House Passes Federal Retirement Reform Bill

The bill includes provisions to enroll new federal employees automatically in the Thrift Savings Plan (TSP) and allow for Roth deferrals, as well as to give the TSP board the authority to add self-directed investment window options if doing so is in the best interest of participants, according to a news report on govexec.com. The TSP provisions were previously tacked on to another bill (see “Legislation Would Add Auto Enrollment Feature to TSP“).

The measure would also provide for unused sick leave to be counted toward the computation of the retirement benefits for federal employees under the Federal Employees’ Retirement System (FERS) as it is for employees under the Civil Service Retirement System (CSRS). The Federal Managers Association contends that the measure would give FERS employees incentives to avoid taking unnecessary sick days, reducing the cost of sick leave to the government, according to the report.

Finally, the legislation would remove rules that effectively penalize CSRS employees for working part-time at the end of their careers and allow FERS employees returning to government after a stint in the private sector to reinvest their retirement savings and claim credit for previous service.