“The federal government employs about 2.7 million civilian workers—1.8 percent of the U.S. workforce. Like many employers, the federal government compensates its employees with salaries, wages, and other benefits that are paid as they are earned, as well as deferred compensation in the form of retirement benefits. Lawmakers have expressed interest in examining the current structure of retirement benefits to ensure that the government provides adequate compensation to attract and retain skilled employees while not paying more than needed to accomplish that goal. Therefore, this report analyzes several potential changes to the federal retirement system and their impact on the federal budget over 75 years.
What Retirement Systems Does the Federal Government Operate for Its Civilian Employees?
The federal government currently provides its civilian employees with pensions under two different systems: The Civil Service Retirement System (CSRS), which is phasing out and has been closed to new participants since 1983, and the Federal Employees Retirement System (FERS), in which almost all current workers participate. In addition, it operates the Thrift Savings Plan (TSP), a defined contribution plan for federal civilian employees. The TSP is similar to 401(k) accounts, which are common in the private sector. (The federal government also provides health care to retirees through the Federal Employees Health Benefits, or FEHB, program and operates a few other smaller retirement programs, though those are not the focus of this report.)…”