GovernmentExecutive.com

Legislation introduced Monday would allow more federal employees to cash out their accrued sick leave at retirement, but it may not be the benefit many had hoped.

The bill (H.R. 5573), introduced by Rep. James Moran, D-Va., would provide employees under the Federal Employees Retirement System with a one-time payment of up to $10,000 for any remaining sick leave at retirement. FERS retirees would receive 15 percent of the hourly rate of their final salary for any sick leave balance of more than 500 hours.

But based on several readers' comments, the proposed benefit does not go far enough. Many argue that offering 25 percent to 50 percent of the hourly rate is more generous.

All federal employees receive 13 days of sick leave annually and can carry over unlimited amounts of sick leave from year to year. But unlike employees under the previous Civil Service Retirement System, FERS employees are not able to convert unused sick leave at retirement to increase their yearly annuity.

CSRS retirees have not always been able to cash out remaining sick leave at retirement, however. In 1969, Congress added the sick leave benefit to CSRS after data showed that the use of sick leave rose dramatically near the time of retirement. Reports by the Civil Service Commission -- the forerunner to the Office of Personnel Management -- found that federal employees retiring before 1969 used an average of 40 sick days in their final year.

History is repeating itself. In a recent survey, 85 percent of CSRS employees said they conserved as much sick leave as possible, while 75 percent of FERS employees said they would use as much sick leave as possible. Many management groups believe that the sick leave issue caused by the two retirement systems has hampered productivity, largely because employees nearing retirement are calling in sick rather than training and mentoring the employees who will succeed them.

While some FERS employees are disappointed with the proposal, it's worth noting that the benefit is slightly more generous than Moran's original plan. On Friday, he decided to boost the hourly rate percentage from 10 to 15 percent.

Still, whether the proposed benefit is sufficient to deter FERS employees from burning through their leave remains in question. "The only solution to this issue is to make the treatment of sick leave the same for FERS as it is in CSRS," one employee said in an e-mail. "Then everyone is treated the same on this issue and is encouraged to not fake illness."

Whether the Bush administration will weigh in on FERS sick leave also is unclear. "OPM has provided some technical assistance at the request of congressional staff, but the administration has not yet taken a formal position or commented on the bill," an OPM spokesman said Wednesday.

Colleen Kelley, president of the National Treasury Employees Union, supports the proposal as "a reasonable and welcome step to correct some of the disparity in treatment for FERS retirees."

One employee wrote in an e-mail that he will be pleased with the benefit should it pass. "I am a federal employee under FERS, and I have over 900 hours of sick leave," he wrote. "My plan is to retire this year, and I have always been honest by taking sick leave only when I am sick."

TSP Trading

Officials overseeing the Thrift Savings Plan are requesting comments on a proposal that would limit the number of interfund transfers that participants are able to conduct each month.

The Federal Retirement Thrift Investment Board on Monday published interim regulations in the Federal Register that would allow two unrestricted transfers each month, followed by unlimited opportunities to transfer amounts to the Government Securities fund.

TSP officials called their approach to the restrictions "more liberal" than most other plans and mutual funds. The comment period on the proposal ends April 9.

"The agency's proposal will affect a very small number of participants," the notice said. "The agency expects that, when coupled with our outreach efforts, this structural limit of two per month will virtually eliminate the problems associated with frequent interfund transfer activity."

COMMENTS

• Both the CSRS and FERS systems started with no reimbursement for outstanding sick leave balances. The CSRS's perceived abuse of sick leave brought the change of leave status to at least some reimbursement value. Such cash-in/out policies are a standard personnel tool used in the commercial work place to encourage resource constraint in both sick leave usage and medical care costs. When the sick leave benefit was first established (without any cash-in/out potential) it was established at a rate the government thought equitable and necessary. We know the rate had justification since Uncle Sugar doesn't give away freebies; at least not to his employees. So, why the current concern? It seems to be over a "perception" that the lower eschelon workers take too much leave late in their careers. The SES or Senior GS leaves don't cause problems. In fact, Uncle Sugar recently increased their ability to accumulate AND cash out their leave balances. But why is the proletariat taking more leave towards the end of their careers? Is it because they just want to skip work? Despite some of the spirited comments here, I don't think so. Is anyone likely to put off taking leave for decades just to skip work prior to retirement when they may not make it to retirement? Then why do they save up these large balances? Could it be because they have saved up their balances to use as they age and are incurring more medical problems? Perhaps. But is this not the way the system was designed? Did they accumulated those large balances by coming to work sick? And what was the impact of that? Is illness spreading through government offices due to individual greed or avarice? I’m not going to fight this battle pro or con. I merely wish to note that the perception of inequity causes conflict and folks don't like losing value. An economics principle called "myopic loss aversion" describes the empirical fact that investors experience more pain from a dollar lost than they experience pleasure from an equivalent dollar gained. So why not make the system equitable if history is repeating itself? As for excessive leave usage, there are rules and procedures already established to handle perceived abuse; but like the NSPS vs GS debate, control depends on the managers. They are the ones with “the POWER” to control and chastise abusers. Tip off Posted April 30, 2008 1:40 PM
• Why exclude CSR employees? Yes, we get unused sick leave credited towards annuity, but I cannot retire any earlier, and the sick leave is proratedyearly on an annual basis, not in one lump sum. It has been calculated that in order to receive the full compensation for one year of sick leave, a person would have to live to approximately 116 years of age. In effect, banking sick leave for CSR employees is of very little value to us. I have over 1900 hours of accumulated sick leave and have less than 3 years to retire. Guess what? I plan on having any medical procedures needed done as quickly as possible. If my doctor says I have an arthritic knee, I'll get it operated on. On the other hand, if I knew I could get some cash for my SL, I would forego same. Lyle Watson Posted April 23, 2008 12:32 PM
• Sick Leave as well as other compensated "perks", (i.e annual leave, family leave, etc) are part of the entire calculated wage packgage. Anyone who has ever run a business or participated on union contracts are keenly aware of the dollars distribution. To be compensated for unused leave, annual or sick, at retirement is only fair. It is dollars earned, not a "freebe" as some suggest. Hawaiian Dude Posted April 17, 2008 3:01 PM