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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


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.
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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-


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