Bill Would Expand Retirement Options for Some Feds

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By on May 3, 2019 in Retirement with 0 Comments
Congressman Derek Kilmer (D-OR)
Congressman Derek Kilmer (D-WA)

A bill to expand retirement options for some federal employees, H.R. 2478, has been introduced in the House. There is only one co-sponsor, so introducing the bill does not mean it will become a law or that it is likely to pass in Congress.

Nevertheless, the subject will be important to some federal employees who had temporary or seasonal employment during a federal career.

The bill was introduced by Derek Kilmer (D-WA). In his press release, the Congressman states that “This bill will ensure that all federal workers, from the Puget Sound Naval Shipyard and beyond, have the opportunity to retire at the same time, regardless of how they started their careers.”

Purpose of the Bill

Here is the situation.

Usually, in order to obtain credit toward a future retirement pension, a federal employee must be employed in a job in which there is a Federal Employees Retirement System (FERS) retirement deduction. Federal jobs requiring these deductions from an employee’s pay are usually working in a job as a career or career-conditional appointment with the federal government.

With a few exceptions, a FERS employee cannot make a deposit for “non-contributory service” performed after January 1, 1989. Creditable service under FERS can include working as a federal employee before 1989—even when an employee’s pay was not subject to retirement deductions—if a deposit has been made. This includes service under a temporary appointment.

Only Counting Time Prior to 1989

Under FERS, in order to count federal employment prior to 1989 toward a retirement payment where a retirement deduction was not taken from an employee’s salary, a deposit must be paid to count toward your retirement computation.

A deposit is a payment for a period of employment when retirement deductions were not withheld. The deposit amount is generally 1.3% of salary plus interest.

You are not required to make this type of payment. However, not making the payment means that this time does not count toward federal retirement.

This bill would eliminate the requirement that creditable service would have to have been performed before January 1, 1989.

Benefit of the Bill

Congressman Tom Cole (R-OK) is a co-sponsor of the bill. He is quoted in the press release as follows: “The existing policy provides no benefit to federal employees or the federal government, but the buy-back option gives workers additional credit toward retirement which is an option they currently do not have available.”

According to the two Congressmen quoted in the press release: “The Federal Retirement Fairness Act would restore the authorities that allow employees hired since 1989 to buy-back the time they served as temporary federal employees under the same terms that were in place prior to 1989.”

© 2019 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47

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