Fed Fear Factor: Back to the Future

Back in the good old days, it was not unusual for a company to fire someone just prior to retirement, then deny him/her a pension because they hadn’t worked long enough to deserve it.

Sort of an early version of Catch-22.

Nowadays, thanks to a bunch of laws, companies don’t do that. There is also the federal Pension Benefit Guarantee Corporation, the Labor Department and other federal outfits that look out for workers retirement rights. Still, people worry. Especially feds …

Congress has been poking at the federal pension package for nearly four decades. The switch from CSRS to the FERS program (for then future hires) was the biggest change. More recently, the amount (new) workers contribute to their FERS benefit has been increased slightly. Most workers were grand-fathered in at the old, current, contribution rate.

But many employees are nervous in the civil service. They keep reading and hearing (here and elsewhere) about assaults on the retirement plan. About plans to reduce future COLAs for all retirees. And changes in the retirement formula itself. Example:

Here’s a fact-sheet advisory put out civilian workers at Tinker Air Force Base in Oklahoma. It was important because Uncle Sam was one of the largest employers in the state. The American Federation of Government Employees was the state’s biggest union! Similar bulletins went to workers all over the country. It said in part:

“Programs which affect civilian employees are continuing to undergo rapid and dramatic changes. This letter is another in our continuing series on legislative/regulator proposals and changes which are of keen interest to employees.”

The memo went on to say that many of the impending changes would require congressional action and that they impacted “employee benefits, pay and for restructuring of the Civil Service Retirement System.”

Among the coming changes it listed a freeze in COLAs for retirees, raising the early optional retirement age from 55 to 65, cutting federal pay 5 percent across the board, “changing the annuity computation based from ‘high three’ years of service to ‘high five’ years of service.” It also warned that instead of the government paying roughly 72 percent of the total health premiums, workers would get vouchers to buy their own insurance. Over time, that would either drive employees into less generous plans, or force them to pay more out of pocket.

According to that warning, which was entirely justified and accurate, the stuff was about to hit the fan. One thing I forgot to mention at the top. The warning to employees was dated Jan. 28, 1985. So where were you 30 years ago? Were you even here, as in on the planet Earth, yet?

Any or all of the above could happen. Just a couple of votes in Congress and off to the President. Just because things haven’t happened doesn’t mean they can’t or won’t happen. The fact that groups representing feds have fought hard for them has been a major factoring in keeping the benefit package intact.

So be vigilant. Stay informed. Join the appropriate union or organization that is looking out for you and yours. But at the same time, don’t lose sleep (or hair) worrying about what might happen.

Nearly Useless Factoid by Michael O’Connell

The first prototype of the DeLorean DMC-12 appeared in October 1976, with production of the sports car beginning in 1981.

(Source: Wikipedia)

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