March 8, 2016

LAWS ARE FOR THE LITTLE PEOPLE: One of President Reagan’s least-heralded but significant reforms was passage of the 1984 law that put an expiration date on the excessively generous and immensely costly Civil Service Retirement System for federal workers. That law said all employees hired on or after Jan. 1, 1984, would be covered by the then-new Federal Employee Retirement System. Where the CSRS was a defined benefit program, the FERS is a defined contribution program that makes the employee a genuine participant in his or her retirement planning.

So what’s the news here now 32 years later? The 1984 law required federal agencies to fully fund their employees’ pensions, just like the private sector has been required to do for decades. But, as the Daily Caller News Foundation Investigative Group’s Katie Watson reports today, agencies have ignored the law with the tacit consent of the U.S. Office of Personnel Management, which oversees both CSRS and FERS.

“For years, the Office of Personnel Management (OPM) has been taking tax dollars from the U.S. Treasury to fund a growing gap in retirement payments … The OPM funded $23 billion, or 28 percent of all payments in fiscal year 2015, in that manner,” according to Watson. The federal pension system, by the way, is the fourth largest such benefit program in the entire world!

And OPM has been doing it for so long that the pension gap – the amount required to fully fund present and projected benefits versus how much has actually been set aside for that purpose – is now estimated at $1 trillion.  “The taxpayers are being hosed,” former federal internal auditor Tom McKinney told Watson. McKinney analyzed the federal pension system for Truth In Accounting, a non-profit group pushing for honest accounting of federal spending and debt.

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