Thanks to new legislation to be introduced for federal workers, full retirement could soon be available for those started on temporary contracts before then converting to full-time employment.
Over the years, there have been plenty of stories of people confused because they feel employees starting later than them are enjoying an earlier retirement. It was an overheard conversation at the Puget Sound Naval Shipyard that lead Congressman Derek Kilmer (D-WA) to suggest ‘The Federal Retirement Fairness Act’ (now H.R. 5389).
For example, the Kitsap Sun recently published a story from Allen Hodge, 54, who started his federal career as a temporary employee in the shipyard. After five years, his contract was then converted to a full-time contract. Unfortunately, as has been the case for many years, the first five years when he was employed on a temporary basis didn’t count towards his retirement. According to Hodge himself, this is becoming a huge problem, and it affects employee motivation on a wide scale.
For Kilmer, this was just one example of many, and he saw it as an opportunity to change the existing legislation. Considering part-time employees work just as hard as full-time employees, Kilmer has said they deserve to have a secure and timely retirement. Just because red tape says they need to work longer, this doesn’t mean they should risk their health.
With this new legislation, payments can be made into the retirement system for all the years an individual was a temporary employee, and this means their benefits, at the point of retirement, will match their complete service time (temporary or otherwise). For many years, the only two options for people in this position were to work for longer or retire with reduced benefits, so this new legislation is a huge benefit.
As long as the individual is now a full-time employee, this bill allows for ‘catch-up payments’ with interest. To minimize the federal budget hit, they’ll need to cover all government contributions in addition to this. For Hodge, he is expecting to pay around $50,000, and this should cover his own contributions as well as the contributions from the government. In order to do this, he’s planning to reduce contributions to his TSP and take some money from existing retirement savings. However, Hodge sees this as a positive long-term step despite the short-term hit to his finances. He believes the reward of having full retirement benefits as being fully worthwhile.
If you were once a temporary employee, or know somebody, who was, this is great news and should level the playing field somewhat when it comes to retiring on time!