Costly Confusion

In August 2003, Energy Department employee Mike Jacobs received some unwanted news. While attending a retirement seminar sponsored by his department, he learned that, due to a technical problem, he had been placed in the wrong retirement system.

Jacobs isn't the only one. When the government switched from the Civil Service Retirement System to the Federal Employees Retirement System in 1987, thousands of employees were mistakenly and unknowingly placed into the new system without their consent. Employees in CSRS were supposed to have been given a choice between staying in the old system or moving to the new.

The glitch mostly affected employees who had worked under the old system, left government and later returned to the public sector, and employees who had experienced changes in appointment types or who had worked in excepted service agencies and then moved to the standard personnel system. Upon their return to the standard personnel system, those employees also could have been eligible to be placed in a third system called CSRS Offset, which combines CSRS with some Social Security benefits.

In response to the situation, in 2000 Congress passed and President Clinton signed the Federal Erroneous Retirement Coverage Corrections Act, allowing affected employees to choose a retirement system. The act also provided for reimbursement of lost funds and allowed for additional Thrift Savings Plan contributions.

Five years later, the Office of Personnel Management announced that the contractor it hired to oversee the corrections, KPMG, had started mailing claims to employees who had been placed in the wrong system. OPM said the claimants were prioritized into three categories: those 50 years or older with an option to elect FERS; those 50 years or older without an option to elect FERS; and those with the earliest service computation date.

To date, OPM has declared 5,529 people eligible to switch systems under FERCCA. An OPM spokesman said the agency doesn't have data on the total number of employees who have filed for FERCCA eligibility.

Employees had until Aug. 1, 2004, to file a claim with OPM. Agencies are responsible for paperwork accompanying claims filed after that deadline. If employees are already retired, the agency that last employed them is in charge.

Which brings us back to Mike Jacobs. More than two years after Jacobs discovered the error in his retirement plan, he has yet to hear back about his eligibility under FERCCA. He said he first gave his information to the human resources office at the Energy Department, but the woman handling his problem retired without informing him, and he had to start over again.

After that, Jacobs' claim was passed around the human resources office. He said he eventually consulted a lawyer, who told him he should switch to CSRS.

Jacobs still has a few years to go before he reaches retirement age, which gives him time to get this sorted out. Others may not have that kind of time. The lesson for all federal employees nearing retirement: check to make sure you're in the system you think you're in. It may take years to sort it out.

To find out, look at the last Standard Form 50 you received, which is a notification of personnel action. Under Block 30 in the "Employee Data" section, there's a code followed by an acronym that represents your retirement plan, it should say FERS, CSRS or CSRS Offset.

OPM offers a FERCCA hot line at 1-888-689-3233 to answer question concerning your specific FERCCA retirement situation. Hours of operation are Monday to Friday, 8 a.m. to 6 p.m. (EST). If you're already retired, the number to call is 202-606-2048.

OPM also has published an extensive handbook titled "Should You Stay in FERS?"