Pension Problems Detailed

THE DAILY FED

Pension Problems Detailed

Members of a House subcommittee vowed Thursday to find a solution to a foul-up in federal retirement programs that has caused numerous employees financial hardship.

Four federal employees who were erroneously placed in the wrong government pension system appeared before the House Government Reform and Oversight Subcommittee on the Civil Service to ask for legislation that would restore lost benefits or give them a choice on how to reshape their retirement, The Washington Post reported.

The problem began more than a decade ago, when Congress created the Federal Employees Retirement System, which features a stock investment plan and a scaled-back pension benefit. On January 1, 1984 the old Civil Service Retirement System was closed to new enrollees. Those employed after this date were supposed to be placed in FERS, but apparently some were not.

Those employees, said subcommittee chairman John Mica., R-Fla., lost retirement benefits, owed back taxes, and were denied the opportunity to invest in stock funds.

There are no estimates of the number of employees and retirees who ended up in the wrong retirement system. However, the Treasury Department has found 600 misplaced employees, while the Defense Department has estimated up to 1,000 of its employees could be in the wrong system.

Office of Personnel Management Associate Director William Flynn III apologized for the problem and said that OPM is working on a remedy.

Mica said he would ask OPM officials to present their proposed solutions by Sept. 10.