75-05-B4
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Federal Retirement Pensions[edit]
Transcript[edit]Congress goofed six years ago. It could cost you plenty. I'll be right back. It was William Blake, the English poet and essayist, who said well over a century ago, "If you would do good for me, you must do it in the minutest particulars." In other words, don't leave any stone unturned. Well it seems that Congress forgot the minutest particulars in 1969 when it amended the pension program for retired federal employees. The minutest particular they forgot may cost the rest of us an extra one hundred billion dollars over the next fifteen years. Here's what happened. Pensions for the nearly two million retired military and civilian employees were supposed to keep up with increases in the cost of living. No one would argue with that. To do so there's a formula the administrators of the program use and adjustments are made about twice a year but many pensioners were concerned and angry that it took so long between the time the cost of living index was adjusted and their pension checks were increased in size. They complained the time lag was causing them to slip behind everyone else. The House subcommittee assigned to look into the matter decided in 1969 to remedy the situation with what they thought was a disarmingly simple device. Instead of simply adjusting the pensions to the rise in the cost of living they'd go a step further and beat the time lag by tacking on an extra one percent to each adjustment. But wait a minute, you say, the pensioners were suffering one-time losses each time these adjustments were made but now the formula actually adds to the permanent base of the pensions? That's just the point. By adding that automatic one percent bonus Congress put the pensioners in the position of profiting from inflation. The higher the rate of inflation, the more these federal retirees will outpace the cost of living. An employee who retired two years ago at the average age of 57 and who lives an expected 18 years will receive nearly 28 thousand dollars as a bonus if inflation is at the rate of six percent a year. At current inflation rates the bonus will be larger, of course. A review of the records of the Congressional hearings held on the subject in 1969 shows that Congress naturally intended the pensioners to keep up with the cost of living but not to profit from inflation. No doubt the retirees didn't expect the result they got either. Now we can hardly ask them to give the money back but we can ask our Congressman to take a close look at this unpublicized problem and get some corrective legislation moving so that it doesn't end up costing the taxpayers that estimated 100 billion dollars one day. There may be a simple solution. Remember it was the time lag between recording the cost of living increase and adding it to the pension checks that was the problem in the first place. That lag is caused by people and paperwork systems. Red tape. Why not send a management audit team into the pension office and cut that red tape with a simple system that adjusts the, oh say, the very next pension check. This is Ronald Reagan. Thanks for listening. |
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