USDANEWS                                                           VOLUME 58 NO.1 - JANUARY 1999

Hey! What's This New Change In My Employee Paycheck?!

Employee paychecks for the first pay period of a new calendar year invariably reflect new adjustments to such standard deductions as health insurance and life insurance.

But the first pay period for 1999 reflects an adjustment to an item that hasn't been adjusted in 29 years: the deduction for employee retirement benefits.

Eleanor Ratcliff, USDA's Retirement Counselor, noted that, effective with Pay Period No. 1 in January 1999, the employee deduction for both the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) has increased by .25 percent. Then, in January 2000 it is scheduled to increase again by .15 percent, and in January 2001 it is to increase yet again by .10 percent--for a total increase of .50 percent.

It means that, with this change, employees under CSRS are now contributing 7.25 percent of their base pay to their retirement pension fund, while employees under FERS now contribute 1.05 percent.

She said that these higher employee deduction rates were all part of the Balanced Budget Act of 1997, which was signed into law on August 5, 1997.

"This is the first time that the employee contribution to both CSRS and FERS has increased since 1970," Ratcliff pointed out.

Marjorie Rawls, an employee relations specialist in the Office of Human Resources Management, added that the employee Statement of Earnings and Leave for Pay Periods No. 24 and No. 26 included a message alerting employees about this change.

"But look at it positively," she affirmed. "We've still gotten a pay raise, effective at the same time--although the increased retirement plan deduction obviously offsets that somewhat." 

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