HR 416 -- 03/23/9

March 23, 1999

H.R. 416 - Federal Retirement Coverage Corrections Act
(Rep. Scarborough (R) FL and 10 cosponsors)

The Administration supports the goal of H.R. 416, which is to establish procedures for Federal agencies to provide an equitable remedy for employees who were mistakenly placed in the wrong retirement system during the transition from the Civil Service Retirement System (CSRS) to the Federal Employees' Retirement System (FERS). The Administration, however, strongly opposes the bill as reported by the House Government Reform and Ways and Means Committees. In particular, the bill is problematic for the following reasons:
  • H.R. 416 would be unnecessarily costly. Implementation of the bill would cost Federal agencies roughly $500 million over the next five years, reducing funds available for other discretionary spending priorities. These unnecessary costs would result in large part from the bill's overcompensating potentially thousands of affected Federal employees by giving them "missed" employee contributions to the Thrift Savings Plan -- which rightly would have been each employee's responsibility had the error never occurred -- in addition to missed Federal Government retirement contributions and associated lost earnings required by current law.

  • H.R. 416 would be difficult to administer and is incomplete. The bill's provisions designed to correct the errors are excessively complex, thereby potentially leading to further errors by the more than one hundred Federal agencies responsible for implementation. In addition, the bill inadequately addresses errors associated with former employees, retirees, and deceased retirees. The Administration believes that additional legislation would be required to address these errors. Furthermore, the bill itself requires submission of additional legislation related to certain coverage error situations.

The Administration looks forward to working with the Congress to enact a mutually acceptable solution to this problem that is consistent with the Administration's proposal, the "Retirement Coverage Error Correction Act," which was transmitted to the Congress on March 4, 1999.

Pay-As-You-Go Scoring

H.R. 416 would affect direct spending and receipts; therefore, it is subject to the pay-as-you-go (PAYGO) requirement of the Omnibus Budget Reconciliation Act of 1990. OMB's preliminary PAYGO estimate indicates that H.R. 416 would increase direct spending by approximately $2 million over the period FYs 1999-2004. (However, as noted above, it would substantially increase Federal agencies? discretionary spending on personnel, which would reduce funds available for other priorities.)