The Golden Handcuffs

CSRS was created for lifers - people who put in a full career of 25 to 30 years. It provides for a generous retirement and annuities fully-indexed to inflation. Because of their more generous pensions and higher cost of living adjustments, CSRS employees don't get any matching government contributions to their Thrift Savings Plan accounts. Because they pay into Social Security (and only a token amount into the federal retirement system) FERS employees are more mobile. It's easier (and more rewarding) for them to move from government to the private sector since FERS doesn't have the so-called "golden handcuffs" of the CSRS retirement system.

FERS was modeled after the best (especially nowadays) private retirement plans. But some people think the portability of FERS, with the TSP and Social Security benefits, will encourage more employees in the future to move into the private sector.

Here's a comment from MM, who works for a federal security agency.

He writes:

"As a federal employee, I have noticed that several middle to senior level accountants and auditors (GS-14/GS-15) under FERS have left the government to join public accounting firms as consultants to federal agencies. I doubt if they would have made this transition if the total benefits package was less than what they received at the Office of the Comptroller of the Currency and the Mint.

Further, an acquaintance of mine, working as a Defense contractor, mentioned that my pay is considerably lower than the pay of individuals he hires for similar budget and accounting positions. I work under the CSRS and am eligible to retire in a few years.

Clearly, individuals working in information technology and in many accounting/budget positions are better paid in private industry particularly if they have security clearances. In addition, as to private sector contractor pay being equal or greater than federal pay for skilled positions, the taxpayers pay more for the overhead and profit of contractors and consultants.

He says a recent article in the Washington Post by a staffer of the CATO Institute, which said that feds on average are paid double the private sector average "was also misleading because the CATO writer inferred that every federal employee gets some match for TSP. CSRS employees receive no match.

With few exceptions [such as individuals wanting investigations/security/State Department/NIH type experience], I doubt if many current federal employees encourage their children to pursue federal careers. The current FERS program likely will result in either the most productive or skilled employees leaving well before 30 years for better paying opportunities. This will likely include contractor jobs where the taxpayers pay more for the same services." MM

To reach me: mcausey@federalnewsradio.com