The Administration supports the goals of H.R. 208, which would allow
Federal employees to begin contributing to the Government's Thrift Savings
Plan (TSP) immediately upon their employment and to transfer funds into the
TSP from certain other tax-deferred savings plans, such as 401(k) plans.
The Administration would support H.R. 208 if it were amended to delete the
requirement that agencies make additional Federal Employees' Retirement
System (FERS) contributions to the Civil Service Retirement and Disability
Fund (Fund). This provision is intended to offset the reduction in
revenues that would result from immediate employee TSP participation, which
would, in effect, make additional funds subject to tax deferral. Such
contributions, however, are unrelated to: (1) the benefits derived from
the TSP, and (2) the retirement programs -- FERS and the Civil Service
Retirement System -- that are financed by the Fund. The Administration is
concerned that requiring such non-programmatic deposits into the Fund would
set a bad precedent, possibly leading to the future use of the Fund as a
source for payments unrelated to the retirement programs. Furthermore, the
bill would prohibit agencies from paying these additional FERS
contributions from funds available for salaries and benefits, thereby
making compliance with this provision difficult or impossible for agencies
with little or no funding other than for salaries and benefits.
In addition, the Administration strongly urges the Congress to amend the
bill to provide automatic and matching employer contributions to the TSP as
soon as an individual begins employment with the Federal Government. It is
important for the Federal Government to lead, not follow, private sector
employers in providing more meaningful retirement benefits to workers.
The Administration will work with the Congress to address these issues and
to offset fully the bill's pay-as-you-go costs (described below).
H.R. 208 would affect 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 the bill would
decrease receipts by approximately $14 million over the period FYs