy F. Geithner to resign at the height of the American International Group bonus controversy.

One program the California congressman would like to torpedo is the defined-benefit retirement system for federal employees. He shared his thoughts with the Federal Diary.

Q: You told the Federal Managers Association that "we have to come up with a better retirement system" for federal workers. What's wrong with the current system?

Currently, the federal government is facing a massive retirement wave due to the baby-boomer generation approaching retirement age, which will cause us to lose our most experienced employees. This is exacerbated by a structural flaw which incentivizes our most qualified employees to take that retirement rather than stay around.

Q: What would a better system look like?

A better system would not incentivize federal employees to leave federal service before they or their employers wish to do so, and would treat their experience as the private sector does, as something of value, and not as the federal government does, as a cost. I have issues with our current pay-cap structure [for high-level civil servants], because I don't believe in pay caps. I take issue with having an employee's salary capped for the purposes of calculating your salary but not for retirement. This doesn't make sense -- if anything, these employees should be paid a full salary and have the theoretical cap apply to retirement. You should make what you earn. In the meantime, there are several temporary solutions under consideration, including temporary re-employment of retired annuitants. In addition, I have recently co-sponsored H.R. [House Resolution] 1203, which allows federal and military retirees to pay their health-care premiums on a pretax basis. This amounts to a savings of over $800 per year, which can be significant for a retiree living on an annuity.

Q: You told the FMA that the current system encourages federal employees to retire and go to work for someone else. How does it do that?

When a federal worker's years of service and age make him or her eligible for a retirement payment, if the federal worker continues to work for the federal government, he effectively loses that payment. The trouble is that federal employees can take their decades of experience to the private sector, where they will receive full pay and benefits from the private sector in addition to their federal retirement. That extra pay, which can be quite significant, is a tremendous incentive to leave government service, even if the employee otherwise enjoys working in his federal position.

Q: You indicated there are problems with a defined-benefit plan. What are those problems?

Simply stated, defined-benefit plans lack portability, and there is no incentive to say, "I have my retirement already, but every day I stay, I am better off." Currently, our defined-benefit plans almost mandate retirement for our federal workers. This is a problem which has existed for decades. This system encourages our federal workers to retire, and to take their knowledge and experience to the private sector. We have got to come up with a plan where it is in the best interest of the federal employee to remain in the workforce, either directly or in a post-retirement role, for as long as possible, because the skills these experienced federal workers have are essential.

Contact Joe Davidson at federaldiary@washpost.com.