THE 10 MYTHS
OF FEDERAL RETIREMENT
Setting the Record Straight
media's repetition of myths and stereotypes is taking its toll on the image of
government workers and retirees. Moreover, with ever in-creasing frequency, we
see elected officials who on the one hand loudly proclaim their support for an
independent and dignified retirement for older Americans, while on the other
hand they vote to make older Americans, particularly federal retirees, prime
targets for huge budget cuts.
In this "Age of Entitlement Reform," there are many myths concerning federal
retirees and the federal retirement system. These myths are not based on facts;
rather, they are concocted and woven from timeworn images and derogatory
stereotypes of federal workers and retirees. They are fueled by the frustration
felt by all Americans, including federal retirees, with chronic federal budget
deficits and the clear need to reassess our national priorities and the very
role of the federal government as we approach the 21st Century.
It is essential that the myths about federal retirees be dispelled. It is
important that the American people understand the tremendous public service
contributions being made by federal workers on-the-job and in retirement. It is
necessary to foster an understanding of the federal retirement system and its
solvency and to establish the fact that federal workers are legally entitled to
an annuity based on years of service and employee payroll contributions to a
trust fund. It is vital in this "Age of Entitlement Reform" that there be a
clear distinction between the earned, work-related annuities to which federal
retirees are entitled and the entitlements given based solely on public policy
considerations. Finally, the American people must clearly understand that
federal retirees, like their counterparts in the private sector, want a measure
of in come security in retirement. This is what federal retirees worked for,
contributed towards and, most important, federal retirees have earned.
The myths regarding federal retirees and the federal retirement system often are
perpetuated for self serving reasons by individuals and organizations who crave
the public limelight and have made federal retiree-bashing a profitable venture.
In many instances, the media has validated and promoted these myths,
conveniently ignoring the facts. In the Congress, there are many lawmakers who
know better than to believe these myths. Yet, there are others who only know
what they have been told by the media.
It is essential to dispel the myths and to set the record straight. The media
has a responsibility to provide the American public with factual and balanced
coverage of important issues. Members of Congress have a responsibility to
legislate based on the facts. They do a disservice to the American people and,
in this instance, to federal workers and retirees when they fail to look beyond
10 Myths of Federal Retirement dispels the most common myths regarding federal
retirees and the federal retirement system; this information is based on
documented facts and figures that will set the record straight.
1 Federal entitlement programs are
all the same.
FACT: There is a distinct difference between the earned, work-related annuities
of federal retirees and the need-based entitlements determined by public policy
2 The federal retirement system's
trillion dollar unfunded liability will mean increasing deficits and a
staggering national debL
FACT: The civil service retirement fund is on solid financial footing with
current assets of more than $317 billion. Employee and government contributions
to the fund generated more than $66 billion in 1995 - $27 billion more than
needed to pay annuities. Critics say government contributions are not real money
and so the fund runs an annual deficit, not a surplus, but claiming that
contributions are of real money is just plain wrong. The contributions are real
income, since these funds are appropriated by Congress.
3 Federal deficits are due to
uncontrolled growth in federal retirement programs.
FACT: The nonpartisan Congressional Budget Office (CBO) reports that all
increases in future federal deficits will be the result of increased outlays for
health care programs. The new Federal Employee Retirement System (FERS) will
significantly reduce future outlays from the assets of the Civil Service
Retirement trust fund.
4 Cuts in cost-of-living adjustments
(COLAs) are necessary to reduce the national debt.
FACT: The Civil Service Retirement & Disability Fund (CSRDF), consisting of
employee and federal government-as-employer contributions, is required by law to
invest in government securities. COLA cuts increase the trust fund's assets and
the amount of government securities available to finance the deficit and
government programs; however, the national debt is also in-creased as the
government owes interest on the additional government securities purchased with
the trust fund's assets.
5 Far too many federal retirees are
wealthy, receiving tax free annuities and other special benefits.
FACT: The average earned monthly annuity of a federal retiree in 1993 was
$1,468. The average widow or widower of a federal retiree receives $760 a month.
On average, federal retirees receive less than other older Americans.
6 Federal employees retire at age 55.
Private sector employees must wait until they are 65 to retire.
FACT: Most federal employees work well beyond age 55, with an average retirement
age comparable to that of private sector workers. Nine out of 10 private sector
workers can retire at age 55 or younger.
7 Federal retirees receive automatic
annual increases in their retirement benefits; private sector retirees do not.
FACT: Cost-of-living adjustments (COLAs) for federal retirees have been
cancelled, delayed and reduced over the years. Private sector retirees do
8 All federal employees receive full
Social Security benefits in addition to an annuity.
FACT: There are hundreds of thousands of federal retirees who do not receive
Social Security benefits. The new Federal Employee Retirement System (FERS),
which covers federal workers hired after 1983 and is modeled after private
sector programs, integrates Social Security benefits with a small annuity and a
thrift savings plan.
9 The federal retirement system is
the nation's most generous retirement program.
FACT: Federal retirement benefits, particularly for federal civilian retirees,
fall short of the retirement benefits provided by major companies in the private
10 Federal retirees are "pensioners"
who are taking the American taxpayers to the cleaners.
FACT: Required employee payroll deductions and length of service requirements
for federal workers dispel this myth that capitalizes on time worn images of
"government pensioners on the public dole."
It is important to dispel the myths about federal retirees and the federal
retirement system. Public policy decisions should be based on facts and not on
politically expedient perceptions and myths. Federal retiree-bashers deceive the
media, lawmakers and the American public by railing against a system that has
already been changed. In 1986, the federal retirement system was changed to
reflect job market trends and to achieve several long-term policy goals,
including reducing the cost of the federal retirement system. Finally, it is
time for lawmakers to be honest with the American people and, more importantly,
A reduction in COLAs for federal retirees does as much to increase the federal
deficit as it does to reduce it.
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