THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, October 21, 1994 TAG: 9410210015
SECTION: FRONT PAGE: A20 EDITION: FINAL
TYPE: Letter
LENGTH: Medium: 55 lines
Who will speak for the Civil Service Retirement System (CSRS)? The recent Money magazine report on pension benefits picked up by your newspaper was filled with distortions and outright falsehoods.
The CSRS is not funded on a pay-as-you-go basis. More than $200 billion is in the reserve fund. This fund is growing by billions of dollars each year.
Taxpayers are not being robbed to support the annual pension payout. The bulk of this money comes from employee payroll contributions; the government's matching contribution is made as an employer and from the interest earned by the reserve fund.
The article also reported that state governments spend 14.3 percent of payroll on pensions; local governments 17.5 percent; the federal government 25 percent; and private companies only 3.6 percent. The magazine suggests that the annual CSRS payout is coming entirely from the taxpayer, which is obviously false. Moreover, Social Security should be included as part of the pension costs for private companies and for state and local governments. (Federal workers hired prior to 1983 receive no Social Security coverage for their years of federal service.)
Money magazine reports also that ``a state or local government worker earning $35,000 a year with 30 years on the job can retire at age 65 with an annual pension of $18,000; a comparable federal worker would receive $19,700; but a similar private-sector worker would receive only about $10,000.''
Again, Social Security is being ignored. Most of the above employees, except for the federal worker, would be entitled to an additional pension of about $12,000. Furthermore, if a spouse is included, there would be an added $6,000 benefit.
Not so for the federal worker. The federal pension is actually reduced by 10 percent to provide the spouse with a widow's benefit! Now figure out which one will retire with the largest pensions!
The CSRS, which started in the 1920s, is one of the oldest in the nation. It has been used as a model for almost all major pension plans. Federal employees have always contributed a higher percentage of their total salary; have always been taxed on their full salary; and have also had their pensions taxed the same as salary by both the federal and state governments (now being corrected by the state).
It would be a great service to the public if an in-depth study could be made of the retirement systems of each Hampton Roads city and the state of Virginia. Also a comparison should be made of the CSRS with the retirement systems of some major corporations, such as General Motors, Ford and Exxon. But don't forget to also include Social Security as part of any retirement package.
CLYDE A. DECKER
Portsmouth, Oct. 5, 1994 by CNB