Senator introduces bill to fix retirement errors

Sen. Thad Cochran, R-Miss., on Thursday introduced a bill that would fix retirement snafus for as many as 20,000 federal employees whose agencies placed them in the wrong retirement system.

The Federal Erroneous Retirement Coverage Corrections Act (S. 1232), would give affected employees the choice of moving into the retirement plan they should have been in or staying in the plan their agencies erroneously put them in.

The bill "provides a comprehensive solution to the problems faced by federal employees due to retirement coverage errors-it does so at a reasonable cost and without creating unnecessary administrative burdens," Cochran said Thursday when he introduced the bill.

The errors arose during the transition from the old Civil Service Retirement System (CSRS) to the Federal Employees Retirement System (FERS) in the mid-1980s. Confused agencies placed some employees in CSRS when they should have been in FERS and some in FERS when they should have been in CSRS. Under current law, agencies must immediately correct such errors when they are discovered. Employees who must be moved into FERS from CSRS face severely reduced retirement benefits because they did not put money into the Thrift Savings Plan throughout their federal careers.

Some employees discovered the problem at the brink of retirement and saw their nest eggs significantly reduced.

The House passed a corrections bill, H.R. 416, in March. The House bill would "make whole" the employees, while the Senate bill would require employees who opt into FERS to make retroactive payments into their Thrift Savings Plan accounts. The Clinton administration backs the less expensive, and less generous, Senate version. Employees affected by the error tend to favor the House version.

Julie Kenny, an employee with the Navy, spent 10 years in the wrong retirement system before her agency caught the error. Unless Congress approves a change, Kenny will have to make up 10 years of TSP contributions. Under current rules, Kenny's TSP account will not be credited with the earnings she would have made on those contributions had the agency not put her in the wrong retirement system. Kenny and her human resources office are muddling through the difficulties of addressing the mistake.

"We never created the original errors, yet we are being made to pay the price," Kenny said.