- The Washington Times - Monday, October 24, 2005

Members of the elite federal Senior Executive Service are finding they are getting more bonuses but fewer and/or smaller pay raises.

Under pay-for-performance rules being phased in for the 6,000 career SES members, the amount of annual pay raises has gone down. Agencies have made up for it, in part, by giving out bigger bonuses than in some previous years, the Senior Executive Association reports.

Although bonuses of spendable money look great, they don’t count toward retirement. Pay raises, on the other hand, keep compounding and can substantially boost the value of an SES member’s annuity.

Many agencies find it more cost-effective to give nice one-shot bonuses rather than pay raises, the gift/reward that keeps on giving.

Office of Personnel Management data from fiscal 2004 show that bonuses at the National Aeronautics and Space Administration averaged $17,000, up from an average of $10,000 in fiscal 2001. NASA has been the subject of congressional scrutiny about high-living habits of some former officials.

Average bonuses were in the $16,000 range in the Defense Department, Nuclear Regulatory Commission, Homeland Security Department, Veterans Affairs Department and Agriculture Department. At the Treasury Department, average bonuses topped $15,000.

These are not as good over the long haul as steady pay raises, but still not bad for government work — or any other kind.

Retire wisely

When it comes to investing with a vengeance, U.S. civil servants could teach many of their private-sector counterparts a thing or two. More than 3.5 million current and former feds are investing in the Thrift Savings Plan, the government’s generous version of a 401(k) plan.

The vast majority of feds are covered by the Federal Employee Retirement System that began in the mid-1980s. Under TSP rules, they can qualify for a 5 percent tax-deferred match from the government by contributing 5 percent or more of salary. That adds up.

As of last year, the average account balance of FERS employees was almost $56,500. Older, longer-service feds who are still under the old Civil Service Retirement System (CSRS) have an average account balance of $47,000. Military personnel, who weren’t allowed to participate in the TSP until 2002, have an average $5,800 account balance.

Congress modeled the FERS after several of the most generous private-sector plans. It provides the TSP and a federal annuity indexed to inflation that is on a less-generous formula than the older civil service pension plan. Workers under the CSRS system get full inflation catch-up raises in the form of cost-of-living adjustments every January. Next year, that COLA will be worth 4.1 percent. Retirees get it regardless of their age.

Under the FERS plan, the COLA will be 3.1 percent. COLAs for those employees don’t kick in until they are age 62.

According to government data, the typical fed retires at age 62.

When agencies offer early retirement, employees can leave at age 50 with 20 years of service, or any time they have 25 years of federal service. As a result, there are active-duty feds who are 90 or older, as well as some retirees who are as young as 43. Early retirees can keep their federal health insurance for life, but their annuities are reduced 2 percent for each year before age 55.

Mike Causey, senior editor at Federal News Radio AM 1050, can be reached at 202/895-5132 or [email protected]

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide