- The Washington Times - Tuesday, November 5, 2002

With the right lawyer (say, Johnny Cochran), an understanding judge, a sympathetic jury and lots of luck, the government's 2 million retired civil servants might have a good discrimination case.

We're talking age discrimination.

While they worked for Uncle Sam, federal retirees could take part in the generous (because of a 5 percent government matching contribution) 401(k) plan. Feds who are age 50 or older may soon be able to make catch-up contributions (of up to $5,000 per year) to the Thrift Savings Plan.

Also while on active duty, federal workers can pay their health insurance premiums with pretax dollars. That saves them an average of $450 per year in taxes, and enables many to purchase even better health coverage.

And, if you are still working for the government and under the old Civil Service Retirement System, you can take advantage of the so-called Voluntary Contributions program.

It works like a certificate of deposit, but it's better because you can contribute to it at will in $25 increments, pay taxes only on the earnings, and get a guaranteed-by-the-government return of 5 percent next year.

One more thing. Coming up in mid-2003, federal workers will be able to take advantage of a Flexible Spending Account program that will enable them to set aside money that can be used to pay for medical costs not covered by their federal health plan.

But all those perks disappear the day one retires from the federal government.

Health insurance continues, but without the premium-conversion benefit. People with money in the TSP can leave it there, but can't add to it.

And the Voluntary Contributions CD must be cashed in when or before one retires, meaning it's not available to retirees who would love to secure some excess cash there.

Legislation is pending to extend the pretax premium break to retirees. It could but probably won't pass during the after-election lame duck session of Congress.

But for all the rest, retirees and those who will some day retire are out of luck. They would require changes in rules, the tax code (which isn't easy) or other legislation.

Opponents of the flexible spending accounts and 401(k) benefits for retirees argue that (among other problems) there is the question of payroll deduction. Retirees don't get biweekly paychecks.

But they do get monthly annuity checks (also processed by the government) that could, in this age of computers be the regular source of deductions to enable them to participate in payroll-deduction plans.

It's unlikely that retired feds will ever be able to participate in the Voluntary Contributions plan or the Thrift Savings Plan. Or take advantage of Flexible Spending Accounts. All those changes would require congressional approval.

But it's too bad that the benefits gap between active feds and those who retired after long careers is wide and getting wider.

Pay vs. pension increase

Retired federal and postal workers, and military retirees know what they are going to get in January 2003. It's a cost of living adjustment (reflecting this year's low inflation rate) of 1.4 percent. That's official and final.

Active duty military personnel know that they will be getting a 4.1 percent pay raise in January. That's official and final.

But for white-collar federal workers, the amount of the January pay raise is a mystery. We can predict, with confidence, there will be one. But the amount is still a little (make that "very") fuzzy.

Reason: Congress failed to approve the Treasury-Postal Service Appropriation bill before it recessed for the elections. Both the Senate and House versions provide for a 4.1 percent raise.

Unless and until Congress acts, the president controls the size of the January pay raise. He proposed a 2.6 percent civilian adjustment in his budget, and it is possible the White House will go along with a higher amount as in 3.1 percent to conform to private sector wage increases.

But the pay ball is in the president's court unless Congress finds and takes a route to give feds a bigger January increase.

Meanwhile, no matter how much (or how little) you are getting in January, your health insurance premiums are going up an average of 11.1 percent. That means that federal workers and retirees need to be smart consumers during the open insurance enrollment season that starts Nov. 11 and runs through Dec. 9.

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