- The Washington Times - Monday, January 10, 2005

One in every three federal workers in some agencies and half the employees in other agencies will get a second pay raise sometime this year. It will be worth 3 percent and is in addition to the 3.5 percent January raise and any locality adjustment they received for living in a expensive locale.

The second set of raises are largely invisible to the public, and are so commonplace that many feds don’t factor them in when considering annual pay adjustments. They are known as WIGS, WithinGrades, that are given to workers based on their tenure at a certain grade level. Depending on how long they have been in their jobs and in government, workers come due for a raise every one, two or three years. The difference between the first step of the grade and the 10th step is about 30 percent.

Presidents Carter, Reagan, Clinton and both Bushes — or people who work up their civil service policies — thought and think that the WIGs are, well, crazy. They say they provide no incentive other than to show up for work on a regular basis.

Instead, they proposed a new merit system, in which raises were based on performance. Backers say it’s a way to motivate employees and reward top performers. Critics say it would be a return to the spoils or buddy system that is the reason WIGs were put in place in the first place.

Health insurance

Retired federal and postal workers could save $250 to $500 per year in taxes and be able to afford better, more comprehensive health insurance if Congress would cut them in on the “premium conversion” perk that most working feds enjoy.

The perk allows workers — but not retirees — to pay their share of health premiums in pre-tax dollars. But that benefit isn’t available to federal (or private-sector) retirees, and won’t be unless Congress votes to amend the tax code.

Last year 342 (of 435) House members promised to vote for premium conversion — if they were given a chance. Fifty-seven of 100 senators said they, too, would vote for the change.

Most of the co-sponsors to the bill to extend premium conversion to retirees are back, and they will sign on again this year. But nothing can or will happen until backers find a way to offset the huge revenue losses to the Treasury that premium conversion would produce. Until that happens, the congressional traffic cops that regulate the flow of tax legislation (the Senate Finance Committee and the House Ways and Means Committee) are likely to keep premium conversion off the vote calendar.

CSRS vs. FERS

The majority of retired federal workers are under the old Civil Service Retirement System. It was replaced in the 1980s by the Federal Employees Retirement System. CSRS is a stand-alone program and it provides a bigger annuity and larger cost-of-living adjustments than FERS. The majority of still-working feds are now under FERS.

FERS is modeled after the most generous private-sector retirement plans. It has a smaller employer-provided benefit, Social Security plus money invested by the employee in his or her Thrift Savings Plan, with a generous 5 percent federal match.

Because the two systems are so different, Congress permits CSRS retirees to get full cost-of-living adjustments each year, regardless of age. FERS retirees get a so-called “diet COLA” and payments don’t begin until they reach age 62, no matter when they retire.

As a result, FERS retirees this month got a 2 percent “diet COLA,” while CSRS retirees got the full 2.7 percent inflation catchup.

Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcausey@federalnewsradio.com.

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