Sunday, December 19, 2010

VA may switch newer employees to partial defined contribution pension program (GOP proposal); Fed used to be like this

Virginia Republican Governor Bob McDonnell is proposing that most state employees hired since July 1, 2010 contribute 5% of their salaries to the pension system, reversing a 27 year period (since 1983) when employees paid nothing. So the plan is going back to partially a defined contribution as well as defined benefit program. Rosalind S. Helderman has the Washington Post blog entry here.

Until sometime in the 1980s (with Reagan’s reforms), federal employees used to have a payroll deduction to contribute to their own retirement, but did not (always) participate in Social Security. My own records show that when I had a GS-4 job at the National Bureau of Standards in 1963-1964, I did make social security contributions, but not when I had a civilian job with the Navy from 1971-1972. I was able to retrieve the retirement contributions when I left and buy a Ford Pinto. I still remember!

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