Bill Would Restore Pension Credits to Returning Employees

By Stephen Barr

Washington Post

A bill that would allow former government workers to recoup their pension credits when returning to federal employment has been introduced in the House by Rep. James P. Moran Jr. (D-Va.).

Under the Federal Employees Retirement System, employees who leave the government can get a refund of their retirement contributions, a decision that erases their pension credits. If they rejoin the government, they are not allowed to pay back the money and restore their pension.

Moran's bill would allow them to repay their cashed-out annuity and pick up pensions at the same accrual rates as if they had never left -- giving them a higher annuity payment upon retirement.

The so-called redeposit benefit is available to employees who work under the older Civil Service Retirement System, and Moran's bill essentially would extend that practice to returning FERS employees. Former CSRS employees may recoup their lost service by repaying the withdrawn amounts plus interest.

Moran said that people increasingly change jobs during their careers and that "there is a demand for a redeposit option" in FERS, which took effect in 1984.

"More and more former federal employees who leave the federal government but want to come back at a later date will find a redeposit option a great incentive to rejoin the federal service," Moran said in a statement.

Co-sponsors include Reps. Frank R. Wolf (R-Va.), Steny H. Hoyer (D-Md.), Jim Kolbe (R-Ariz.), Albert R. Wynn (D-Md.), Danny K. Davis (D-Ill.) and Chris Van Hollen (D-Md.) and Del. Eleanor Holmes Norton (D-D.C.), Moran's statement said.

Moran's bill, similar to ones he has offered in past years, faces uncertain prospects. The Office of Personnel Management usually opposes bills that make retroactive changes or corrections to long-established rules. Moran's bill also may face questions about its cost, since the government would be on the hook to pay larger pensions.

As a general rule, retirement counselors caution against taking a FERS refund unless the employee is absolutely certain that he or she will never return to federal service. The standard contribution rate to FERS is 0.8 percent of basic pay.