According to Govexec.com: “A bill aimed at modifying the way retirement benefits are calculated for certain federal employees who work part-time at the end of their careers would cost the government $39 million from 2010 to 2019, the Congressional Budget Office reported this week.”
“The legislation (S. 469), sponsored by Sen. George Voinovich, R-Ohio, would modify the way retirement annuities are calculated for employees covered under the Civil Service Retirement System. Currently, CSRS employees who retire with part-time service late in their careers could see reduced annuities.”
“According to the CBO report, the bill would provide an average of $2,000 more in retirement benefits per year for about 650 of the expected retirees from the CSRS system in 2010. Additional retirements by 2019 would boost the overall cost of the measure to $39 million, according to CBO.”
“At the same time, the budget office reported, a bill that would let agencies rehire retirees without cutting their annuities would not cost taxpayers extra.”
The Basis for Congressional Budget Office Cost Estimate :
Under current law, a CSRS employee with service prior to April 7, 1986, who works part-time at the end of his or her career may receive a lower annuity than an otherwise identical employee whose part-time service occurred earlier. In either case, the employee will receive a total retirement benefit that results from the sum of two annuity calculations—one for service before April 7, 1986, and one for service on or after that date. A major factor in the calculation of a federal retirement annuity is an employee’s “high-3,” the average of the three highest consecutive years of salary. Often, an employee’s highest three years of salary occur in the final three years of service. For employees with part-time service in their career, the basis on which the high-3 is calculated is different for service prior to April 7, 1986, than for service after that, which may result in a lower annuity for employees who work part-time at the end of their careers.
S. 469 would change the calculation of retirement benefits for employees with part-time service to treat all service the same. As a result, annual spending for civil service retirement would rise by amounts growing from $1 million in 2010 to $6 million in 2019; overall, enacting the legislation would increase direct spending by $39 million between 2010 and 2019. CBO assumes the bill will be enacted near the end of fiscal year 2009, which would affect benefits for about 650 new CSRS retirees in 2010 (the number of new retirees would decline annually thereafter, as CSRS is a closed retirement system with no new entrants). The Office of Personnel Management estimates that the average increase in value of retirement benefits for eligible employees as a result of this bill would be about $2,000 a year.
Related Link: A Risk in Going Part-Time