OK, it’s not Julius Caesar crossing the Rubicon in terms of impact on history, but recently an important line was crossed for federal retirement.
New OPM data show that as of March of this year, the share of federal employees in the FERS system exceeded 90 percent of the workforce. To be precise, the figures were 1,677,914 FERS employees, or 91 percent rounded off, and 162,581 CSRS employees, 9 percent.
Those numbers don’t include Postal Service employees but the ration there probably is similar. The percentage of FERS employees there might well be higher, since USPS has offered round after round of buyouts and early retirements to older employees in recent years.
Why is this important? Let’s look back for perspective.
When FERS was created as an outgrowth of Social Security reforms of the early 1980s (part of the drive to get more people paying into that system), it was the poor distant cousin of the CSRS system, which had been in place by that time for six decades. Employees of the time looked down at FERS, with its Social Security component, its inferior civil service benefit, and its reliance on a new, dubious philosophy of having employees save for their own retirement through some new contraption to be called the Thrift Savings Plan.
The general expectation was that CSRS would be the dominant of the two programs for the career of everyone in government at the time. Given two chances to switch to FERS, and given substantial encouragement from the government both times to do so, only low single digit percentages of CSRS employees changed systems.
However, some people took the time to do some math. They realized that every employee hired starting in 1984 and after would be put under FERS, meaning that as employees retired or left government for other reasons, their replacements would be under that system. They even predicted that a day would come when – gasp – the FERS population would outnumber the CSRS population. Much to the shock of the snickering group, that day arrived in 1995, only about a decade after FERS formally got off the ground.
And now FERS is not just the majority, it is the overwhelming majority.
Among those in retirement, CSRS still is dominant. Those retired under CSRS make up 77 percent of federal retirees. Their average monthly benefit is $3,181; the median (where half are below and half are above) is $2,769, according to OPM figures through fiscal 2012, which don’t take into account the COLA of 1.7 percent paid in January of this year.
Among the 23 percent retired under FERS, the average benefit was $1,175 and the median $889. FERS retirees also get COLA-protected Social Security benefits; the government does not keep Social Security data specific to FERS retirees, but the average monthly benefit in that program is $1,260 a month.
More than 92 percent of survivor beneficiaries are under CSRS with an average monthly benefit of $1,446 and a median benefit of $1,289; under FERS, it’s $484 and $374, respectively.
Those who foresaw the growth of FERS further predicted at the time that when CSRS became in effect a sweet deal for a favored minority, there would be pressure to make its benefits less valuable—to bring them down to the FERS level, that is. One often cited example is the more generous COLA provisions of CSRS.
Since then, there has been a steady progression of milestones, with the FERS share growing ever larger. Through it all, CSRS has held up, but a nine to one ratio is enough to make anyone take notice.