- The Washington Times - Tuesday, April 22, 2003

The much publicized "brain drain" that was supposed to reduce Uncle Sam to an inept, shell of his former self has been postponed due to lack of interest.
The hordes of experienced professionals engineers, language and computer experts, scientists and other well-trained federal employees who were supposed to retire this year, and last year, didn't get the message: They are still on the job.
Several years ago people who are experts on human resources and human capital but not so expert on real people predicted that by 2003 government offices would look like the cast of Hollywood Squares. Very old and/or very out of it.
The tough economy and the terrorist attacks on New York and Washington persuaded many feds, who might have retired or sought greener pastures, to stick with it.
Office of Personnel Management Deputy Director Dan Blair recently told a congressional committee that "while the number of federal employees who are eligible for retirement remains high … we have not seen the mass exodus of talent that many had predicted."
Instead, Mr. Blair said, "separation rates have declined." Translation: Fewer people are quitting or retiring than in previous years.
Many feds say they've decided to stay on because they know and feel they are needed. Also, thousands of retired feds tried to come back into government after the September 11 terrorist attacks.
With the outside job market very tight, and with the threat of terrorism, the brain drain never had a chance.
Retiree/Social Security raise
Federal, military and Social Security retirees don't have to count on Congress or the White House for increases in benefits. Unlike civilian and military personnel whose pay is based on political and budget considerations retired feds are on automatic pilot.
The federal-military-Social Security retirees get an automatic increase each January that reflects the rise in living costs from the most recent third quarter (July, August, September) over the previous year's third quarter.
With six months left to go in the COLA (cost of living adjustment) countdown, the retirees can expect a 2.1 percent raise next January based on current projections. If inflation goes up and it will the raise will be higher.
Military personnel are likely to get the same 4.1 percent raise they got this year. Civilian feds in line for a 2 percent raise can expect a repeat of last year's political infighting that (finally) gave them the same average 4.1 percent raise as military personnel. After locality pay adjustments, feds in the Washington-Baltimore area wound up with a total increase of 4.27 percent.
Locality pay and pensions
Several readers say they've been told by their human resources offices that locality pay doesn't count toward retirement. That's wrong. It does.
Your retirement will be based on your length of service and your highest three-year average salary, including locality pay. That's the law.
The HR offices either got it wrong, the employees heard it wrong, or somebody is confusing locality pay (which goes to feds in 32 geographic areas) with the special 25 to 15 percent differentials given to feds in Alaska, Hawaii and Puerto Rico. Those differentials do not count toward retirement.
Federal 401(k) plan
This year most federal workers (those under the newer Federal Employee Retirement System (FERS) can invest up to 13 percent of pay (subject to the Internal Revenue Service limit of $12,000) and workers under the old Civil Service Retirement System, and military personnel can invest up to 8 percent of pay, subject to the IRS limit.
The open season when people can sign up began April 15.
Beginning in July, federal and military Thrift Savings Plan (TSP) investors who are age 50 or older (or who will turn 50 anytime this year) can sign up to contribute an additional $2,000 tax-deferred. They must be maxing out in their current TSP contributions and the catch-up contributions will be taken out of their paychecks starting in August.
That means that some 50-plus TSP investors will be able to put up to $14,000 tax-deferred this year in their 401(k) plan. Next year, the so-called catch-up contribution rate goes from $2,000 to $3,000.



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