House Also Passes Thrift Saving Plan Reforms

From The National Association of Postmasters of the United States (NAPUS)

On Wednesday evening, the House of Representatives passed legislation that would enable Federal Employees Retirement System (FERS) employees to credit their unused sick leave towards retirement. Civil Service Retirement System (CSRS) employees already have this option. House Oversight and Government Reform Committee Chairman Henry Waxman (D-CA) added the FERS provision to H.R. 1108, the Family Smoking Prevention and Tobacco Control Act – Waxman is the author of H.R. 1108.Chairman Waxman also inserted in bill a number of provisions to modify the Thrift Savings Plan (TSP). H.R. 1108 passed by an overwhelming 326-102 majority.

The Waxman FERS provision differs from H.R. 5573, FERS sick leave introduced earlier this year by Rep. Moran. H.R. 5573 would have provided a lump-sum payment of 15% of the amount of accumulated sick leave exceeding 500 hours, not to top $10,000. Instead of providing a lump-sum payout, the Waxman provision would credit unused sick leave towards the FERS annuity. Specifically, FERS employees who retiree within three years after enactment would be credited for 75% of unused sick leave, and employees retiring after the three years would get full credit, similar to CSRS employees. The credit, however, would not be able to be used to determine retirement eligibility.

H.R. 1108 also includes the text of H.R. 6500, the Thrift Savings Plan Enhancement Act. Chairman Waxman introduced the bill, and Committee Ranking Republican Tom Davis (R-VA) and Federal Workforce and Postal Service Subcommittee Chair Danny Davis (D-IL) cosponsored it. H.R. 1108 would provide for automatic TSP enrollment for new employees, permit the TSP Board to designate a fund other than the G Fund as the default investment fund, create a Roth IRA option, and give the TSP Board the authority to a add additional, self-directed investment options. A number of employee organizations have raised concern about this enhanced Board authority.

The FERS and TSP provisions are linked for budget reasons. The Congressional Budget Office estimates that H.R. 6500, which includes the Roth IRA TSP option, would increase federal revenue by about $1.3 billion over the next decade. This revenue would offset the increase costs associated with the FERS sick leave provision.

H.R. 1108 faces an uncertain future in the Senate, primarily due to the tobacco provisions, which are controversial. Also, there is a narrow legislative window. This weekend, Congress plans to recess for the summer, returning in September for only three weeks, before hitting the campaign trail. In addition, the White House has threatened to veto the measure. NAPUS will be monitoring the bill and pushing for consideration of the measure.

Source: NAPUS