‘Potomac Pipe Dreams’

You stated in your editorial (July 24), “Potomac Pipe Dreams,” that billions could be saved by shaving federal pension plans to put them more in line with private pension plans.

Let the record show:

--Federal spending on Civil Service retirement has already been reduced by $4 billion since 1980, and by $6.8 billion since March, 1976. Concurrently, defense spending has soared, and revenue has fallen sharply as a result of the 1981 changes in the tax law.

--An objective study, conducted by Hay Associates for the Congress, found that as a percentage of payroll, Civil Service retirement is 6.4% more costly than in the private sector, but when pay and all benefits are combined, the federal government trails the private sector by 7.2%.

--The Grace Commission’s view that Civil Service retirement is three times more generous than private sector retirement fails to meet any one of the three most commonly accepted measures of comparison.

1--Age at retirement. There is less than a year of difference in the average age at retirement from federal Civil Service (61.1) and the private sector (62).

2--Income replacement. When company benefits are combined with Social Security, the combination often replaces a greater portion of final salary (60-70%) than does Civil Service retirement (56.25%), based on equal salaries and 30 years of service.

3--Inflation protection. Civil Service annuities are supposed to be fully indexed to inflation, but there has been only one increase, of 3.5%, since April, 1983. The Social Security portion of the private retiree’s income is fully indexed, and the average company plan adjustment has been 33%.

L.J. ANDOLSEK

Washington, D.C.

Andolsek is president of the National Assn. of Retired Federal Employees.