Implementation of the Federal Employees' Retirement System Act of 1986

Pursuant to a congressional request, GAO testified on the implementation of the Federal Employees Retirement System Act of 1986 (FERS). GAO noted that three lead agencies set policy for investment and management of the thrift savings fund, administer the basic annuity portion of FERS, and serve as information sources for employees transferring to a new retirement system. GAO found that: (1) some agencies experienced difficulty in programming their payroll systems to handle employee and agency contributions to the thrift plan; (2) under the thrift plan, the contributions of higher paid employees, as a group, could not significantly exceed the average contribution of other employees; (3) employee contribution rates varied between FERS and civil service retirement systems because FERS participants received matching contributions not available to civil service participants; (4) the Office of Personnel Management prepared instructional materials and training programs for agencies to use in counseling employees on their decision to switch to FERS; (5) FERS authorized alternative forms of annuities in which retiring employees withdrew lump-sum amounts equivalent to their contributions into the retirement system; and (6) although the Social Security Administration had no direct role in FERS implementation, it was the source of information for the employees who transferred to the thrift plan.