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1 Federal Employee Retirement Systems 1 (1978)

handle is hein.tera/femoyetes0001 and id is 1 raw text is: Federal Employee Retirement Systems Toar This is a summary of a 57-page study by the above title prepared by Tax Founda- tion. The study (Research Publication No 34) is available at a price of $3 per copy from the Foundation's ofW. % t CO n n C r;- t . - .A JG (kA c, D c. 2oo o In enacting new and stricter stan- dards for private pension plans, Con- gress in 1974 also called for special studies of public pension systems, pre- sumably with a view to considering legislation to correct what may be the defective provisions of these plans. As of 1977 the studies have not been com- pleted nor has Congress announced a timetable for discussion of public plans. At the same time there is growing evidence that there are problems in the public systems which need examina- tion. A Tax Foundation study in 1976 called attention to some of the major issues in the state and local government systems. This study covers similar ground for the Federal employee retire- ment plans. Retirement benefits under Federal systems totaled $15 billion in calendar year 1975, five times as large as they were a decade earlier. (See Table 1.) They are estimated at more than $20 billion in fiscal year 1978. Not only have these payments grown rapidly in absolute terms, but also in relation to the direct pay of Federal employees. Ten years ago Federal retirement pay- ments amounted to about 10 cents per dollar of payrolls. In 1978 retirement benefits will be equal to 28 cents per dollar of payrolls. The Federal government operates more than a dozen retirement systems for its civilian and military employees, with total membership of approxi- mately five million, and employee and survivor annuitants of some 2.5 million. This study deals almost exclusively with the two largest of these plans-the Civil Service Retirement and Disability System and the Uniformed Services Re- tirement System. Together these sys- tems account for about 99 percent of benefit payments under all Federal em- ployee pension systems. Issues in Financing the Systems The legal arrangements for financing the civil service and the uniformed ser- vices retirement systems are entirely different. Retirement benefits for for- mer civil service employees are paid from a trust fund which has accumu- lated over the years. The fund is financed through matching employee and employer contributions, investment earnings, and other government pay- 1

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