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

Holiday goodies

Last week Pay and Benefits Watch reviewed the good things Congress did for federal employees in 2000. Since that column was published, Congress delivered even more holiday goodies to federal employees in last-minute spending bills.

TSP Limits Lifted

Perhaps the biggest and best surprise was legislation that raises the maximum annual employee contribution to Thrift Savings Plan accounts by 1 percent of salary per year for the next five years. The bill was included in the Labor-HHS-Education appropriations bill approved last week.

After the five-year gradual increase, the limits on the amount of money federal employees can contribute to their TSP funds will be eliminated. By 2006, federal employees' contributions to the TSP will be limited only to the maximum deferral amount set by the IRS. That amount is currently $10,500. Agency contributions to FERS employees' TSP accounts will not be affected by the change.

For more information see's Dec. 19 story, "Congress lifts limits on TSP contributions."

Saundra Harman of S. Harman & Associates Inc., a firm that provides training and seminars to human resources professionals and federal employees, the tax deferral that comes with TSP contributions will be a big advantage to members of the Senior Executive Service and employees in the upper levels of the General Schedule. Still, "there's a whole group out there that can't afford to put more in than they are now," Harman said. In either case, federal employees should take advantage of the higher TSP contribution limit to the greatest extent possible, said Harman.

Child Care Subsidies

A bill that will help lower-income federal employees meet child care expenses was also included in the massive 2001 omnibus appropriations package passed last Friday. Funding for a child care subsidy for lower-income government employees was reauthorized for another year. The law permits agencies to use appropriated funds to help lower-income employees cover the costs of child care in licensed child care centers. For more information, see OPM's Guide for Implementing Child Care Legislation.

SES Pay Hike

The massive spending bill also boosted the pay of members of Congress' by 2.7 percent to $145,100 next year. Since pay for members of the Senior Executive Service is tied to the pay scale for members of Congress, lower-ranked SESers will get a pay boost in 2001. However, a cap on executive pay has left SESers at the top three pay levels with the same pay rates. President Clinton is expected to issue an executive order outlining base and locality pay raises for SESers and finalizing pay rates for the General Schedule later this week.

Stay Tuned

Next week Pay and Benefits Watch will look at what's left for Congress to accomplish in 2001.

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