Federal Reserve employees who leave the Fed to work for other federal agencies would receive higher pensions than they do now under a bill approved by the House civil service panel Thursday.
Because of an oversight in the Federal Employees Retirement System statute, some Federal Reserve employees who transfer to other agencies do not get credit toward their FERS pensions for the time they worked at the Fed. Instead, they are treated like new employees for the purpose of calculating their pensions.
The bill (H.R. 807) approved by the House Government Reform Subcommittee on the Civil Service Thursday would correct the problem.
The Federal Reserve has its own pension system for its 24,000 employees. When employees from other agencies go to work for the Fed, they are given full credit toward their pensions for all of their federal service. It is only when Federal Reserve employees go to other agencies that their pensions are not portable.
The problem affects only those Federal Reserve employees who were hired after 1983. About 50 former Federal Reserve employees who now work for other agencies have been affected by the problem. But other Federal Reserve employees have been discouraged from transferring to other agencies because of the pension reduction issue, Edward W. Kelley, Jr., a member of the Board of Governors of the Federal Reserve System, told the civil service panel.
Federal Reserve employees regularly transfer to and from other federal bank regulatory agencies, such as the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
The Thursday hearing on the bill was the first for new Civil Service Subcommittee Chairman Rep. Joe Scarborough, R-Fla. Scarborough noted that the Federal Reserve System's pension fund's assets exceed its liabilities. In contrast, the Civil Service Retirement and Disability Fund, on which a majority of federal employees' pensions rely, has unfunded liabilities of about $500 billion, Scarborough said. Some critics worry those liabilities put the government at financial risk.
William E. Flynn, associate director for retirement and insurance at the Office of Personnel Management, told Scarborough that the unfunded liabilities should not be a concern, because the government will always have money to pay federal pensions.
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