- The Washington Times - Monday, July 28, 2003

Here are some real-world tips for the 3 million federal and military personnel who have more than $113 billion in the federal Thrift Savings Plan. The advice is timely and comes from testimony before Congress concerning the delays the 401(k) plan has experienced since it introduced a daily valuation system in mid-June. The dos and don’ts include:

• For best and quickest results, don’t do interfund transfers, make calls or expect prompt service on loans between 8 a.m. and 4:30 p.m. — at least for the time being.

That is when most of the calls or log-ons (which are running at the rate of 60,000 per hour) are made. For faster service, call before you leave for work, or after getting home. That might make your boss happier, anyhow.

• Until the computer glitches plaguing the giant federal 401(k) plan are resolved, don’t depend on a refinanced loan from the TSP to pay bills (like a mortgage or car payment) that are so overdue you are about to be tossed out of the house or lose your car. Between 7,000 and 9,000 feds regularly have (and refinance) two outstanding loans with the TSP at any given time.

Once they pay off one of the loans, they can apply for another. One official described it as a sort of line of credit. But if they need the loan fast, to pay off a tough or threatening creditor, they are running it close at the best of times, and playing with fire during the TSP’s rough, glitch-rich transaction period that started in mid-June.

• Remember that the daily valuation system — meaning transactions are now processed at the close of each business day — doesn’t mean next-day service or issuance of a check, especially in the case of loans. Paper, such as a spousal-consent form, is still required for many transactions that can’t be handled online.

• Bear in mind that Congress set up the TSP as an optional retirement/investment program, not as a loan service. The TSP is more generous than many private-sector 401(k) plans (many won’t permit non-hardship loans). Most of its time and attention are directed toward investors because only a relatively small number take out loans, and an even smaller number are juggling two loans at one time.

Pay parity

The stage is being set for a repeat of what is becoming a bipartisan annual event in Washington. Like a secular passion play, the annual tussle — involving billions of pay and fringe dollars — revolves around equal pay-raise treatment for civilian feds and military personnel. It has been going on each year since the start of the Clinton administration. It goes as follows:

The White House either recommends a minimal pay raise for feds (which Mr. Clinton did for seven years) or proposes a higher January increase for military personnel than for civilians, a favorite of the Bush administration. In both cases, a bipartisan team of House leaders — Reps. Steny H. Hoyer, Maryland Democrat, and Reps. Frank R. Wolf and Thomas M. Davis III, Virginia Republicans — then talk Congress into insisting that both groups get the same percentage increase. It nearly always works, although the drama often runs from January until October.

This year, the White House has called for a military raise (which varies) of around 4.1 percent while civilians would get just over 2 percent. If the parity proposal — which passed a House Appropriations Committee unanimously last week — again wins the day, civilian feds could look forward to an average increase of 3.7 percent or better.

Pay parity isn’t a done deal, and it is never guaranteed. But thanks to the bipartisan clout of the Washington-area congressional delegation — and Mr. Hoyer’s pay-raise track record — the action lacks the suspense of a Hitchcock thriller.

Benefits trimmed

If you are a retired fed, chances are any Social Security benefit you earned (for minimal service under the program) has been reduced by the so-called Windfall Elimination Provision. The WEP formula can trim that Social Security benefit up to $300 per month, depending on how little time you paid into Social Security.

If you are a retired fed hoping to get a spousal or survivor benefit under Social Security, odds are you’ve heard of, or will find out about, the Government Pension Offset formula. It can reduce, and often eliminates, the spousal/survivor benefit anticipated by a retired civil servant who never paid into Social Security.

Thanks to lobbying by the National Association of Retired Federal Employees, other federal and postal unions and national and state teachers organizations, nearly half the House has pledged to vote for repeal of Offset/Windfall if and when it comes up for a vote. Support in the Senate is growing.

But support is one thing, getting a chance to use it is another. The next step is to get the House-Senate leadership to agree to give the Offset/Windfall repeal proposals hearings, then a vote. Getting co-sponsors is tough enough, but getting congressional tax-writers to OK a plan that would cut revenue is even tougher.

Contracting out

Thanks to tough talk from their bosses — and the administration — a growing number of feds are seriously concerned about being privatized. Some have been told their jobs are up for consideration to be contracted out. Others have been told they won’t be hired by the contractors that take over their positions. Some familiar with privatization say that even if they move with their jobs the chances are the pay, and especially the retirement and insurance they will get, won’t match their government situation. Handicapped feds are especially concerned because they believe they are the kinds of workers that cost-conscious private-sector employers don’t want to have to provide health insurance.

Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or [email protected]


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