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Key developments in the world of federal employee benefits: health, pay, and much more.

Pay and Benefits Watch: Bitter about retirement


Barry Schrum, an employee with the Energy Department's Office of Inspector General, is bitter.

Schrum was placed in the wrong retirement system-the Civil Service Retirement System-years ago. When his agency finally discovered the error, Schrum was forced into the Federal Employees Retirement System (FERS). That's the way it works under current law.

But that's not why Schrum is bitter.

A major portion of retirement income for people under FERS is from the Thrift Savings Plan, the government's 401(k)-style package. During those years when Schrum thought he was in CSRS, he wasn't depending on the TSP. So now he has to make up those missed contributions to the Thrift Savings Plan in lump-sum payments over several years. Next week, he'll write a check to the government for more than $3,000-money he's had to save all year for this purpose-to pay for a mistake that Uncle Sam made. If he doesn't make similar payments for several years to come, he will face a relatively low-income retirement.

But that's not why Schrum is bitter.

Schrum is bitter because the Senate, the House and the Office of Personnel Management have been working on a fix for him and the thousands of other federal employees affected by similar retirement errors for four years, and they still haven't come up with a solution.

"Thanks to our 'do-nothing Congress,' many of us continue to suffer because of a lack of action on their part," Schrum said. "Just imagine if a member of Congress had encountered this problem. They would have stopped the world until it was fixed."

"If I sound bitter, you can bet on it," Schrum said.

Schrum and perhaps 20,000 other federal employees want Congress to change the law so that Uncle Sam, not they, pay for the mistakes their agencies made. The employees want the level of retirement income that was promised to them.

Congress and OPM want to help employees. Both the Senate and the House have passed versions of a bill to fix the retirement errors.

Both versions of the bill would allow employees to remain in the retirement system they were mistakenly placed in-an option not permitted under current law. Both bills would make the government make up lost earnings that employees would have accrued under the Thrift Savings Plan.

But there's one major difference between the two versions. In the House bill, the government would make up the contributions to the TSP that employees missed. The Senate bill would require employees to make up those contributions themselves-just as Schrum is doing.

The House bill is more expensive, but it's only fair that the government pay for its mistake, proponents of that bill argue. The Senate version is less generous to employees, but its proponents argue that the employees would have had to make those contributions to the TSP anyway, even if they had been placed in the proper retirement system to begin with.

Negotiators from both sides say they are frustrated that it's taking so long to correct the errors. But the bottom line is that their inability to solve their differences is leaving thousands of employees stranded in retirement limbo.

Uncle Sam's error has followed Ron Gamertsfelder into retirement. Gamertsfelder retired from the CIA in 1997, but couldn't come up with the money to make up the Thrift Savings Plan contributions he missed. So, Gamertsfelder estimates, his Thrift Savings Plan account was about half the size of colleagues who retired at the same time but were not placed in the wrong retirement system.

"I think Congress and OPM are dragging their feet on this because it does not affect them," Gamertsfelder said. "They pass their raises in a heartbeat, but for the little guy it takes years."

Brian Friel is founder of One Nation Analytics, an independent research, analytics and consulting firm for the federal market.

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