It’s Time to Fix an Unfair Federal Retirement Rule

Imagine you work your whole career with a colleague. You start the same day. You show up at the same time every day and do the exact same work, for the same number of years. You’re paid the same amount. But when you calculate the number of days you must work between now and retirement, the Office of Personnel Management tells your coworker she can retire, but you have to work five more years, thanks to a three-decade-old retirement rule change.

A generation of federal employees across the country are discovering that this is their story.

Many soon-to-retire public servants started their careers as temporary workers in the federal government. During their careers, they maintained the submarines and aircraft carriers that keep us safe, took care of our nation’s parks, prepped our timber harvests, and delivered our mail. Many of these workers were later converted to permanent employees because the jobs they were doing were so important. Now, the oldest among them are getting ready to retire.

For example, the area I represent in Congress, Washington’s 6th District, is home to the Puget Sound Naval Shipyard, where federal workers maintain the Navy’s Pacific Fleet. A number of employees who work on ships there came to me with a problem. Their peers, who were hired as permanent employees, have been making retirement contributions since the first day they put on their boots and showed up to the worksite. But those who met with me had spent a few years as temporary employees and now face a difficult choice: retire at the same time as their peers but with a lower level of benefits, or work years longer. For many folks, given the physical nature of the job, this is a choice between their physical health or their financial health. Nobody who gave their life’s work to our country should have to make that choice.

That’s why I introduced the Federal Retirement Fairness Act. It is a simple solution to this complex problem. Workers in this situation can make up for the years they didn’t pay into the retirement system with a one-time “catch up payment” which amounts to a deposit of 1.3 percent of their base pay for each year spent in temporary status, plus corresponding interest, and the amount the government would have contributed during those years, as calculated by the Office of Personnel Management.

While this is a lot of money up front, many of the folks I represent believe this is fair. Their payment would cover the amount of money that would have been put aside if they were permanent employees, plus interest, which means taxpayers are getting a good deal too. In return, those workers will receive the same level of benefits they would have received if they had been permanent employees all along.

This isn’t a new idea. Temporary employees who convert to permanent status have always had this problem. In fact, until 1989, permanent federal employees who started as temporary workers had the option to buy back years of retirement contributions to allow for an on-time retirement.  

In 1989, the government converted to a new retirement system and the buy-back system expired. This issue was largely unnoticed, as workers up until now were covered under the old system. Today, as the generation of federal workers who lost this buy-back ability under the new system retire, many are just now realizing they are still years away from retirement at the level of benefits they expected.

One of those workers is Al Hodge, a worker at Puget Sound Naval Shipyard. Al put it best when he told The Kitsap Sun, “How can I plan my life for retirement when I don’t even know when I can retire?”

The Federal Retirement Fairness Act remedies one of the many headaches that goes along with having a job where Uncle Sam runs the HR department. It minimizes the burden to taxpayers, and it means folks like Al, who show up to work each day and serve our country, won’t have to choose between physical health or financial health. Federal workers keep the country safe and our economy growing. The nation ought to treat them fairly when they retire.

U.S. Rep. Derek Kilmer, a Democrat, represents Washington’s 6th congressional district. He serves on the House Appropriations Committee.