OPTIONS TO CONSIDER FOR CERTAIN EMPLOYEE GROUPS IN DESIGNING THE NEW CIVIL SERVICE RETIREMENT PROGRAM (GAO/GGD-85-22)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M01152R000200160020-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: January 8, 2010
• Sequence Number: 20
• Publication Date: January 7, 1985
• Content Type: REPORT

STAT
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UNITED STATES GENERAL ACCOUNTING OmCE
SAL OOVO NMO4T
OW-ION
The Honorable Charles McC. Mathias, Jr.
Chairman, Subcommittee on Governmental Efficiency
and the District of Columbia
Committee on Governmental Affairs
United States Senate
The Honorable Ted Stevens
Chairman, Subcommittee on Civil Service,
Post Office, and General Services
Committee on Governmental Affairs
United States Senate
The Honorable Thomas F. Eagleton
Ranking Minority Member
Subcommittee on Governmental Efficiency
and the District of Columbia
Committee on Governmental Affairs
United States Senate
The Honorable Jeff Bingaman
Ranking minority member
Subcommittee on Civil Service,
Post Office, and General Services
Committee on Governmental Affairs
United States Senate
JANUARY 7.1985
Subject: Options to Consider for Certain Employee Groups in
Designing the New Civil Service Retirement Program
(GAO/GGD-85-22)
This report responds to your June 25, 1984, letter about the
issues associated with District of Columbia employees in design-
ing the new federal civil service retirement system to supplement
social security benefits. The majority of District employees now
participate in the current federal civil service system; however,
the Social Security Amendments of 1983, which require all new
federal employees to be covered by social security, did not apply
to District employees. Thus, you asked us to develop options for
addressing this situation in the design of the new retirement
program.
(966195)
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B-217196
You also requested us to develop options for addressing the
future status of certain federal law enforcement personnel who
are now covered by a District retirement program in the design of
the new civil service retirement program. New employees in this
group are covered by social security but must retire before the-
age when social security benefits will be available to them.
As later agreed with your offices, we expanded the scope of our
study to (1) include all federal civilian employee groups who are
eligible for retirement benefits without penalty at ages earlier
than general civil service employees) and (2) provide
information about employees, like those in the District, who are
covered by the civil service retirement system but are not
federal employees.
In January 1978, we reported on our review of issues
associated with District employees participating in the civil
service retirement system and some federal personnel covered by
the District retirement system.2 We concluded at that time that
the District should establish a separate retirement system for
its employees and that new federal employees in positions covered
by the District's program should be placed in a federal
retirement system. Moreover, in an earlier report we questioned
the need for special early retirement provisions for federal law
enforcement and firefighter personnel and recommended that the
Congress reevaluate the need for such benefits.3 The Congress
took no action on these reports.
In conducting this study, we obtained information on
retirement provisions and retiree demographics from the Office of
Personnel Management (OPM), Department of State, Department of
the Interior, Federal Aviation Administration, Central
Intelligence Agency, Secret Service, and the District of
Columbia. Except for OPM, certain employees of each of these
organizations may retire without penalty at earlier ages than can
general civil service employees. OPM has overall responsibility
for managing the civil service retirement system. We considered
the views of officials of each of these organizations in
developing the options we are presenting.
1General employees are all employees not covered by special
provisions of the retirement system.
2Federal and District of Columbia Employees Need to be in
.Separate Pay and Benefit Systems (FPCD-77-71, Jan. 12, 1978).
3Special Retirement Policy for Federal Law Enforcement and
Firefighter Personnel Needs Reevaluation (FPCD-76-97, Feb. 24,
1977).
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EMPLOYEES PARTICIPATING IN THE
CIVIL SERVICE RETIREMENT SYSTEM
WITHOUT SOCIAL SECURITY COVERAGE
We identified two employee groups who are continuing to
participate in the civil service system but are not federal
employees and do not have social security coverage. These groups
are employees of the District of Columbia and employees of the
Washington Metropolitan Area Transit Commission.
In contrast, another employee group which did not have
social security coverage stopped entering the civil service
system on January 1, 1984. State Department officials recognized
that a new civil service retirement system which supplements
social security would be inappropriate for its foreign national
employees who are not covered by social security and, in January
1984, discontinued entering new foreign employees in the civil
service system. These employees are being placed in programs in
their respective countries.
Qptions we identified which the Congress may want to
consider for those employee groups not covered by social security
are:
1. Allow the employees to continue entering the current
civil service system. If this option is taken, these
nonfederal employees will eventually be the only
participants in the current system. In this case, the
employees' or employers' contributions could be increased
to cover the full accruing costs of retirement benefits.
OPM estimates these to be an additional 22.5 percent of
pay.
2. Close the current system to all new entrants, in which
case, civil service retirement coverage for such
employees could be terminated and replaced with a new
program established by their employers.
We did not consider the option of social security coverage
for District employees because the Congress has not required any
state or local government employees to participate in the social
security program and the District has not elected such coverage
for its employees.
SPECIAL RETIREMENT ELIGIBILITY PROVISIONS
Certain groups of federal employees are covered by special
provisions which permit them to retire without penalty at earlier
ages than employees covered by the general civil service
retirement provisions. These employees, if they have 20 years of
service, are eligible for full benefits at age 50 or younger. By
contrast, the earliest point at which most federal employees can
opt to retire without penalty is age 55 with 30 years of service.
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The table below identifies groups of employees with special
provisions, their retirement eligibility provisions, and the
retirement system which covers them.
Employee group
Law enforcement
officers/
firefighters
Retirement
eligibility provisions
Age 50 and 20 years'
service as law enforce-
ment officer or fire-
fighter. With some
exceptions, mandatory
retirement is at-age 55
or 20 years' service
whichever is later.
Retirement
system
Civil service
Air traffic
controllers
Foreign Service
officers
Central
intelligence
officers
Age 50 with 20 years'
service as an air
traffic controller, or
any age and 25 years'
service as an air
traffic controller.
With some exceptions,
mandatory retirement is
at age 56.
Age 50 and 20 years'
service. With some
exceptions, mandatory
retirement is at age 65.
Same as Foreign Service
system-except mandatory
retirement is at age 60.
Any age and 20 years'
service. Mandatory
retirement is at age 60.
Uniformed Division Same as Park Police.
of the Secret
Service
Secret Service
agentsa
Same as Park Police.
Civil service
Foreign Service
Central
Intelligence
Agency
District of
Columbia
District of
Columbia
District of
Columbia
aSpecial agents assigned to protect the president and other
government officials.
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The special eligibility provisions are reflected in the
actual retirement experiences of the various employee groups.
The federal employees in the District's retirement system have
retired the earliest--years before social security benefits would
be available at age 62. The table below shows the experiences of
the employee groups for fiscal year 1983 which agency officials
considered typical of recent historical experience. Data on
general civil service employees is shown for comparison purposes.
Employee group
Average age
at retirement
Average years
of service
Secret Service Uniformed Division
46
25
Secret Service agents
not available
not available
Park Police
48a
23.4a
Air traffic controllers
51.7
30.7
Central intelligence officers
52.8
29.3
Law enforcement officers/
firefighters
54.1
26.4
Foreign Service officers
55.7
27.0
General civil service
employees
60.9
28.6
aAverage of last 10 years.
Options for employees covered by
special early retirement provisions
In designing the new retirement system to supplement social
security benefits, the Congress may decide to treat new employees
currently covered by special early retirement provisions like
general civil service employees, in which case no special provi-
sions would be needed. On the other hand, if the Congress wishes
to continue early retirement eligibility for these new employees,
a means of providing higher benefit levels at earlier ages than
allowed for other employees must be incorporated into the new
system. Alternative benefit formula designs for these special
provisions are:
1. Provide the same benefit accrual rate as for general
civil service employees but with no reduction for early
retirement age. In our report on the features of
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nonfederal retirement programs,4 we reported that most
pension plans permit employees to retire at reduced
benefits before they fulfill the requirements necessary
for the payment of full benefits. The Congress could
provide benefits without reductions at earlier ages for
the employees covered by special provisions.
2. Provide a higher benefit accrual rate than that provided
general employees. Under this alternative, the benefit
formula for these employees would have a higher accrual
rate for each year of service than the rate used to com-
pute benefits for regular civil service employees. This
would provide greater benefits at earlier ages for the
covered employees.
3. Provide supplemental benefit payments in addition to
civil service benefits until age 62 when social security
benefits are available. In our report on the features
of nonfederal retirement programs, we reported this is
provided for in many nonfederal pension plans.
4. Provide a more generous thrift (savings) plan than the
plan available to general civil service employees. This
alternative assumes that the design of the new retire-
ment program will include a thrift plan. A capital
accumulation plan, such as a thrift plan, is a typical
part of nonfederal retirement programs. Under thrift
plans, employers help employees save for retirement or
other needs by matching some portion of the employees'
contributions. A majority of employers with thrift
plans match at least 50 percent of employee
contributions up to a specified level. For employees
covered by special retirement provisions, the thrift
plan could provide a higher rate of employer matching
than the rate for regular civil service employees
thereby enabling them to accumulate a sufficient amount
to afford earlier retirement. If the thrift plan is
authorized under section 401(k) of the Internal Revenue
Code, the burden of employee contributions would be
reduced by deferring taxes on them.
We did not consider the alternative of withdrawing these
employees from social security in view of the Congress' decision
in enacting the 1983 Social Security Amendments that all new
federal employees would be covered.
4Features of Nonfederal Retirement Programs (GAO/OCG-84-2, June
26, 1984).
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As requested by your offices, we did not obtain agency
comments on this report. We are sending copies of this report to
the Directors of OPM, the Central Intelligence Agency, and the
Secret Service; the Secretaries of the Interior, Treasury/ and
Transportation; the Administrator of the Federal Aviation
Administration; and the Mayor, District of Columbia. We will
also send copies to other interested parties and make copies
available to others upon request.
1
4~0' 9 LON
William J. Anderson
Director
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