A Costly Concern For Future Retirees; Enrollment Errors During Mid-1980s Leave Some Employees With Diminished Prospects
When Alan W. White went to work for the government in 1984, he was put in the wrong federal retirement system. The mistake, discovered earlier this year, could cost him thousands of dollars annually in pension benefits.</br></br>Barry Schrum also learned this year that he was in the wrong pension plan. He then sold his home to make a lump-sum payment of about $34,000 into his new retirement plan, but that, too, turned out to be bad advice. Instead, he will be allowed to make up the missed contributions over eight years.</br></br>"What you thought you had, you wake up and you don't have anymore," Schrum said. "It's an absolute nightmare."</br></br>The mistakes that have left White and Schrum feeling anxious about their future financial security stem from the mid-1980s, when Congress decided to stop enrollment in the government's generous pension program and put new hires into a retirement program anchored by Social Security and a 401(k)-type stock market investment plan.</br></br>The transition ran from 1984 to 1987 as Congress rewrote laws, a period when the government hired about 350,000 new workers. Federal agencies made a number of errors in handling employee personnel records during the transition, but Office of Personnel Management (OPM) retirement experts think most of the errors have been discovered and fixed.