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Show Federal retirement costs will soar in the years ahead Federal employee retirement costs, which have climbed from $2.8 billion in 1970 to tin Q hillirtn in 1Q7R will sour to $20.4 billion by 1984 and a projected $194.4 billion by the year 2015. This was the projection contained in an analysis of the Federal employee retirement costs prepared by Utah Foundation, the private tax research organization. It was based on a recent study issued by the Congressional Budget Office. Foundation analysts hasten to point out that the above costs and estimates are merely for the Federal civil service retirement system and do not include the dozen or more other retirement programs operated by the Federal Government. Expenditures for the civil service retirement program presently constitutes only about one-half the total outlays for all Federal retirement. Critics of the Federal civil service retirement system contend that the program is too expensive because its provisions generally are more liberal than those commonly available in the private sector. The Congressional Budget Office study found, for ; example, that the cost of the current Federal retirement system is more than one and a half times what the I normal cost would be if social security and a representative private sector plan were provided. According to the Congressional Budget Office report, the greater cost of the Federal retirement systems stems from a combination of the i: following factors: 1. Retirement benefit levels generally are greater under Federal 1 civil service than benefits from a Z combined social security-typical j private pension program. j 2. Civil service provides retirement r credit for prior military service while the typical private plan does not allow 5 credit for military service preceding company employment. 5 3. Early retirement benefits for s Federal employees are far more liberal than those provided in the private sector. E 4. Eligibility for long-term disability 2 payments is considerbly more liberal 5 under . civil service retirement than in most private plans. J 5. Annuities for civil service retirees are adjusted twice each year to keep pace with inflation. Except for Social Security, most private pension plans afford little or no protection against inflation. The Foundation report notes that present assets in the retirement trust fund are not sufficient to meet benefit obligations to current annuitants and active employees. The unfunded liability in the trust fund will be $130.8 billion at the beginning of the ;1980 fiscal year, and this amount will increase in-crease to $160.1 billion by fiscal 1984. To solve this growing Federal retirement problem, the Congressional Budget Office suggested the following possible legislative actions: 1. Reduce the early benefit advantage ad-vantage contained in the present system by adopting the provisions of a representative private plan. 2. Adopt stricter eligibility standards stan-dards with respect to long-term disability and change disability levels to conform with typical private plans. 3. Limit cost-of-living adjustments for Federal retirees to 70 percent of the increase in the consumer's price index. 4. Increase employee contributions to the plan thereby reducing the cost to government. These changes would modify the present Federal retirement system to make it more consistent with what is now being offered in the private sector, but still maintain the system's independence from Social Security. A more far-reaching approach suggested by the Budget Office would extend Social Security to Federal employees and revise the present retirement system to make it conform with . the typical plan offered in the private sector. According to the Foundation, while the savings from any change in the Federal retirement program might be relatively small during the first few years, it would grow as the revision began to affect more in-divicuals. in-divicuals. Last year, civil service retirement and disability payments made to individuals in Utah totaled $125.3 million. Over the past eight years, such payments in Uah have grown by 463 percent, or an average of 24 percent per year. |