Summary: Federal retirement programs have not received the management attention they deserve, in view of their importance and tremendous costs. The systems have evolved without overall policy guidance. The programs have developed on an independent, piecemeal basis, resulting in a patchwork of systems providing inconsistent and different benefits to various groups of employees. An overall, coherent, coordinated Federal retirement policy needs to be established. It should serve both management and employee needs and cover such matters as benefit levels, funding, social security coverage, vesting, and administration. All Federal personnel should receive consistent benefits. Presently, the systems differ substantially in employment contribution rates, benefit formulas, retirement eligibility requirements, creditable service, disability policies and benefits, survivor benefits, and reemployment of annuitants practices. Whether Social Security should form a base for Federal retirement benefits is one of the many matters that must be considered in formulating an overall policy. Congress should consider centralizing committee jurisdiction over retirement policy by establishing a permanent, independent board with authority and responsibility for monitoring the development, improvement, and administration of the Federal retirement systems. Costing and funding procedures used by many Federal systems understate the full cost of providing retirement benefits; and, in most cases, the systems' funding requirements are less stringent than those imposed on private pension plans. Some systems are financed on a contributory basis, some on a noncontributory basis; some provide for fully funded benefits, some provide partial funding; and others are completely unfunded. The Government should adopt actuarial valuation methods and funding provisions that reflect the full cost of accruing retirement benefits and charge to agency operations all costs not covered by employee contributions. Requiring Federal retirement systems to submit annual reports to Congress and the Comptroller General fully disclosing their financial condition was a step in the right direction. Annual adjustments for Federal retirees should be limited either to 75 percent of the full consumer price index increase or to the average percentage pay increase granted to active employees, and granted only once a year.
