Expert's View

It’s funny how things change when you’re not paying attention. Just the other day I learned that as far back as 1995 – 11 years after FERS began – there were more federal employees covered by FERS than by CSRS. And, as of September 30, 2002, FERS employees outnumbered CSRS employees by almost two to one: over 1.7 million to fewer than 900,000. Looking to the future, by 2010, the number of employees who are eligible to retire will be roughly the same for both retirement systems; and, in 2014, nearly all federal employees will be covered by FERS.

So what does this all mean? Not much. Time will just be marching on, with one way of doing business being supplanted by another. However, this particular shift will give rise to a variety of hoary old rumors designed to alternately increase or dash the hopes of those employees in the old retirement system. Let me illustrate with some examples that came to me from current CSRS employees:

Rumor 1: To get rid of CSRS employees, the government will give them five extra years of service credit to encourage them to retire earlier than they had planned.

Rumor 2: As an incentive for CSRS employees to retire now, the age penalty for being under age 55 will be eliminated.

Rumor 3: All CSRS employees will have to retire in three years or be converted to FERS.

Rumor 4: CSRS will run out of money to pay benefits because fewer employees are paying into the system; therefore, future CSRS retirees won’t be able to collect their retirement benefits.

Are any of these rumors true? Absolutely not! Most of them have been making the rounds for decades and are no truer now than when they first reared their silly heads. To paraphrase the old song, “They’re dead but they won’t lie down.”

While the first three rumors are just plain silly – no administration or Congress has ever proposed doing them – the fourth is a result of a misunderstanding about how retirement benefits are financed. First and foremost, the contributions made by employees and agencies for both retirement systems are deposited in the same account, the Civil Service Retirement and Disability Fund. The money is mingled with various general Treasury payments. Any money that isn’t needed to pay immediate benefits is retained in the Treasury as an account balance. That’s not to say that there is there is a lockbox that contains the money. Quite the opposite. However, routine intergovernmental fund transfers assure that there is always enough money to meet benefit obligations.

Hey, if you hear of any other rumors, don’t hesitate to share them with me. For me it will be like skeet shooting – you send ‘em up; I’ll shoot ‘em down!