- The Washington Times - Monday, January 5, 2004

Thanks in part to the tight job market and steady pay raises inside the government, the dreaded “brain drain” — which was supposed to render Uncle Sam incapable of thinking, planning or doing anything — has been canceled, or at least delayed.

Several years ago, nervous officials, think tanks and reporters warned that by 2004 much of the government’s top talent and institutional memory would either be lost to the private sector or retirement. It didn’t happen.

The number of retirements over the past several years is way down even as a growing number of feds reach or approach retirement age, and few feds left the safety of their government jobs to pursue positions during the economic slowdown.

The majority of retirement-age feds are under the old Civil Service Retirement System, which provides an excellent annuity for people who make a full career (30 or more years) in government.

Normally, only about 30 percent of the people hired under the old CSRS plan actually retired from government. But more and more CSRS employees are working longer than ever. It’s partly because of the outside job market (which didn’t begin to pick up until the September 11 security upsurge), and partly because feds wanted to boost their lifetime annuities by continuing to work.

Feds under the CSRS increase their lifetime annuities (which are indexed to inflation) by about 3 percent each year. That is based on their highest three-year salary average, which has been going up 3 percent to 6 percent each year thanks to regular pay raises and longevity increases.

A California-based fed, who works for the Social Security Administration in Oakland, put it like this: “My New Year’s resolution for 2004 is the same as for 2003 and 2002, which is to help build up my highest salary average as I work on moving from a tired federal employee to a retired federal employee.”

As often happens when pessimistic forecasts are issued, the predictors of the brain drain looked at the numbers (how many people would be able to retire now), but they didn’t bother to look at past trends. When times get tough, people hang on to their jobs.

Benefits push

With the elections just around the corner, lobbyists for federal workers, postal employees and retirees have little time to win any major benefits improvements this year.

Once the rest of the federal pay raise is approved, the issue will be whether to spend time and energy on revising or repealing the Social Security check-eater rules, or to seek a health premium tax break for retirees.

A record number of House and Senate members have promised to vote to repeal or modify the Social Security Windfall rule and the Social Security Offset formula. Both can — or will — have an effect on the Social Security benefits of millions of current and retired public employees (from cops to teachers) and feds retired under the old CSRS plan.

Windfall can reduce the Social Security benefit a fed earned for minimal service in the private sector, whereas Offset can wipe out the spousal Social Security benefit some government retirees anticipate.

Although the repeal bills have lots of individual political support, they haven’t been able to make it through the tax-writing House Ways and Means Committee or the Senate Finance Committee.

The other option fed groups have is to push the Premium Conversion bill that would permit retired feds to buy better health insurance while reducing their federal taxes. Active-duty feds (and some private-sector workers) now can pay their premiums with pretax dollars. But that perk is lost when people retire from government or industry.

Extending it to retirees makes sense. The $250 to $500 annual tax savings would allow more to buy insurance, or better coverage shifting their high medical costs to private insurers rather than the government. But politicians charged with increasing tax revenue will continue to try to block Premium Conversion from coming up for a vote.

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

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