Setting the Record Straight


Not since the Grace Commission's "heyday" have federal retirees and their survivors been so maligned and misunderstood. The truth is that the media's repetition of myths and stereotypes is taking its toll on the image of government workers and retirees. Moreover, with ever in-creasing frequency, we see elected officials who on the one hand loudly proclaim their support for an independent and dignified retirement for older Americans, while on the other hand they vote to make older Americans, particularly federal retirees, prime targets for draconian budget cuts.

It is essential that the myths about federal retirees be dispelled. It is important that the American people understand the tremendous public service contributions being made by federal workers on-the-job and in retirement. It is necessary to foster an understanding of the federal retirement system and its solvency and to establish the fact that federal workers are legally entitled to an annuity based on years of service and employee payroll contributions to a trust fund. It is vital in this "Age of Entitlement Reform" that there be a clear distinction between the earned, work-related annuities to which federal retirees are entitled and the entitlements given based solely on public policy considerations. Finally, the American people must clearly understand that federal retirees, like their counterparts in the private sector, want a measure of in come security in retirement. This is what federal retirees worked for, contributed towards and, most important, federal retirees have earned.

10 Myths of Federal Retirement is designed to set the record straight. Published by the National Association of Retired Federal Employees (NARFE), this publication was written and compiled by NARFE's Legislative Department, Retirement Benefits Department, Public Relations Section, and Publications Section with direction from NARFE National Vice President Al Gola to. The editors want to thank all the individuals who assisted with this publication, with special recognition for the in-formation and assistance provided by the Office of Personnel Management (OPM), the Department of Labor (DOL) and the Federal Government Service Task Force.

10Myths of Federal Retirement

In this "Age of Entitlement Reform," there are many myths concerning federal retirees and the federal retirement system. These myths are not based on facts; rather, they are concocted and woven from timeworn images and derogatory stereotypes of federal workers and retirees. They are fueled by the frustration felt by all Americans, including federal retirees, with chronic federal budget deficits and the clear need to reassess our national priorities and the very role of the federal government as we approach the 21st Century.

The myths regarding federal retirees and the federal retirement system often are perpetuated for self serving reasons by individuals and organizations who crave the public limelight and have made federal retiree-bashing a profitable venture. In many instances, the media has validated and promoted these myths, conveniently ignoring the facts. In the Congress, there are many lawmakers who know better than to believe these myths. Yet, there are others who only know what they have been told by the media.

It is essential to dispel the myths and to set the record straight. The media has a responsibility to provide the American public with factual and balanced coverage of important issues. Members of Congress have a responsibility to legislate based on the facts. They do a disservice to the American people and, in this instance, to federal workers and retirees when they fail to look beyond the myths.

10 Myths of Federal Retirement dispels the most common myths regarding federal retirees and the federal retirement system. Unlike the myths cut from the whole cloth of time worn derogatory images and stereotypes, this publication is based on documented facts and figures that will set the record straight.

1 Federal entitlement programs are all the same.
FACT: There is a distinct difference between the earned, work-related annuities of federal retirees and the need-based entitlements determined by public policy goals.

2 The federal retirement system's trillion dollar unfunded liability will mean increasing deficits and a staggering national debL
FACT: The civil service retirement fund is on solid financial footing with current assets of more than $317 billion. Employee and government contributions to the fund generated more than $66 billion in 1995 - $27 billion more than needed to pay annuities. Critics say government contributions are not real money and so the fund runs an annual deficit, not a surplus, but claiming that contributions are of real money is just plain wrong. The contributions are real income, since these funds are appropriated by Congress.

3 Federal deficits are due to uncontrolled growth in federal retirement programs.
FACT: The nonpartisan Congressional Budget Office (CBO) reports that all increases in future federal deficits will be the result of increased outlays for health care programs. The new Federal Employee Retirement System (FERS) will significantly reduce future outlays from the assets of the Civil Service Retirement trust fund.

4 Cuts in cost-of-living adjustments (COLAs) are necessary to reduce the national debt.
FACT: The Civil Service Retirement & Disability Fund (CSRDF), consisting of employee and federal government-as-employer contributions, is required by law to invest in government securities. COLA cuts increase the trust fund's assets and the amount of government securities available to finance the deficit and government programs; however, the national debt is also in-creased as the government owes interest on the additional government securities purchased with the trust fund's assets.

5 Far too many federal retirees are wealthy, receiving tax free annuities and other special benefits.
FACT: The average earned monthly annuity of a federal retiree in 1993 was $1,468. The average widow or widower of a federal retiree receives $760 a month. On average, federal retirees receive less than other older Americans.

6 Federal employees retire at age 55. Private sector employees must wait until they are 65 to retire.
FACT: Most federal employees work well beyond age 55, with an average retirement age comparable to that of private sector workers. Nine out of 10 private sector workers can retire at age 55 or younger.

7 Federal retirees receive automatic annual increases in their retirement benefits; private sector retirees do not.
FACT: Cost-of-living adjustments (COLAs) for federal retirees have been cancelled, delayed and reduced over the years. Private sector retirees do receive COLAs.

8 All federal employees receive full Social Security benefits in addition to an annuity.
FACT: There are hundreds of thousands of federal retirees who do not receive Social Security benefits. The new Federal Employee Retirement System (FERS), which covers federal workers hired after 1983 and is modeled after private sector programs, integrates Social Security benefits with a small annuity and a thrift savings plan.

9 The federal retirement system is the nation's most generous retirement program.
FACT: Federal retirement benefits, particularly for federal civilian retirees, fall short of the retirement benefits provided by major companies in the private sector.

10 Federal retirees are "pensioners" who are taking the American taxpayers to the cleaners.
FACT: Required employee payroll deductions and length of service requirements for federal workers dispel this myth that capitalizes on time worn images of "government pensioners on the public dole."

It is important to dispel the myths about federal retirees and the federal retirement system. Public policy decisions should be based on facts and not on politically expedient perceptions and myths. Federal retiree-bashers deceive the media, lawmakers and the American public by railing against a system that has already been changed. In 1986, the federal retirement system was changed to reflect job market trends and to achieve several long-term policy goals, including reducing the cost of the federal retirement system. Finally, it is time for lawmakers to be honest with the American people and, more importantly, with themselves. A reduction in COLAs for federal retirees does as much to finance the federal deficit as it does to reduce it.


For the better part of their lifetimes, federal retirees made significant contributions to the federal government and the American people. They served with pride and dedication. In retirement, many federal retirees continue to serve the public as active volunteers in their communities. Nowhere is this more evident than in the work done by members of the National Association of Retired Federal Employees (NARFE).

In the pages that follow, the 10 most common myths about federal retirees and the federal retirement system are dispelled with documented facts and figures. A better understanding of federal retirees and the federal retirement system is important for those who served and for those who will decide whether promises made will now be broken.

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