- The Washington Times - Tuesday, October 10, 2006

Federal workers are smart investors and are more generous than their private-sector counterparts when it comes to charitable donations.

When it comes to building a retirement nest egg, most financial planners say, you can’t beat a 401(k) plan for long-term returns. That is especially true when your employer offers a match, which is the equivalent of a tax-deferred pay raise.

Uncle Sam offers all workers under the Federal Employees Retirement System the chance to receive tax-deferred matching contributions of up to 4 percent for participating in its 401(k) plan, the Thrift Savings Plan. That is on top of the automatic 1 percent contribution just for being on the payroll, even if they don’t sign up for the TSP.

The matching contribution and aggressive agency programs explaining the TSP appear to be why the percentage of investing feds is nearly twice as high as it is in private firms with 401(k) plans.

But how do you explain the generosity of feds? Federal workers give an average of $215 per year to the Combined Federal Campaign, the world’s largest and most successful annual workplace giving campaign. The average gift for charity from private-sector workers last year was $195.

The irony of the sparkling federal numbers is that fewer people are giving bigger gifts, mostly via payroll deduction, to the CFC. The number of participants has been dropping for the past four years.

In 2002, about 35 percent of the federal population gave $237 million to the CFC. By last year, only 32 of every 100 feds contributed, but the amount they gave went to $268 million.

Some charity watchers think a slightly larger number of feds may be giving money to groups outside the CFC. Others say it may reflect a welcome decrease in arm-twisting, which used to be a major problem in some agencies.

Whatever the reason, feds are expected to give even more to the CFC this year. Leading the way are those in the Washington area, which has a large number of upper-grade, top-paid civil servants.

Limited merit pay pool

Critics of a proposal to implement a pay-for-performance system in the departments of Defense and Homeland Security and other agencies worry about favoritism and about lack of funding for merit pay plans.

They say bosses can’t be trusted to give out pay raises based on merit — not looks, style, friendship or congeniality. They also argue that there won’t be enough money in the performance pay pool to fund healthy raises to large numbers of deserving workers.

Backers of the plan say that won’t be a problem and that with proper training, support and a due-process system, raises will be handed out in a fair manner.

Now, supporters of merit pay have a another worry: the number of players in the pay pool.

Congress authorized merit pay but is having second thoughts, and has cut funding for programs. Courts have severely limited the number of employees who can go into pay-for-performance systems at the departments of Defense and Homeland Security. Only supervisory, managerial and executive employees can be put into merit pay. The courts have excluded the vast majority of workers who are members of a bargaining unit even if they are not union members.

Unless and until the ban on bargaining-unit employees is changed — and it could go to the Supreme Court — pay for performance may be limited to bosses, not the rank and file for whom it was intended.

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

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