Senate considers bill affecting federal retirement

The Senate this week will take up a bill that contains several provisions affecting federal workers, including one that would allow those enrolled in the Federal Employee Retirement System to count unused sick leave toward their pensions.

The Senate voted 86-11 on Tuesday to begin debate on H.R. 1256, legislation enabling the Food and Drug Administration to regulate tobacco products. The House approved the bill on April 2.

The legislation also includes measures that would automatically enroll federal hires into the Thrift Savings Plan; enable employees to invest their retirement money into mutual funds of their choice; allow TSP enrollees to create a Roth 401(k) so they do not have to pay taxes when funds are withdrawn; and let FERS employees include unused sick leave when calculating their retirement annuities.

The National Active and Retired Federal Employees Association sent a letter on Tuesday to Homeland Security and Governmental Affairs Chairman Sen. Joseph Lieberman, I-Conn., endorsing the provisions creating automatic enrollment and Roth options for the TSP, as well as the change in the FERS system.

In the letter, NARFE president Margaret Baptiste said making the change to the FERS system would correct an inequity between FERS and the Civil Service Retirement System. Employees hired before 1984 are covered under the Civil Service Retirement System and do receive such credit for unused sick leave.

Dan Adcock, legislative director for NARFE, said while his association supported the bill, the group is concerned about the idea of allowing employees to choose which mutual funds to invest their retirement money in.

"Certainly, we don't want to be paternalistic, but by the same token, we're concerned that federal employees might put all their eggs in one basket," Adcock said.

He said his organization would try to help educate enrollees about the option if it became law, but also would caution them that mutual funds typically are riskier investments and have higher administrative costs than the TSP.

Language that would create so-called spousal accounts is not currently in either version of the bill but could be added as an amendment. The Federal Retirement Thrift Investment Board has endorsed the creation of such accounts, which would allow spouses of deceased federal employees to continue managing their funds in the TSP instead of requiring them to withdraw those funds 60 days after their spouse passed away and reinvesting them elsewhere.

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