[Congressional Record Volume 145, Number 86 (Thursday, June 17, 1999)]
[Senate]
[Pages S7226-S7227]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COCHRAN (for himself and Mr. Akaka):
  S. 1232. A bill to provide for the correction of retirement coverage 
errors under chapters 83 and 84 of title 5, United States Code; to the 
Committee on Governmental Affairs.


       The Federal Erroneous Retirement Coverage Corrections Act

  Mr. COCHRAN. Mr. President, today I am introducing a bill to provide 
relief to many Federal employees and their families who, through no 
fault of their own, find themselves the victims of retirement coverage 
errors.
  In 1984, the Federal government made a transition from the Civil 
Service Retirement System (CSRS) to the Federal Employees Retirement 
System (FERS). As government agencies carried out the complex job of 
applying two sets of transition rules, mistakes were made, and 
thousands of employees were placed in the wrong retirement system--many 
learning that their pensions would be less than expected. Under the 
current statutory scheme, federal agencies have no choice but to 
correct a retirement coverage error when it is discovered, effectively 
forcing employees into a new retirement plan. Unfortunately, the 
correction of a retirement coverage error can have a harmful impact on 
an employee's financial ability to plan for retirement.
  This proposal, ``The Federal Erroneous Retirement Coverage 
Corrections Act,'' provides comprehensive and equitable relief to 
employees, former employees, retirees, and survivors who are affected 
by retirement coverage errors. The bill provides individuals with a 
choice between corrected retirement coverage and the coverage the 
employee expected to receive, without disturbing Social Security 
coverage law. For each type of retirement coverage error, individuals 
are furnished the opportunity to maintain their expected level of 
retirement benefits without a change in their retirement savings and 
planning. Among other provisions, the bill also provides that certain 
employees who missed an opportunity to contribute to the Thrift Savings 
Plan (TSP) due to a coverage error may receive interest on their TSP 
make-up contributions.
  ``The Federal Erroneous Retirement Coverage Corrections Act'' 
provides a comprehensive solution to the problems faced by Federal 
employees due to retirement coverage erros--it does so at a reasonable 
cost and without creating unnecessary administrative burdens.
  I invite my colleagues to support this effort to address a serious 
problem affecting Federal employees and their families.
  Mr. President, I ask unanimous consent that a copy of the section-by-
section analysis of the bill be printed in the Record.
  There being no objection, the item was ordered to be printed in the 
Record, as follows:

 The Federal Erroneous Retirement Coverage Corrections Act--Section-by-
                            Section Analysis

       The ``Federal Erroneous Retirement Coverage Corrections 
     Act'' would provide a remedy to federal employees who have 
     been placed in the wrong retirement system.
       Section 1: Provides the short title (``Federal Erroneous 
     Retirement Coverage Corrections Act'') and the Table of 
     Contents.
       Section 2: Defines the terms used throughout the Act.
       Section 3: Provides coverage for all errors that have been 
     in effect for at least three years of service after December 
     31, 1986.
       Section 4: Provides that elections made under this Act are 
     irrevocable.


  title i: description of retirement coverage errors and measures for 
                             rectification

       This title details the specific types of retirement 
     coverage errors and the remedies provided by the Act.
       Subtitle A: Covers employees and annuitants who should have 
     been FERS covered, but were erroneously covered under CSRS or 
     CSRS Offset. These individuals have a choice between 
     correction to FERS or be covered by CSRS Offset. Includes 
     provisions that allow all employee contributions, and 
     earnings thereon, to remain in the TSP account if CSRS Offset 
     is elected.
       Subtitle B: Covers employees who should have been covered 
     by a retirement plan (CSRS, CSRS Offset, or FERS), but were 
     erroneously covered by Social Security only. In all cases, 
     coverage is corrected to the appropriate plan so that the 
     employee has retirement coverage.
       Subtitle C: Covers employees who should have been covered 
     by Social Security only, but were erroneously covered by CSRS 
     or CSRS Offset. These individuals have a choice between 
     correction to Social Security only or be covered by CSRS 
     Offset.
       Subtitle D: Covers employees who should have been covered 
     by CSRS, CSRS Offset, or Social Security only, but were 
     erroneously covered by FERS. These individuals have a choice 
     between remaining in FERS or correction to the appropriate 
     plan. Includes provisions that allow all employee 
     contributions, and earnings thereon, to remain in the TSP 
     account if coverage other than FERS is elected.
       Subtitle E: Covers employees who should have been covered 
     by CSRS Offset, but were erroneously covered by CSRS. 
     Coverage is corrected to CSRS Offset to conform with Social 
     Security coverage law.
       Subtitle F: Covers employees who should have been covered 
     by CSRS, but were erroneously covered by CSRS Offset. 
     Coverage is corrected to CSRS to conform with Social Security 
     coverage law.


                      title II: general provisions

       Section 201: Requires that all government agencies make 
     reasonable efforts to identify and notify individuals 
     affected by retirement coverage errors.
       Section 202: Authorizes OPM, SSA, and TSP to obtain any 
     information necessary to carry out the responsibilities of 
     this Act.
       Section 203: Provides for payment of interest on certain 
     deposits made by employees that, due to correction of a 
     retirement coverage error, are returned to the employee. 
     Allows retirement credit for certain periods of service 
     without payment of a service credit deposit. Provides that 
     the retirement or survivor benefit is actuarially reduced by 
     the amount of deposit owed.
       Section 204: Provides that the employing agency pays any 
     employer OASDI taxes due for the period of erroneous 
     coverage, subject to the three-year statute of limitations in 
     the Internal Revenue Code. OPM will transfer excess employee 
     retirement deductions to the OASDI Trust Funds to fund the 
     employee share of the OASDI taxes. In no case will an 
     employee be required to pay additional OASDI taxes.
       Section 205: Provides that certain employees who missed an 
     opportunity to contribute to TSP due to a coverage error may 
     receive interest on their own TSP make-up contributions. 
     ``Lost'' interest will be paid by the employing agency. Note: 
     Current law already provides that certain employees who 
     missed an opportunity to contribute to TSP due to a coverage 
     error may receive agency matching contributions on TSP make-
     up contributions, agency automatic one percent contributions 
     to TSP, and interest on both.
       Section 206: Provides that employing agencies may not 
     remove excess agency retirement contributions from the Civil 
     Service Retirement and Disability Fund.
       Section 207: Requires that agencies obtain written approval 
     from OPM before placing certain employees under CSRS 
     coverage.
       Section 208: Authorizes the Director of OPM to extend 
     deadlines, reimburse individuals for reasonable expenses 
     incurred by reason of the coverage error or for losses, and 
     waive repayments required under the Act.
       Section 209: Authorizes OPM to prescribe regulations to 
     administer the Act.


                      title III: other provisions

       Section 301: Makes remedies provided under the Act also 
     available to employees of

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     the Foreign Service and the Central Intelligence Agency.
       Section 302: Authorizes payments from the Civil Service 
     Retirement and Disability Fund for administrative expenses 
     incurred by OPM and for other payments required under the 
     Act.
       Section 303: Allows individuals to bring suit against the 
     United States Government for matters not covered under this 
     Act.
       Section 304: Provides that the Act is effective from the 
     date of enactment.


                        title iv: tax provisions

       Section 401: Provides that transfers and payments of 
     contributions under this Act will not result in an income tax 
     liability for affected employees.


              title v: miscellaneous retirement provisions

       Section 501: Allows portability of service credit between 
     Federal Reserve service and FERS.
       Section 502: Provides technical amendments to chapter 84 of 
     title 5, United States Code, that allow certain transfers to 
     other federal retirement systems to be treated as separations 
     from federal services for TSP purposes.
                                 ______