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106-3
March 26, 1999
HOUSE PASSES H.R. 416, THE FEDERAL RETIREMENT COVERAGE CORRECTIONS ACT
On March 23, the House passed by voice vote H.R. 416, the
Federal Retirement Coverage Corrections Act. The bill seeks to correct
errors made between 1984 and 1987 when the federal government changed from
the Civil Service Retirement System (CSRS) to the Federal Employees'
Retirement System (FERS) and thousands of federal employees were placed in
the wrong retirement system. Salient bill provisions are as follows:
Changing Retirement Plans
- With two exceptions, would permit employees to choose to remain in
the retirement plan in which they were mistakenly placed, or to be
placed in the plan in which they should have been placed, retroactive to
the date of the error.
- Would provide that employees erroneously placed in the CSRS could
not remain in that plan. They could, however, select the CSRS Offset
plan, or be placed in the FERS.
- Would provide that employees who should have been placed in Social
Security only and were mistakenly placed in a federal retirement
system, could not remain in a retirement plan unless they had already
vested.
- Would make all elections irrevocable. Employees not making an
election would retain their current coverage.
Agencies' Responsibilities
- Would make a lump-sum payment to Thrift Savings Plan (TSP) accounts
of affected employees, representing past employee contributions, as well
as the automatic 1 percent agency contributions and agency matching
contributions.
- Would pay past earnings on all three amounts, calculated using the
employee's TSP fund allocation choices.
- Would make all necessary contributions to the Civil Service
Retirement and Disability Fund (CSRDF), Social Security trust funds and
the TSP for the affected period.
- Would pay the reasonable costs of financial and legal advice
employees need to make informed decisions under the bill. In addition,
the measure is intended to prevent employees from incurring undue tax
burdens as a result of their choices.
Office of Personnel Management Responsibility (OPM)
- Would require OPM to ensure uniform implementation of the bill's
provisions and to ensure that employees and retirees are adequately
informed as to the status of their retirement accounts in order to make
an informed decision. OPM must give final approval to all corrections
made under the bill.
Other Social Security ProvisionsThe bill passed by the House does
not include certain amendments to the Social Security Act and tax
provisions that were in the bill as reported by the Committee on
Government Reform. Those provisions were dropped to expedite passage of
the bill in the House and to also facilitate the bill's consideration in
the Senate. The provisions may be reinserted in the bill during Senate or
conference committee consideration. The provisions that were dropped:
- Would permit the Commissioner of Social Security to modify the wage
record of each employee affected by a retirement coverage error to
change, add, or delete any entry regarding service as an employee to the
extent necessary to carry out the purposes of this Act or the Social
Security Act, regardless or any limitation in the Social Security Act.
- Would require the Commissioner to notify the Secretary of the
Treasury if the Commissioner determines that the payment of the OASDI
taxes described in this Act did not result in an equal credit to the
OASDI trust funds. Upon receiving such notification, the Secretary of
the Treasury shall transfer an amount equal to such shortfall from the
general fund of the Treasury to the OASDI trust funds.
- Would amend the Social Security Act's coverage provisions and the
Internal Revenue Code's employment tax provisions so that individuals
who should have been placed in CSRS but who were placed in another
system with Social Security participation would have a legal basis for
Social Security coverage and tax liability.
Source:
Congressional Record; Congressional Quarterly
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