January 2014 NARFE Magazine

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The Health of state & local Gov’t pensions

P.41

COVER STORY

annuity calculators

Online Tools Reduce Retirement Guesswork

P.22

2014 NARFE national Convention Volume 90 • Number 1

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Jan

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WashingTon Watch

8

Same Battles Expected to Be Fought in 2014

9

NARFE Joins White House Rally Against Chained CPI

9

Bill Would Open FEHBP to All

10 FEHBP and the Affordable Care Act

10 Good News! Resolution

Supports Federal Workers

11

Bill Addresses ‘Pension Advance’ Scams

12 NARFE Bill Tracker

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Columns

Cover Story annuity calculators. Federal employees are going online to get estimates of their future annuity payments. But, as with all computations, the output is only as good as the data entered.

4 From the President 34 Managing Money 36 The Informed Citizen DEPARTMENTS

28

The Health of state and local pensions.

All government pension plans are not the same. But local experience can be a cautionary tale for feds.

On the Web P.28

THE HEALTH OF STATE & LOCAL GOV’T PENSIONS

www.narfe.org P.41

like us on facebook:

NARFE National Headquarters follow us on twitter:

@narfehq

COVER STORY

ANNUITY CALCULATORS

Investments, COLA Chart

40 NARFE News 48 The Way We Worked

JA N

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visit us online at:

16 Questions & Answers 38 For the Record: TSP

special section

41 33rd Biennial NARFE National Convention

2014 NARFE NATIONAL CONVENTION

Online Tools Reduce Retirement Guesswork

P.22

ON THE COVER

Illustration by Bill Pragluski, Critical Stages, LLC

w w w. n a r f e . o r g

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january 2014 | Volume 90 | Number 01

Editor Margaret M. Carter Assistant Editor Ken Fanelli Editorial Administrator Toni Vallario Graphic Design Charlene Gridley Editorial Board Joseph A. Beaudoin, Paul H. Carew, Elaine C. Hughes, Richard G. Thissen Editorial Office: narfe magazine, 606 North Washington St., Alexandria, VA 22314-1914; Phone: 703-838-7760; Fax: 703-838-7781; Email: communications@narfe.org Advertising Sales: Warren Berger, Media People Inc., 122 East 42nd St., Suite 725, New York, NY 10168; Phone: 212-779-7172, ext. 223; Email: wberger@mediapeople.com NARFE for the Visually Impaired On the Telephone: This publication can be heard on the telephone by persons who have trouble seeing or reading the print edition. For more information, contact the National Federation of the Blind NFB-NEWSLINE® service at 866-5047300 or go to www.nfbnewsline.org.

On digital audio: Issues of narfe magazine are also available in audio format through the National Library Service for the Blind and Physically Handicapped (NLS). For availability, call 202-727-2142 or your local NLS service provider.

The Association, since July 1970, has been classified by the IRS as a tax-exempt labor organization [not a union]; however, dues and gifts or contributions to the Association are not deductible as charitable contributions for income tax purposes.

National Active and Retired Federal Employees Association NATIONAL OFFICERS JOSEPH A. BEAUDOIN, President; natpres@narfe.org PAUL H. CAREW, Vice President; natvp@narfe.org ELAINE C. HUGHES, Secretary; natsec@narfe.org RICHARD G. THISSEN, Treasurer; nattreas@narfe.org

REGIONAL VICE PRESIDENTS

REGION I Arthur Pike (Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) Tel: 207-764-4468 Email: artpike1937@aol.com REGION II Evelyn Kirby (Delaware, District of Columbia, Maryland, New Jersey and Pennsylvania) Tel: 410-604-1141 Email: ekirby@atlanticbb.net REGION III Donald Stewart (Alabama, Florida, Georgia, Mississippi, Puerto Rico, South Carolina and Virgin Islands) Tel: 305-442-6388 Email: dejs33149@aol.com REGION IV Paul E. Johnson (Illinois, Indiana, Michigan, Ohio and Wisconsin) Tel: 812-306-5137 Email: pejohnson@tds.net REGION V Carol R. Ek (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) Tel: 620-241-1131 Email: ek617@att.net

Here’s How to Contact Us… If you want to:

Join NARFE Call (toll-free): 800-627-3394 or go to: www.narfe.org Change or update your membership record Call (toll-free): 800-456-8410 Email: memberrecords@narfe.org

REGION VI Jerome S. Smith (Arkansas, Louisiana, Oklahoma, Republic of Panama and Texas) Tel: 903-534-5849 Email: retiredjer@aol.com REGION VII Frank Impinna (Arizona, Colorado, New Mexico, Utah and Wyoming) Tel: 303-482-1747 Email: impinna@gmail.com REGION VIII Helen L. Zajac (California, Guam, Hawaii, Nevada and Republic of Philippines) Tel: 707-644-7565 Email: hlz17@aol.com REGION IX Lanny G. Ross (Alaska, Idaho, Montana, Oregon and Washington) Tel: 360-692-9741 Email: lannyjean@comcast.net REGION X William F. Martin (Kentucky, North Carolina, Tennessee, Virginia and West Virginia) Tel: 540-872-3345 Email: billmartin@narferx.org

For any other NARFE matter:

Call NARFE Headquarters: 703-838-7760 Email: hq@narfe.org Fax: 703-838-7785 Write: NARFE 606 N. Washington St. Alexandria, VA 22314

www.narfe.org

narfe (ISSN 1948-4453) is published monthly by the National Active and Retired Federal Employees Association (NARFE), 606 N. Washington St., Alexandria, VA 22314. Periodicals postage paid at Alexandria, VA, and additional mailing offices. Members: Annual dues includes subscription. Nonmember subscription rate $45. Postmaster: Send address change to: NARFE Attn: Member Records, 606 N. Washington St., Alexandria, VA 22314. To ensure prompt delivery, members should also forward changes of address without delay. Because of the volume involved, NARFE cannot acknowledge nor be responsible for unsolicited pictures and manuscripts, although every reasonable precaution is taken. All submissions become the property of NARFE. Copyright © 2014, NARFE. Advertisements in the magazine are not endorsements of products and/or services by NARFE, unless officially stated in the ad. We shall accept advertising on the same basis as other reputable publications: that is, we shall not knowingly permit a dishonest advertisement to appear in narfe, but at the same time we will not undertake to guarantee the reliability of our advertisers.

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From the President

Thoughts on the New Year

T

he New Year brings with it unfinished business as well as new opportunities. Important issues that

affect the well-being of federal employees and retirees remain unresolved, and related legislation carries over into 2014. By midmonth, Congress will be voting on the fiscal year 2014 budget. It is our hope that a budget is passed and that it does not include the Chained CPI, which we are fighting so hard to oppose.

The 33rd Biennial NARFE National Convention in Orlando, FL, this summer will be the pivotal event of the year. Its motto, “NARFE Is In Your Future: Embrace the mission. Share the vision.,” speaks to how we must hearken back

to our roots as we reimagine our work going forward. It is a fitting slogan in a year that the Future of NARFE Committee will complete its report on charting the Association’s long-term direction. At the National Convention, you will elect national officers, who will lead NARFE in its efforts to preserve our earned benefits. I encourage you to be a part of this important gathering.

This past November, Katherine Archuleta was sworn in as the 10th director of the U.S. Office of Personnel Management. She has extensive experience in federal service, having worked in top administrative and personnel positions at the Departments of Labor, Energy and Transportation. Just as important, she has the president’s ear. NARFE looks forward to working with her as a partner in advocating for fairness toward federal civil servants both retired and active.

Legislatively speaking, 2014 may appear similar to the preceding two years. One difference, however, is that the electorate – fed up with the partisan behavior that brought the government to a standstill last fall – will demand that its lawmakers work toward real solutions for the public good or face the consequences at the midterm election ballot box.

Here’s to a happy and prosperous New Year for NARFE and the federal family it represents!

Joseph A. Beaudoin NARFE national President natpres@narfe.org

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Washington Watch

same battles expected to be fought in 2014

A

s deadlines loom on Capitol Hill, and lawmakers continue to legislate from crisis to (self-imposed) crisis, 2014 is looking a lot like 2013.

First on the calendar is the January 15 expiration of the stopgap Continuing Resolution that has been funding the operations of the federal government since October 16, 2013.

By the time you get this issue, the budget conference committee that was created to resolve the fiscal year 2014 budget impasse should have made its recommendations. Those recommendations should be voted on by Congress by January 15. This assumes, however, that committee members were able to come to an agreement on a budget bill by their December 13, 2013, deadline. At press time, proposals that would affect the federal family were still on the committee negotiating table.

If Congress is unable to pass a budget, another government shutdown could occur. However, the political ramifications from the shutdown in October have been widespread, with the American public largely blaming the Repub8

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lican Party, so another shutdown is possible but unlikely.

The next key date is February 7, when the federal debt limit will be reached. Treasury Department officials have said they will be able to meet the nation’s obligations for a few weeks after the deadline, using extraordinary measures.

Those include borrowing from the Civil Service Retirement and Disability Fund, which must be paid back with interest under the law.

Based on the experience of the past several years, House Republicans are not expected to agree to raise the ceiling unless spending cuts are part of the mix. The debtceiling vote, once noncontroversial, recently has been linked to other demands. It’s safe to assume this fight will continue into the new year.

General opposition to the Affordable Care Act (also known as “Obamacare”) and criticism of its problem-plagued implementation, also will dominate congressional

debate in early 2014, particularly as members of Congress and their staffs enter into the health care exchanges created under the law.

Full repeal of the health reform law is on the top of the Republicans’ agenda, so the angst surrounding the law is not expected to abate anytime soon.

As November elections get closer, members of Congress will begin spending more time in their home districts and states and less in Washington. While most pundits predict that the balance of control in Congress likely will stay the same (House in Republican control, Senate in Democratic control), House Democrats are working hard to win the 17 seats they need to take control of the House. On the Senate side, a change in power is more likely, given the states in play, with the Republicans needing only six seats to take the majority.

All in all, 2014 is looking similar to 2013 and 2012 – the same fights, the same issues and the same balance of power in Congress.

—By Jessica Klement, Legislative Director

NARFE JOINS COALITION PARTNERS AT WHITE HOUSE RALLY AGAINST CHAINED CPI

N

ARFE continued its strong opposition to the Chained CPI at a November 14 rally in front of the White House.

NARFE urged the president not to use the Chained CPI as a bargaining chip in budget negotiations.

NARFE previously held a press conference in front of the Capitol, asking Congress not to adopt the Chained CPI to calculate annual cost-of-living adjustments (COLAs) to federal retirement annuities, Social Security benefits, military retired pay and disability benefits. A switch from the current CPI-W to the Chained CPI would cost the average federal retiree an estimated $48,000 over 25 years in lost benefits, NARFE says.

In the past, the Chained CPI proposal has received support from congressional Republicans and Democrats who view the Chained CPI as a more accurate measurement of inflation. Because the president included the proposal in his fiscal year 2014 budget in an attempt to achieve a “grand bargain” on deficit reduction, NARFE has been lobbying both the White House and Congress.

Speaking at the rally, NARFE National Secretary Elaine C. Hughes asked, “Why should reducing the standard of living for those who served our country be part of a budget compromise?”

“We’ve seen this act before,” Hughes said. “We’ve earned our retirement. We will protect our retirement.”

NARFE joined several of its coalition partners for the event,

NARFE National Secretary Elaine Hughes speaks at a rally in front of the White House opposing a switch to the Chained CPI for calculating retiree cost-of-living adjustments.

which was hosted by the National Committee to Preserve Social Security and Medicare. Reps. Keith

Ellison, D-MN, and Mark Pocan, D-WI, also spoke at the rally.

—By Jason Freeman, Legislative Staff Assistant

BILL WOULD OPEN FEHBP TO ALL

I

n October, the chairman of the House Oversight and Government Reform Committee introduced a bill that would allow all Americans to enroll in the Federal Employees Health Benefits Program (FEHBP).

The four-page bill, the Equal Healthcare Access Act, H.R. 3319, is short on details. And statements from bill sponsor Rep. Darrell Issa, R-CA, have been limited and, in some cases, erroneous. “The Equal Healthcare Access Act offers Americans access to the same health insurance plans long enjoyed by members of Congress and their families,” Issa said. However, members of Congress are entering into the health care exchanges created under the Affordable Care Act (ACA).

The legislation is silent on many fronts, including how it would be implemented, how it would work with the ACA, and whether enrollees would be in a separate risk pool from federal employees and retirees.

NARFE opposes any legislation that would open the FEHBP to nonfederal employees, retirees and their dependents without separate risk pools. Adding people to the plan, many of whom are likely to be previously uninsured, would undoubtedly raise premiums for everyone in the plan.

It is unlikely the bill will move through committee and receive a vote on the House floor. NARFE will continue to monitor any progress on the bill.

—By Jessica Klement, legislative director w w w. n a r f e . o r g

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Washington Watch

FEHBP AND THE AFFORDABLE CARE ACT: WHAT YOU NEED TO KNOW NOW

W

ith provisions of the Affordable Care Act (ACA or “Obamacare”) going into effect in 2014, NARFE’s Legislative Department provides these reminders about the relationship between the Federal Employees Health Benefits Program (FEHBP) and the ACA. • Federal employees, retirees and survivors will continue their coverage through the FEHBP. The only exceptions are members of Congress and their staffs, who will lose their FEHBP coverage and must purchase insurance in the new Health Insurance Marketplace, also known as exchanges.

Individuals who do not have access to insurance through their

Legislative Resources • Legislative Hotline: A weekly update of legislative news, compiled by the NARFE Legislative Department staff, distributed via email and available by phone (toll-free) at 877-217-8234 and online at www.narfe.org.

• Legislative Action Center: A one-stop site to send a letter to Congress, and more, at www.narfe.org.

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employer can purchase health insurance in the exchanges.

• Some of the ACA’s tax provisions apply to tax year 2013 and will be applied when taxpayers complete their returns in April.

First, flexible spending accounts (FSAs) are limited to $2,500, a reduction of 50 percent (this has already been in effect for the FEHBP). FSAs enable employees to use pretax funds to help pay out-of-pocket medical costs. Retirees continue to be prohibited from having FSAs. • Also for tax year 2013, the threshold for deducting unreimbursed medical expenses is increased from 7.5 percent of adjusted gross income to 10 percent.

For taxpayers age 65 and older, the increase is postponed through 2016.

• The following provisions required to start this year already have been adopted by the FEHBP: - Insurers cannot exclude individuals with pre-existing conditions. The FEHBP has always prohibited such exclusions.

- Insurers cannot have annual or plan lifetime spending limits.

FEHBP plans have not imposed lifetime limits.

For more information on the relationship between the FEHBP and the ACA, see the May 2013 issue of narfe magazine (p. 30).

—By Sarah Weissmann, Grass-Roots Program Manager

GOOD NEWS! RESOLUTION SUPPORTS FEDERAL WORKERS

H

ere’s a bill that the federal family can rally around. A resolution introduced in October by Rep. Marcia L. Fudge, D-OH, expresses the “sense of the House of Representatives” supporting federal employees. An additional 42 members of the House have signed on as cosponsors.

H.Res. 388 details the sacrifices made by federal employees in recent years. It recognizes that they are under a three-year pay freeze, have been required to contribute more toward their retirement, saw a loss in income due to furloughs from sequestration and faced grave uncertainty during the government shutdown.

The resolution also lists as

grievances the proposals that ask for even more sacrifice from the federal workforce. Specifically, it cites the proposal to base cost-ofliving adjustments (COLAs) for federal civilian retirement annuities on the Chained CPI, which would lower COLAs. It also refers to the proposal to turn the Federal Employees Health Benefits Program into a voucher system, which would shift a greater share of the premium burden onto employees and retirees.

NARFE President Joseph A. Beaudoin thanked Fudge for her leadership on behalf of federal employees and retirees.

— By John Hatton, Deputy Legislative Director

BILL WOULD HELP PROTECT FEDS FROM ‘PENSION ADVANCE’ SCAMS

L

egislation that would clamp down on companies offering unconventional and sometimes illegal “pension advance” financial products has been

introduced by Rep. Matt Cartwright, D-PA. Nearly 50

support for public service with his private-sector experience as an attorney,” Beaudoin said.

—By John Hatton, Deputy Legislative Director

members of the House have cosponsored the bill, the Annuity Safety and Security Under Reasonable Enforcement (ASSURE) Act, H.R. 3310.

Pension advance schemes offer cash now and, in exchange, require borrowers to sign over all or part of their future monthly pension checks to a separate bank

The legislation would require appropriate disclosures, would cap interest rates on pension advances and would allow individuals to enforce the law in court. account managed by the company.

The companies attempt to circumvent current state and federal laws prohibiting assignment of pensions to third parties, and often carry usurious interest rates not appropriately disclosed to the borrower. Federal retirees are among those who have been the targets of

these schemes. The topic was the subject of a narfe magazine cover story in September 2013 (p. 30).

The ASSURE Act would expand on existing law to require appropriate disclosures regarding these transactions and cap interest rates on these advances. Importantly, it would create a private right of action to allow individuals to enforce these laws in court.

“These simple measures will protect federal retirees from exploitation, allow individuals to assert their rights in court, and ensure that retirees maintain their financial independence,” Cartwright said.

“The legislation would help ensure the retirement benefits federal workers earned throughout their careers are secure from financial scams that could rob them of their annuities through fraudulent sales practices,” said NARFE President Joseph A. Beaudoin.

“NARFE applauds Congressman Cartwright’s leadership on the issue, which combines his

Are you part of a multigeneration civil service family? If so, please email leg@narfe.org. You could be part of a campaign highlighting the tradition of public service.

MYTH vs.

REALITY Myth: Pay raises are a cost-of-living adjustment (COLA) for federal employees.

Reality: Congress provides pay raises to federal employees to ensure their pay remains competitive with privatesector pay.

Raises are subject to a “locality pay adjustment,” which seeks to reflect regional differences in salaries and wages across the country. This component was introduced in 1990 when federal civil service salaries were viewed as increasingly uncompetitive with privatesector salaries in urban locations. Congress must decide on a yearly basis whether to budget a raise for federal employees.

In contrast, yearly retiree annuity COLAs are provided under an automatic plan using the Bureau of Labor Statistics’ CPI-W. The goal of a COLA is to help retirees’ annuities keep pace with inflation.

w w w. n a r f e . o r g

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11

Washington Watch

narfe bill tracker The NARFE bill TRACKER is your monthly guide to the congressional legislation that NARFE is following. Check back each issue for updates.

ISSUE

Bill Number / Name / Sponsor H.R. 26: Deferred Benefits Adjustment Act of 2013 / Rep. Nydia M. Velázquez, D-NY Cosponsors: None

DEFERRED ANNUITIES

supporting federal employees

H.Res. 388: Expressing the sense of the House of Representatives supporting federal employees / Rep. Marcia L. Fudge, D-OH

Latest Action(s)

Provides for the indexation of deferred annuities, including survivor annuities, and for individuals becoming subject to the Federal Employees Retirement System by election. Terminates the entitlement of a survivor who remarries before age 55 to an annuity based on the service of a deferred annuitant who dies before establishing a valid claim for a Civil Service Retirement System annuity.

Referred to the House Committee on Oversight and Government Reform

Recognizes that the work that federal employees perform should be honored and respected. Outlines several ways Congress should not target federal employees.

Referred to House Committees on Oversight and Government Reform, and Ways and Means

Makes any person who has a “seriously delinquent tax debt” ineligible for federal employment or to continue serving as a federal employee.

Approved by the House Committee on Oversight and Government Reform on 3/20/13 Failed to pass the House on 4/15/13

narfe, April 2013, p. 9

See story, p. 10

Cosponsors: 42 (D)

H.R. 249: Federal Employee Tax Accountability Act of 2013 / Rep. Jason Chaffetz, R-UT Tax Delinquency

What Bill Would Do

Cosponsors: None

narfe, July 2013, p. 11

Paid Parental Leave

H.R. 517: To provide that four of the 12 weeks of parental leave made available to a federal employee shall be paid leave / Rep. Carolyn B. Maloney, D-NY Cosponsors: 17 (D)

Pension scam protection

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H.R. 3310: Annuity Safety and Security Under Reasonable Enforcement Act of 2013 / Rep. Matt Cartwright, D-PA Cosponsors: 48 (D)

Allows federal employees to substitute, for four weeks, any available paid leave for any leave without pay available for either the birth of a child or placement of a child for either adoption or foster care.

Referred to the House Committee on Oversight and Government Reform

Requires appropriate disReferred to four House closures regarding “pension committees advance” schemes and caps the interest rates on these See story, p. 11 advances. Also creates a private right of action to allow individuals to enforce these laws in court.

ISSUE

Bill Number / Name / Sponsor H.R. 1367: FEHBP Prescription Drug Integrity, Transparency, and Cost Savings Act / Rep. Stephen F. Lynch, D-MA Cosponsors: 3 (D)

Health Care

H.R. 1780: To provide that the only health plans available to the president, vice president, members of Congress and federal employees are those created under the Patient Protection and Affordable Care Act or offered through a health insurance exchange / Rep. Dave Camp, R-MI

What Bill Would Do

Latest Action(s)

Provides the Office of Personnel Management greater oversight authority over the prescription drug contracting and pricing methods of the Federal Employees Health Benefits Program (FEHBP).

It requires that pharmacy benefit managers return 99 percent of all rebates, market share incentives and other monies received from pharmaceutical manufacturers for FEHBP business and caps prescription drug prices paid by the FEHBP.

Referred to the House Committee on Oversight and Government Reform

Removes federal employees from the Federal Employees Health Benefits Program (FEHBP) and places them in the health exchanges created under the Affordable Care Act.

Referred to the House Committees on Oversight and Government Reform, Energy and Commerce, and Administration

narfe, June 2013, p. 9

narfe, July 2013, p. 15

Cosponsors: 30 (R) H.R. 3319: Equal Healthcare Access Act / Rep. Darrell Issa, R-CA Cosponsors: 1 (D), 8 (R)

Requires the Office of Personnel Management to administer a health insurance plan for nonfederal employees under the existing Federal Employees Health Benefits Program.

Referred to House Committees on Oversight and Government Reform, Energy and Commerce, and Ways and Means See story, p. 9

H.R. 1795: Social Security Fairness Act of 2013 / Rep. Rodney Davis, R-IL GPO/WEP

Cosponsors: 70 (D), 27 (R) S. 896: Social Security Fairness Act of 2013 / Sen. Mark Begich, D-AK

Referred to the Senate Finance Committee

Cosponsors: 10 (D), 3 (R), 1 (I)

narfe, July 2013, p. 16

H.R. 630: The Postal Service Protection Act / Rep. Peter DeFazio, D-OR postal reform

Repeals both the Government Referred to the Pension Offset (GPO) and the House Committee on Windfall Elimination Provision Ways and Means (WEP).

Cosponsors: 164 (D), 7 (R) S. 316: The Postal Service Protection Act / Sen. Bernie Sanders, I-VT Cosponsors: 28 (D)

Eliminates the future retiree health benefit prefunding requirement, protects six-day mail delivery and prevents the closure of rural post offices.

Referred to House Committees on Oversight and Government Reform and Judiciary Referred to the Senate Committee on Homeland Security and Governmental Affairs

(Continued on p. 14)

Washington Watch

narfe bill tracker (Continued from p. 13) ISSUE

Bill Number / Name / Sponsor H.R. 2748: Postal Reform Act / Rep. Darrell Issa, R-CA Cosponsors: 2 (R)

What Bill Would Do

Latest action(s)

Moves the U.S. Postal Service to five-day mail delivery, removes protections for injured workers and eliminates tothe-door delivery in favor of cluster boxes.

Approved by the House Committee on Oversight and Government Reform on 7/24/13

S. 1486: Postal Reform Act Threatens integrity of the Federal Employees Health postal reform / Sen. Tom Carper, D-DE Benefits Program by reCosponsors: 1 (R) moving postal workers and retirees, cuts workers’ compensation benefits, eliminates Federal Employees Retirement System pension for new hires.

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narfe, September 2013, p. 20 Referred to Senate Committee on Homeland Security and Governmental Affairs narfe, December 2013, p. 9

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$50 Silver (qualifies for Silver 2013-2014 NARFE-PAC lapel pin) $20 Basic (qualifies for Basic 2013-2014 NARFE-PAC lapel pin) Other: ______ -orI would like to be a Sustainer and make a monthly credit card contribution to NARFE-PAC of: $25/month $10/month

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Questions & Answers

The following Questions & Answers were compiled by NARFE’s Federal Benefits Service Department staff.

NARFE does not provide legal, financial planning or tax advice or assistance.

employees Retirement application timeline

Q

I was told that I am required to submit my retirement application about three months prior to my retirement date. I was also told that my human resources office cannot send my application to the Office of Personnel Management (OPM) immediately.

A

Retirement applications are slowed down because of procedures that payroll offices must complete. It’s up to your payroll office to close out your records and get your claim to OPM. The payroll office isn’t able to issue you your final check or your lump-sum payment for your annual leave until it receives your final time card, which will not be given to payroll until after your retirement date. Then payroll must collect all of your pay records, certify those records and attach them to your retirement application.

The payroll office assigns a 16

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control number to your case and has 30 days from your retirement date to get your package to OPM, which will not accept your application without your pay records attached.

You will know when OPM receives your retirement package because it will issue you a Civil Service Annuity (CSA) number within seven to 10 days from the date it receives your file. OPM uses your CSA number instead of your Social Security number when it completes tasks for you.

You should use this number on all future correspondence with OPM. If you haven’t heard from OPM within six weeks of your retire-

ment date, you should contact your agency to find out where your claim is. Most packages are at OPM within 30 days of an employee’s retirement date.

Once you receive your CSA number, you will probably receive your first interim annuity check within a couple of weeks; therefore, you probably will receive your interim pay within six to eight weeks of retiring. The amount of interim pay that you will receive is usually between 50 and 75 percent of the amount of the annuity estimate provided to you from your human resources office. Then, it takes six to eight months or longer to get your annuity finalized.

TSP app?

Q

I have a smartphone and would like to download an app for the Thrift Savings Plan (TSP). How do I do this?

A

TSP participants who navigate to www.tsp.gov from a smartphone will now automatically be directed to the new mobile version of the TSP’s “My Account.” The mobile version provides participants the informational, transactional and interactive benefits of www.tsp. gov anytime and anywhere on a smartphone. According to the TSP, participants do not need to download an app to enjoy this benefit.

military deposit explained

Q

I’m preparing to retire under the Civil Service Retirement System (CSRS), and there is one thing that makes no sense to me. I retired from active military service before starting my civilian federal career. I understand about the bar on double dipping and having to waive my military retired pay in order to use my active duty service years in combination with my civilian years for retirement computation purposes. But why do I now have to pay a military deposit of thousands of dollars for those same years? I paid into the civil service retirement fund while working as a civilian. The money is there; the time is there. To me, this is a double whammy.

A

Your concern is shared by many. However, the retirement law is clear about the requirement to pay retirement contributions for periods of creditable service used for

inclusion in the retirement calculation. This is consistent with the law’s provisions covering “deposit service” for civilian employees.

A deposit is the payment of the employee’s retirement deductions, plus interest, that would have been withheld from the employee’s pay if he/she had been covered by CSRS during a period of employment (substitute military service) when retirement deductions were not withheld from salary (substitute military pay).

Under CSRS, the 7 percent of pay that is deducted for retirement is matched by the employee’s agency and together are paid into the Civil Service Retirement and Disability Fund. When you pay the deposit for your military service, the agency portion of the retirement deductions is paid out of the U.S. Treasury. All of these monies are used to help pay out current and future retirements.

retirees FEHBP for surviving spouse

Q

I am a retired federal employee, and my wife is under my Federal Employees Health Benefits Program (FEHBP) Blue Cross/Blue Shield family plan and Medicare.

Upon my death, can she switch to an individual FEHBP plan, and will the government continue to provide its monthly share?

A

Your spouse may continue FEHBP coverage if she is on your plan when you

die and you provided a survivor benefit for her when you retired.

There are two requirements for a surviving spouse to continue coverage under the FEHBP. First, you must have elected a survivor benefit for your spouse when you retired. Second, you must have a family FEHBP plan at the time of your death.

If these two requirements are met, your spouse will be able to continue FEHBP coverage if you predecease her.

The Office of Personnel Management will automatically place your wife in a self-only policy, which is less expensive than a family plan, and the government will continue to pay its portion of the health insurance. She will have Open Seasons and all the same options that you have for changing health insurance outside of Open Season.

withholding medicare premiums from annuity

Q A

How do I have my Medicare premiums withheld from my annuity?

Individuals who are receiving a Social Security benefit automatically will be enrolled in Medicare Part A and Part B. If the individual doesn’t decline Medicare Part B, his or her Medicare premiums are withheld from their Social Security benefit.

Many Civil Service Retirement System (CSRS) employees aren’t entitled to a Social Security benefit and normally have to go to w w w. n a r f e . o r g

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17

Questions & Answers

their local Social Security office to arrange for the Office of Personnel Management to withhold these premiums from their annuity. In some cases, local Social Security officials do not know how to process these requests. We have been able to locate the proper procedures to be used by Social Security offices, and we can provide them to you to give to your local Social Security office.

You also may go to the Medicare website at www.medicare.gov and click on Your Medicare Costs, which will give you options for paying your premiums. One of the options is to have your premiums deducted from your civil service annuity by sending an email message to OPMMailbox@cms.hhs. gov.

eligible for more than one annuity?

Q A

Under what circumstances may I receive more than one annuity?

You may receive a survivor annuity and a separate benefit that is based on your own service.

Generally, if you are the surviving spouse of more than one retiree, you must elect one of the benefits. OPM cannot pay you two survivor annuities. However, under certain circumstances, it is possible for a widow or widower to receive more than one survivor annuity simultaneously. If you are a survivor annuitant and, after age 55, you marry a federal employee and you are again widowed, you may be eligible to receive annuities based on the service of both spouses.

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cost-of-living calculation

Q

I understand that federal retirees will get a 1.5 percent cost-of-living adjustment (COLA) to their annuities in 2014. How is the amount of the COLA determined?

A

The COLA is calculated by comparing consumer prices in July, August and September each year to prices in the same three months from the previous year. If prices go up over the course of the year, benefits go up, starting with payments delivered in January.

Currently, the retiree COLA is computed using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

The index represents purchases of such things as food and beverages, housing, apparel, transportation, medical care, recreation, education and communications, and other goods and services.

NARFE opposes attempts by the Obama administration and some members of Congress to switch to the Chained CPI for COLA calculation. Under the Chained CPI, the COLA would be less, and the effect would compound over time, resulting in a significant reduction in benefits.

(See story, p. 9.)

OPM’s ‘Services online’

Q

I need to create an account online so that I can change the direct deposit of my federal annuity to a different banking institution.

A

To sign up for the Office of Personnel Management’s (OPM’s) “Services

Online,” go to www.services online.opm.gov/Security/request password.aspx. When you receive your password, you will be able to make the change in your direct deposit online. It may take several weeks for OPM to send you the password.

Alternatively, you can go to the new financial institution, request and complete a form 1199A and have the bank send it to OPM. Do not close out your account with your old financial institution until you know your annuity is being direct-deposited to your new bank. If you close out your current account and your annuity payment goes to that financial institution, that bank will return it to OPM. This may cause a delay in your ability to access your funds.

putting new spouse on health insurance plan

Q

I sent an email to the Office of Personnel Management (OPM) regarding what I need to do to get my new wife onto my health insurance, but have not yet received a response. I already have NALC Health Benefit Plan family coverage under the Federal Employees Health Benefits Program (FEHBP).

I spoke with the NALC rep, and she said all I have to do is send NALC a letter with a copy of my marriage certificate. However, I’m not sure if I have to complete an OPM form 2809. I read the directions, but I couldn’t tell if I needed to place her name onto the form since I already have family coverage.

I know I’ll have to get her a survivor annuity so she can keep FEHBP if I predecease her, but for right now, I just want to make sure

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Questions & Answers

NARFE at Your Service I get her health coverage. After we are married, I want to arrange for the survivor annuity. Can you tell me what I need to do for that?

A

The NALC rep with whom you spoke is correct. OPM does not keep a record of dependents covered under a retiree’s enrollment. You already have family coverage, so you just have to do what NALC said, which is to send a letter with the marriage proof to NALC so your records can be updated and your new spouse will not have any problems when she uses your FEHBP coverage.

The rules for electing a survivor benefit for a spouse acquired after retirement state that you have a

ROXC3093NARFEboredomHalfpg.indd 1 ja n 2 0 14

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two-year window after the date of marriage to make your election but that no benefits would be payable if you were to die before you had been married nine months.

For guidance on how to elect a survivor benefit after retirement and the costs involved, go to www. opm.gov/retirement-services/ my-annuity-and-benefits/ life-events/#url=MarriageDivorce.

To obtain an answer to a federal benefits question, NARFE members should call 703838-7760 and ask for the Federal Benefits Service Department; send your question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.

NARFE service officers are available to answer questions and to assist in helping with a variety of benefit matters. Check your chapter newsletter for the name and phone number of your service officer. For the nearest service officer, call NARFE (toll-free) at:

800-456-8410.

NARFE Service Centers also are available in some areas. Use the Service Center listings on the NARFE website,

www. narfe.org.

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Cover Story

Annuity

By William Matthews Illustration by Bill Pragluski, Critical Stages, LLC

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Calculators Online Tools Reduce Guesswork, But There Are Limits to Their Forecasts

The stock market is rising and falling like a bad electrocardiogram, and the bond market has flatlined. Pay for federal employees has been frozen for three years, and retiree cost-of-living adjustments (COLAs) always seem to fall short of actual increases in the cost of living. Meanwhile, Congress is considering proposals that would require federal employees to contribute more to their retirement plans and receive even smaller COLAs. Amid this financial chaos, more than a half-million federal employees are eligible to retire, according to the Office of Personnel Management (OPM). But who among them can afford to do so?

To help answer that question, federal workers can consult a growing array of retirement calculators that have popped up online. Some calculators offer to compute the value of annuities; others attempt to predict future living expenses; still others try to determine whether your nest egg will last at least as long as you will. But how reliable are they?

The calculators designed specifically to compute federal employee annuity payments based on years of service and salary seem to be pretty accurate, according to scores of current federal employees and recent retirees who responded to a narfe magazine survey in October.

But getting a trustworthy answer depends on providing the calculator with accurate employment information. And rounding up precise employment and salary records going back decades can be a daunting, time-consuming chore, retirees and retirement experts caution.

While retirement calculators may do a good job of estimating annuities, many do not take into account other factors that will affect

Annuity Calculators

retirement budgets, such as investment income, inflation, COLAs, taxes, insurance and other living expenses.

Consider, for example, the retirement calculators offered by FedBens.us. “I figure it out to the penny. No approximations or estimates,” FedBens creator Robert Benson boasts of his online annuity calculator (www.fedbens.us/). In all, Benson has developed nine calculators for crunching different pieces of the retirement equation, from high-three averages to sick leave credits to windfall eliminations. But “I don’t look at the future and make assumptions,” such as adjusting for inflation or projecting retirement expenses, Benson says.

So how does an employee determine how much money will be needed for retirement? “That’s a highly individual thing,” Benson says. “Does your spouse work? Do you have money set aside? Do you have dependents? Do you want to reduce your scale of living? I don’t get into all of that.”

Instead, FedBens provides a very accurate calculation of federal retirement benefits, and “you take it from there,” Benson says.

FedBens isn’t unusual. “The federal calculators that I’m aware of will give you the basic retirement benefit that will be paid by the Office of Personnel Management,” says David Snell, director of NARFE’s Federal Benefits Service Department.

To do more – factor in inflation, calculate taxes or predict the effects of stock market gyrations – “that’s financial planning. That’s a whole different thing,” Snell says.

Banks, mutual fund companies and an army of financial advisers eagerly offer a wide variety of financial services and planning tools – including online calculators – to tackle such variables.

But retirees and retirement experts warn: Buyer beware. Advisory fees can be steep, and advice may benefit the advisers more than the clients. In addition, some financial advisers may not be familiar with the peculiarities of the federal retirement systems.

However, when it comes to figuring out the basics of what you can expect to receive in your annuity check each month, the reaction among federal employees who have used online calculators is overwhelmingly positive, according

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to those who responded to the narfe magazine survey. Many of them stress the importance of assembling accurate employment and salary information to get an accurate annuity calculation. And, they say, it’s a good idea to start early.

Carey Houk did both of those things. Before retiring from the Environmental Protection Agency in 2009, “I spent a good deal of time and effort gathering accurate and exact inputs – salary amounts and dates, including anticipated step increases and COLAs, annual and sick leave at retirement date, etc.”

Next Houk, a senior data systems analyst, created his own spreadsheet, where he entered his employment data and updated it whenever things changed, such as when he received salary increases.

With his employment information in good order, Houk says he fed his data into a calculator offered by FedCalc (www.fedcalc.com/), and it figured his retirement annuity “right down to the penny.”

The result? “Originally, I had the wild idea that I would retire at age 55. With an accurate estimate of my annuity, that changed to almost 59,” he says.

Kathy Truex, too, was convinced by an online calculation that she should keep working. “I was able to try different scenarios” with a calculator from OPM (www.opm.gov/retirement-services/ calculators/), she says.

Based on those results, Truex concluded that she needed to work three more years – for a total of 44 – to get the most out of her government annuity. She retired in 2011 as a supervisory auditor for the Defense Department inspector general.

Truex says her retirement calculations were made more complicated by time she had spent under the old National Security Personnel System.

In addition to her Civil Service Retirement System (CSRS) annuity, Truex says she “put as much as I could” into the Thrift Savings Plan – a 401(k)-like retirement fund – and an IRA – a taxfavored individual retirement account. By retirement time, “I ended up with a tidy sum.”

Some who were planning for retirement say they found financial advisers to be useful, but most said they weighed their advisers’ recom-

mendations against the results they received from retirement calculators.

Jill Stuart, a Federal Aviation Administration (FAA) airway transportation system specialist in Kansas who retired in March, says she began planning for retirement several years in advance.

First she used OPM’s Employee Express (www. employeeexpress.gov/DefaultLogin.aspx), a Webbased system for federal employees to manage their employment and personnel information.

Later she consulted an independent financial adviser.

“My agency is short-staffed and [the retirement specialists] lacked experience,” she says.

“They were very slow in responding to requests.”

By contrast, online calculators “gave me the answer immediately and allowed me to plug in various [retirement] dates.” She gave the results to a financial adviser who, she says, was “very knowledgeable” about federal retirement systems.

He provided her with the reassurance that she needed to take the retirement plunge.

Kathleen Smith, a Social Security Administration (SSA) human resource specialist, also sought help from a financial adviser, although perhaps too late. Initially, she used an online calculator provided by her agency to figure her annuity payments.

The calculator “showed me how much more my annuity would be if I continued my employment three more years to take advantage of a grade raise,” she says. So she postponed retirement for three years, then stopped working at age 58 in 2006.

“It wasn’t until after I retired that it really hit home that my CSRS pension and cost-of-living raises do not keep up with the true cost of living,” she says. “Over the years, I have seen the cost of gas, insurance, groceries, etc., go up more than my pension.”

“The SSA calculator took my finances out three years; my financial adviser took it out to age 95 with inflation factors. Looking back, I should probably have worked longer,” she says.

As he planned his retirement from the Bureau of Indian Affairs (BIA), Kenneth Metzger used an online calculator, but thought he got better results from his financial adviser. He says he used OPM’s

Online calculator users stress the importance of assembling accurate employment and salary information. online calculator and found it “adequate,” but “my financial planner was more accurate because he had detailed information on all sources of income and expenses, a spreadsheet that keeps biannual updates and a verification by my tax accountant.”

Of course, the financial planner and the tax accountant “cost me fees; the OPM calculator was free,” says Metzger, who retired in January after teaching accounting at the BIA’s Haskell Indian Nations University in Kansas.

The Government Accountability Office says nearly 30 percent of the federal workforce will be eligible to retire by 2016. Online retirement calculators offer an ideal starting point for those planning to exit.

Under the 1986 Federal Employees Retirement System (FERS) law, government workers may draw benefits from three sources: the FERS Basic Benefit Plan, Social Security and the TSP, to which the government makes automatic and matching contributions. The older CSRS offers an annuity, but no Social Security and no TSP contributions.

Under either system, “If you’re a federal employee today, you’ve got something better than a majority of private-industry employees – you’ve got a pension,” says Tammy Flanagan, senior benefits director at the National Institute of Transition Planning.

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Annuity Calculators

Pensions for private-sector workers have largely disappeared, replaced by 401(k) plans that require workers to save a portion of each paycheck. In many cases, employers offer a modest company contribution.

“To have FERS basic retirement – just for waking up every morning – you get 30 percent of your salary, and it’s not affected by the stock market. That’s golden,” Flanagan says.

“Federal employees, for the most part, are in a good place.”

But getting to that good place still requires some effort. For example, by contributing to the TSP for 25 years – the maximum contribution is $17,500 for 2014 – government workers can amass a retirement nest egg of more than a half-million dollars, Flanagan says. “That can provide $20,000 to $30,000” a year in retirement income in addition to the FERS annuity. Add Social Security, and “that’s a lot to celebrate,” she says.

TSP offers several online calculators, including some designed to estimate the future growth of TSP accounts and the monthly income TSP savings will generate (go to www.tsp.gov and click on Planning & Tools). And there’s a user-friendly online “retirement estimator” on the Social Security Administration website for obtaining a quick estimate of Social Security benefits (www.ssa.gov/ estimator).

But other parts of retirement planning often turn out to be troublesome. “The hardest and most tedious part of a retirement calculation is computing the length of service,” Flanagan says.

“Many employees have had issues with their service that can make it difficult to compute their service accurately.”

The problems are legion. “Files get misplaced; records get scrambled,” Flanagan says. Getting military service counted as part of civilian retirement benefits can be problematic. Federal employees who started out as temporary or part-time workers may be dismayed to discover that time in those jobs is counted differently for retirement purposes than is full-time, permanent employ-

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ment. Breaks in employment, switching from agency to agency, locality pay and overtime can all complicate the process of calculating “creditable” service for retirement, Flanagan says.

“I would say that better than half [of federal employees preparing for retirement] have questions about their service. And a lot of those who have problems don’t even know they have problems,” Flanagan says.

The rules that govern what does and doesn’t count as creditable service take up four chapters – 282 pages – in the CSRS and FERS Handbook for personnel and payroll offices, she says.

“Online calculators are fine to run the numbers,” Flanagan says – but first you need accurate numbers. “I would highly recommend that at least a year before you want to retire you get an estimate [of retirement benefits] from your agency.”

That way, the agency has to round up the records.

“In the end, it’s the agency that has to submit your paperwork to the Office of Personnel Management anyway,” she says.

While online retirement calculators are valuable for federal employees close to retirement, they’re equally helpful for younger workers trying to set realistic retirement goals, says Nevin Adams, director of the American Savings Education Program at the Employee Benefits Research Institute.

Consider John Koehler, who hoped to retire from the Department of Homeland Security (DHS) as soon as he became eligible in 2005. He abandoned that plan after building a simple Excel spreadsheet to calculate his retirement prospects.

The numbers told him that if he worked for eight more years, his annuity would be substantially larger.

Six years passed, and in 2011, as soon as DHS made the retirement calculator FHR Navigator (https://fhrnavigator.com/frbweb/logon. do?operation=index&client=CBP) available to employees, Koehler used it to recalculate his annuity. It was “not as user friendly as it could have been,” Koehler says, but “it actually goes into your electronic record and looks for those anomalies and verifies what your income was.” That’s how Koehler discovered that a long-ago job with

the FAA at the beginning of his federal career was actually a temporary assignment and did not count toward his CSRS annuity.

“I had to make a choice of paying into CSRS what I would have paid, plus interest, or take a minimal reduction in my annuity,” Kohler says.

He did some calculations and found that he would have to pay $3,000 into CSRS or lose 72 cents a day from his annuity. Cost-benefit analysis revealed it would take 25 years to earn the $3,000 back, he says. “I decided to lose the 72 cents a day.”

The eight extra years of work felt like “golden handcuffs,” he says. But now: “La dolce vita. I’m having the good life.”

NARFE members have access to a version of the FHR Navigator through the Association’s website. It’s called the Federal Retirement Benefits calculator for Employees, or FRB-E, and it estimates FERS and CSRS retirement benefits based on the user’s age, length of service, planned retirement date, high-three average salary and other factors.

Unlike some calculators, “FRB-E does account for inflation and COLAs,” says Chris Brown, director of federal HR software and services for Economic Systems, Inc., which created the calculator. “Usually, what these projections show is that COLAs do not really keep pace with true inflation,” Brown adds.

In addition to the FRB-E calculator, NARFE offers a financial planning tool called Financial Benefits Maximizer, and an online financial literacy and retirement planning seminar, both also developed by Economic Systems. (Go to www. narfe.org, log in, click on “Federal Benefits Topics” and see the “eSeminar Plus” graphic.)

These online tools are intended “to get employees – as opposed to retirees – involved with NARFE and planning for their retirement early in their careers,” Brown says.

It’s difficult to find reliable statistics on how many government employees use online retirement calculators. The Employee Benefits Research Institute (EBRI) said last spring that about 25 percent of the people it surveyed – both privatesector and federal employees – used online

Online calculators also are helpful for younger workers trying to set realistic retirement goals. calculators or consulted financial advisers for retirement planning. Far more – about 45 percent – “were more likely to simply guess at their savings needs,” the EBRI reported.

Michael Lynn, chief information officer at Government Retirement & Benefits, Inc. (GRB), says about “20 percent of a given agency’s population” uses GRB retirement calculators, and “almost all are within three years of retirement.” GRB makes a “whole suite of calculators,” including EBIS – the Employee Benefits Information System – that lets federal employees run “what if” scenarios to see how different decisions will affect their retirement benefits. (EBIS is a secure site that requires users to log on through agency portals.) GRB also makes more complex software packages that federal benefits specialists use to calculate employee retirement benefits.

“I have been using this calculator for years.

I am very satisfied with the results and projections,” Paul Jones says of the CSRS-FERS Benefits Calculator and Retirement Analyzer (www.fedre tiresoftware.com). A NOAA fishery policy analyst turned IT specialist, Jones has 35 years of federal service. He says the calculator helped solidify his plan to retire when he hits 41 years and 11 months. “That is the best date to retire for CSRS employees,” he explains. “If I work longer, I am no longer contributing to my CSRS retirement.”

Consulting a retirement calculator shouldn’t be a one-time thing, says Adams of EBRI. “It’s a good idea to do it at least once a year,” he says. “Situations change, people get married, have a kid, get divorced.”

And online calculators keep getting better.

—William Matthews is a freelance writer based in Virginia.

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Special Section

The Health of

State and Local There Are Lessons to Be Learned for Feds In the Condition of Other Government Plans The Great Recession was not kind to state and local government pension funds.

These plans take contributions by employers and employees and professionally invest them in stocks, bonds and other financial products. Similar to the situation of all investors, many state and local pension funds lost ground in funding their obligations, and a small number of localities actually declared bankruptcies and curtailed, or attempted to curtail, benefits to government workers and retirees. Meanwhile, some plans weathered not only the Great Recession but also maintained strong funding levels during the previous market crash in the early 2000s.

While federal employees’ Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS) pension plans have a different funding mechanism (see sidebar, p. 31), observers say there are lessons to be learned from the challenges and successes of state and local funds. narfe magazine writer David Tobenkin asked pension fund experts about state and local government pension fund developments.

1. Why should federal employees and retirees care about the fate of state and local government pensions?

“All of us are connected in several ways,” says Jeffrey Brown, finance professor at the University of Illinois at Urbana-Champaign and associate director of the NBER Retirement Research Center.

“First, underfunded pension plans … are all competing for the same scarce taxpayer dollars. Second, these programs are often politically integrated. For example, one sometimes hears calls to expand Social Security coverage to all remaining state and local workers (not all of whom are covered by Social Security) as a way of dealing with

By David Tobenkin

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Pensions

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The Health of

State and Local Pensions fiscal issues at the federal level. But this fails to account for the fact that those state and local plans are severely underfunded, which might require the federal government to help bail them out. Third, like it or not, the growing concerns about the fiscal impact of these public plans put all public-sector employers in the cross-hairs of those who would like to see government shrink.”

Others point to the sheer size and scope of such plans. “As I note in my book State and Local Pensions: What Now?, public pensions have a significant economic effect on every state, city and town in the nation,” says Alicia Munnell, professor of management sciences and director of the Center for Retirement Research at Boston College. “These plans held about $2.8 trillion in assets in 2012. They cover 15 million working members (about 11 percent of the nation’s workforce) and provide regular benefits to eight million annuitants.”* 2. How well are state and local government pension plans faring?

On average, the experts say, plans are doing worse than before the Great Recession but better than the popular perception.

“The notion that most public plans are in trouble is simply not correct,” says Munnell. “Before the two financial crises of the past decade, most plans were in reasonably good shape. And in the wake of the crisis, plan finances have begun to stabilize. Many states and localities have provided reasonable benefits and set aside money to prefund their commitments, but a few have simply behaved irresponsibly. However, even the good states face challenges: scaling back their investments in risky assets, maintaining adequate compensation to attract talented workers and obtaining the flexibility to alter benefits for current workers.”

One of the key measures of a pension plan’s health is its “average funded ratio,” which measures a plan’s assets relative to liabilities.

“In the aggregate, over the past decade or so, average funded ratios for state and local

government pension plans have declined,” note Alex Brown, research manager, National Association of State Retirement Administrators (NASRA), and Joshua Franzel, vice president of research, Center for State and Local Government Excellence (SLGE). “In 2001, the average ratio was about 100 percent; in 2006, this average ratio had dipped to 84 percent; and preliminary figures for 2012 offer an average ratio between 71 percent to 73 percent.” There is much variation in the financial standing of these plans, say the analysts, who rely upon their own calculations and data from SLGE, Center for Retirement Research at Boston College, and NASRA. A large part of the debate regarding pension fund health revolves around the accuracy of so-called “discount rates” – the estimated future rate of return on pension fund investments – which factor into determining funded ratios. Some experts say that accounting rules that were tightened in 2012, and will change again in 2014, have made an already confusing process even more confusing for governments and employees.

3. Why are some healthier than others?

According to the research of SLGE, the Government Finance Officers Association and other groups that have looked at the issue, plans that are better positioned financially have some factors in common. They tend to: • Consistently fund their plans by paying the full employee and employer portion required to pay for the pension benefit earned by employees for a specific year, plus an amortized portion needed to pay for unfunded liabilities attached to the plan, which together are known as the Annual Required Contribution; • Incentivize or require employees to retire at appropriate full-retirement ages that reflect current life expectancy rates and worker productivity levels; • Make accurate predictions about investment and other actuarial assumptions associated with the future performance of assets

*Some of Professor Munnell’s responses are adapted from her book with permission of its publisher, the Brookings Institution.

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they invest in, including equities, bonds, real estate and alternative investments, among other vehicles; • Not allow extraordinary income in pension formulas that is not accounted for and funded, such as overtime or (non-core salary) allowances; • Take a long-term view of funding the benefit, without reducing plan funding during times of extraordinary positive market performance; and • Avoid retroactive benefit increases to employees.

“The key factor separating the healthy and less healthy plans is fiscal discipline,” Munnell of Boston College contends. “Sponsors of seriously underfunded plans, such as those in Illinois, Kentucky, Louisiana, New Jersey and Pennsylvania, have behaved badly by either failing to make their required contributions or using inaccurate assumptions so that the contribution requirements are not meaningful. An equally large number of states – Delaware, Florida, Georgia, Tennessee and North

Carolina – have done a good job of providing reasonable benefits, paying their required contributions, and accumulating assets.

Whatever differences existed before 2008 were magnified by the financial crisis.”

4. A few localities, such as Vallejo, CA, and Prichard, AL, have declared bankruptcy and curtailed benefits to pension beneficiaries. Do you expect others to follow suit? What will happen to the employees and pension-holders in the plans?

“Historically, if one looks at New York City’s financial crisis in the 1970s or Orange County [CA]’s bankruptcy in the 1990s, pensioners were among the only creditors that came out relatively unscathed,” says Brown of the University of Illinois. “It does appear that more recent cases are leading to some losses among pensioners. When you see the magnitude of the pension liabilities relative to local budgets, it would not surprise me at all to see more cities attempt to reduce liabilities by

Pension Funding: Federal vs. State and Local State and local government pension funding differs significantly from funding for federal civilian retirement annuities.

Funds deposited in the Civil Service Retirement and Disability Fund (CSRDF) are converted to special U.S. Treasury bonds. In essence, the CSRDF represents budget authority to pay the obligations set forth by law. When the Treasury redeems any bond held by the CSRDF, cash from tax revenues or separate government borrowing offsets that redemption. The federal government could avoid this intellectual complication by operating on a pay-as-you-go system (as the Civil Service Retirement System originated), where cash is distributed directly from the Treasury without any redemption of U.S. bonds from the CSRDF or if the contributions into CSRDF only accounted for current obligations. But the current system, with agency and employee deposits that account for future liabilities, forces agencies (in combination with the employee contribution) to recognize the full cost of compensation when they prepare their annual budget requests.

On the other hand, state and local government pension funds hold private-sector assets, such as

stock in private companies, that represent a store of wealth. As opposed to U.S. Treasury bonds, which have a low, but predictable and safe, rate of return, state and local pension fund returns fluctuate greatly, and can turn negative in a recession.

Even if state and local governments have been responsible in providing adequate contributions (from both government and employee) to their funds, substantial declines in asset markets, such as occurred between 2007 and 2009, can threaten the stability of the funds. However, greater rates of return to fund assets in the long term can reduce the overall cost of state and local pensions in comparison to federal annuities.

But what you may have lost in cost, you gain in security. Current law provides mandatory contributions to the fund to meet the current and future liabilities of the CSRDF. According to the Office of Personnel Management, by 2075 the fund is projected to have assets totaling more than $8 trillion, a surplus of about $33 billion over its projected future liabilities at the time. ­ —By John Hatton, Deputy Legislative Director

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The Health of

State and Local Pensions cutting benefits to current or future retirees, nor would it surprise me to see more cities declare bankruptcy. It is important to note that unlike private-sector workers, those in the public sector are not insured by the Pension Benefit Guaranty Corp. So in cases where a state or local government does reduce benefits and where the courts allow it, the pensioners will really have no recourse.”

“States are not permitted to file for bankruptcy by federal law,” points out Ron Saathoff, director of pension resources at the International Association of Fire Fighters (IAFF), a labor union. “In the case of the Detroit bankruptcy, the solution proposed by the emergency manager is to put current and future retirees in bankruptcy. The proposal is to reduce retiree pension benefits by up to 80 percent and triple their health care costs. The outcome ultimately will be decided in federal court.”

5. At the state and local government level, are we seeing replacement of definedbenefit pension plans with definedcontribution plans? (In defined-benefit plans, investment risk and portfolio management is under the control of the fund manager, and employees receive pension payouts based primarily on such factors as length of employment and salary level; in defined-contribution plans, employees have greater involvement but no guaranteed benefit levels.)

“Many of the recent pension reforms reflect, among other things, increased employee contributions, and a shift in the risks associated with providing retirement benefits from the employer to the employee,” say Franzel and Alex Brown. “There has been increased interest in so-called ‘hybrid plans,’ which distribute risks between the employer and employee.”

Still, they say that so far there has been no large-scale shift to defined-contribution plans as the primary vehicle for delivering retirement benefits to state and local employees.

They also say that one goal of shifting from defined-benefit to defined-contribution plans, saving money, is not necessarily borne out in practice. “Several studies have looked at

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whether there were cost savings from switching from defined benefit to defined contribution. They found that, in some cases, cost savings are minimal, partly because you still have the liabilities on the books from the closed defined-benefit plan – they don’t go away. You also lose the economies of scale from having a defined-benefit plan that is professionally managed. So it is not a certainty that you will save money, and sometimes the savings will take years to materialize.”

“There are misconceptions about the cost of pensions – for both the public and private sectors,” agrees Diane Oakley, executive director of the National Institute on Retirement Security (NIRS), a nonpartisan, nonprofit research body. “Pensions are highly economically efficient. Our research makes it clear that the economic efficiencies embedded in pensions enable them to deliver the same retirement benefit as a 401(k) plan at half the cost.

There are also misperceptions about who is paying the cost of these retirement plans and the amount of benefits. Typically, employees and investment returns fund the vast majority of the benefits – about 75 percent nationally.

Many public workers do not participate in Social Security.”

6. To what degree have state and local pension plans changed eligibility, reduced benefits, changed vesting requirements, etc.?

“There is a common misconception that public plans are static – this is not the case,” say Franzel and Alex Brown. They note that, according to the National Conference of State Legislators, 44 states enacted major changes in state retirement plans for many groups of employees from 2009–2012. Some of the more common changes have been: • Suspending or lowering cost-of-living adjustments for current and/or future retirees.

This change is sometimes linked to the plan funding levels or general economic indicators.

• Increasing employee contributions to plans for new and existing employees. Sometimes these increases are phased in over time or change based on underlying plan funding.

• Reducing benefits for new hires by chang-

ing how the pension benefit is calculated. This change has often been coupled with higher vesting requirements, longer service requirements and later retirement ages for new hires.

• Changing from a defined-benefit plan to a hybrid plan.

7. Is a cooperative approach to addressing state and local government pension challenges possible?

“There are many examples of collaborative efforts to address public pension challenges,” says Nancy McKenzie, senior pension specialist at the National Education Association (NEA), a labor union. “For instance, an accord reached in Vermont in 2010 between the legislature, the state treasurer and Vermont NEA will result in most teachers working additional years and making higher contributions to the pension fund but receiving a larger pension check on retirement and a stronger commitment from the state to preserve and fully fund

their pension system. The state will initially save $15 million a year, or about 10 percent of Vermont’s budget shortfall.”

“Yes, it speaks volumes that 48 states have implemented changes to ensure the continued viability of their pension plans,” says the NIRS’ Oakley. “One example is Wisconsin.

The pension plan was caught in the crossfire of a highly charged political debate on a number of issues. But when policymakers got together and really studied the plan and its funding level, they found that it is one of the best plans in the country. In the end, the involved parties agreed to stay with the pension system that is working for employers and employees. Also, Ohio and Texas are models where careful analysis of the pension plans combined with consensus building led to enactment of changes that put the pensions on sustainable paths for the long term.”

—David Tobenkin is a freelance writer based in the greater Washington, DC, area.

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Managing Money

The benefits of a roth conversion

I

n the November 2013 issue, I wrote about proposals that would require nonspouse beneficiaries to liquidate an inherited IRA within five years of inheriting the

account. I also mentioned that Roth IRA conversions may become even more beneficial if the proposals become law. Several NARFE members have asked, “If the proposals apply to inherited Roth IRAs as well, why would converting to a Roth IRA be beneficial?”

Before we get into the details of the answer, it’s important to understand the economic difference between a traditional IRA (or other tax-deferred retirement plan) and the potential Roth IRA to which the traditional IRA can be converted.

And that is, there is no economic difference between the two, assuming the tax liability in the year you convert to a Roth IRA is the same as it would be in the year you (or your beneficiaries) take distributions from the traditional IRA if you forgo the conversion.

Let’s look at a simple example to illustrate this equality. Let’s assume Jack has a traditional IRA worth $100,000 and is in the 25 percent tax bracket.

What’s the real value of Jack’s traditional IRA? Hint: It’s not $100,000. No, the real value is $75,000 ($100,000 minus the $25,000 tax liability he must pay if he liquidated the account).

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Now, let’s assume Jane, also in the 25 percent tax bracket, converts her $100,000 traditional IRA to a Roth IRA. When you convert to a Roth IRA, you have to pay taxes on every dollar you convert (assuming there are no after-tax contributions in your traditional IRA).

In Jane’s case, her taxes on the conversion total $25,000, and although it’s better if you don’t, we’ll assume Jane uses funds from her traditional IRA to pay the taxes. This leaves Jane with a Roth IRA valued at $75,000, the same “real” value as Jack’s traditional IRA. What about the future value, though? Assuming both accounts grow at 7.2 percent per year for 10 years, Jack’s traditional IRA will be worth about $200,000, and Jane’s Roth IRA will be worth about $150,000.

But adjusting for taxes, Jack’s traditional IRA’s real value is $150,000 (assuming a 25 percent tax rate), and because

By Mark A. Keen,

CFP®

a Roth IRA has no tax liability (assuming qualified distributions), Jane’s Roth IRA’s real value is $150,000 as well.

When I refer to tax liability, I’m referring not only to the tax bracket you may be in, but also to any ancillary expenses you may incur as a result of a Roth conversion or traditional IRA distribution. For example, the increased income generated by a Roth conversion or traditional IRA distribution may trigger additional taxes on your Social Security benefits, higher Medicare Part B premiums or loss of medical deductions.

Now, to answer the question: Roth conversions may become more appealing because if a nonspouse beneficiary is forced to liquidate the traditional IRA within five years, the larger distributions may create a higher total tax liability for the beneficiary than the deceased owner would have incurred if he or she converted the traditional IRA to a Roth IRA. For example, let’s assume Jane dies 10 years after she converted her traditional IRA to a Roth IRA and leaves the $150,000 Roth IRA to her son, Mike. Although, under the proposed rule, Mike must liquidate the inherited Roth IRA within five years, the distributions will be completely tax free. In other words, Mike’s inherited Roth

FINANCIAL TOOLS NARFE offers an online retirement calculator and other financial planning tools. Find out more at www.narfe.org/ federalbenefits.

IRA’s real value is $150,000.

Now, let’s assume Jack died at the same time as Jane, and left his $200,000 traditional IRA to his daughter, Mary, who takes out $40,000 per year to liquidate the account in five years. We’ll also assume Mary was in the upper range of the 25 percent tax bracket and finds $10,000 of each distribution taxed at the 25 percent rate and $30,000

of each distribution taxed at the 28 percent rate.

Mary’s tax bill on the distributions totals $54,500, resulting in a net real value of $145,500.

That’s an extra $4,500 in taxes than what Jane paid to convert her IRA and doesn’t include any possible ancillary expenses Mary may incur as a result of increasing her taxable income. For example, if Mary were over age 65, her Medicare Part B premium would have increased by about $100 per month during the distribution years as well.

Next month, we’ll take a look at factors that could affect one’s total tax liability and scenarios where Roth conversions could shine.

Mark A. Keen, CFP®, is partner, Keen & Pocock, 10300 Eaton place, Fairfax, VA, and an investment adviser representative and registered principal of The Strategic Financial Alliance, Inc. (SFA). Securities and advisory services are offered through SFA. Email: mkeen@keenpocock.com.

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The Informed Citizen

Electoral planning

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f you’ve resolved to use the ballot box to its maximum impact, plan to learn about congressional candidates, especially between the filing deadline and your state’s primary, shown in the table below. Incumbents, including those easily re-elected for many cycles, may get a sudden and serious challenge. “No Prior Experience” might be the ballot slogan for the “Throw the Bums Out” party.

These uncertain times empower NARFE chapters, working together within a single congressional district, to conduct candidate forums prior to party primaries when such forums will have their biggest impact.

Redistricting before the 2012 elections made House primaries even more important. In many districts, there will be almost no competition in November.

Races for Senate and governor must be coordinated by federa-

State Filing Deadline Primary Runoff Alabama April 4 June 3 July 15 Alaska June 2 August 19 Arizona May 28 August 26 Arkansas May 20 June 10 California March 7 June 3 Colorado April 15 June 24 Connecticut June 10 August 12 Delaware July 8 September 9 District of Columbia April 1 Florida May 2 August 26 Georgia March 21 May 20 July 22 Guam TBD August 30 Hawaii June 3 August 9 Idaho March 14 May 20 Illinois December 2 March 18 Indiana February 7 May 6 Iowa March 14 June 3 Kansas TBD August 5 Kentucky January 28 May 20 Louisiana August 22 December 6 Maine March 17 June 10 Maryland February 25 June 24 Massachusetts June 3 September 16 Michigan TBD August 5 Minnesota June 3 August 12 Mississippi TBD June 3 June 24 Missouri March 25 August 5 Montana March 10 June 3 Nebraska March 3 May 13 36

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By Christopher Farrell, Legislative Representative

tion leaders. Harness the federation convention, where NARFE heavy hitters gather, to question statewide candidates. Use elections to make candidates (incumbents, their challengers and those running in open seats) speak to NARFE issues.

The stakes are high. Income security (COLAs) and health security (FEHBP and Medicare) are threatened by the Chained CPI and risk pool changes respectively. NARFE’s organizational structure must be used to defend the earned benefits of career federal service.

State Filing Deadline Primary Runoff Nevada March 14 June 10 New Hampshire June 13 September 9 New Jersey TBD June 3 New Mexico TBD June 3 New York TBD June 24 North Carolina February 28 May 6 TBD North Dakota February 28 June 10 Ohio February 5 May 6 Oklahoma April 11 June 24 August 26 Oregon March 11 May 20 Pennsylvania March 11 May 20 Puerto Rico Rhode Island TBD September 9 South Carolina TBD June 10 June 24 South Dakota March 25 June 3 August 12 Tennessee April 3 August 7 Texas December 9 March 4 May 27 Utah March 20 June 24 VERMONT June 12 August 26 Virgin Islands TBD TBD Virginia March 27 June 10 Washington May 16 August 5 West Virginia January 25 May 13 Wisconsin June 2 August 12 Wyoming May 30 August 19 KEY: Black= No Statewide Election

Red = Senate Election

Blue = Governor Election Purple = Both Senate & Governor Elections

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’12 2013 ’12 2013

For the Record

Thrift Savings Plan Monthly Returns G FUND

F FUND

C FUND

S FUND

I FUND

DECEMBER

0.12%

(0.13%)

0.91%

2.69%

4.02%

JANUARY

0.13%

(0.56%)

5.18%

6.96%

4.45%

FEBRUARY

0.13%

0.51%

1.36%

1.00%

(0.99%)

March

0.13%

0.07%

3.75%

4.69%

0.88%

APRIL

0.12%

1.02%

1.93%

0.65%

5.32%

MAY

0.12%

(1.78%)

2.34%

2.71%

(3.12%)

June

0.14%

(1.53%)

(1.34%)

(0.99%)

(2.77%)

JULY

0.18%

0.13%

5.10%

6.88%

5.29%

AUGUST

0.18%

(0.48%)

(2.89%)

(2.76%)

(1.31%)

SEPTEMBER

0.19%

0.99%

3.14%

5.89%

7.41%

OCTOBER

0.19%

0.89%

4.60%

2.94%

3.38%

NOVEMBER

0.18%

(0.35%)

3.05%

2.49%

0.75%

YTD

1.69%

(1.13%)

29.17%

34.40%

20.32%

LAST 12 MO

1.81%

(1.26%)

30.34%

38.02%

25.16%

L INCOME

L 2020

L 2030

L 2040

L 2050

DECEMBER

O.47%

1.19%

1.48%

1.69%

1.93%

JANUARY

1.10%

2.83%

3.56%

4.11%

4.63%

FEBRUARY

0.27%

0.41%

0.49%

0.54%

0.56%

MARCH

0.73%

1.69%

2.12%

2.44%

2.71%

APRIL

0.67%

1.58%

1.91%

2.13%

2.41%

MAY

0.19%

0.33%

0.43%

0.51%

0.53%

JUNE

(0.30%)

(0.94%)

(1.20%)

(1.40%)

(1.59%)

JULY

1.21%

2.95%

3.72%

4.29%

4.83%

(0.39%)

(1.22%)

(1.60%)

(1.87%)

(2.11%)

SEPTEMBER

1.12%

2.71%

3.40%

3.90%

4.42%

OCTOBER

1.01%

2.23%

2.75%

3.11%

3.47%

NOVEMBER

0.58%

1.24%

1.54%

1.74%

1.93%

YTD

6.35%

14.59%

18.32%

21.08%

23.75%

LAST 12 MO

6.86%

15.96%

20.06%

23.13%

26.14%

AUGUST

Stocks advance, but bonds decline Equity markets gained in November for the third consecutive month. A Bloomberg poll indicates that investors expect the Federal Reserve to delay a decision to taper its monetary stimulus until March 2014 or later, supporting equity prices. The F Fund suffered its first monthly decline since August, however, on speculation that November jobs gains may signal faster growth and convince the Fed to scale back its bond-buying sooner.

—BY william H. Jacobson, Deputy Chief investment officer of the Thrift Savings Plan

Countdown to COLA

T

he Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 0.3 percent in October 2013. To calculate the amount of the 2015 cost-of-living adjustment (COLA), the indices of July, August and September 2014 will be averaged and compared with the 2013 third-quarter average of 230.327.

That percentage increase, if any, determines the COLA. The October index of 229.735 is down 0.26 percent from the base. The 1.5 percent 2014 COLA will take effect in January.

Benefits awarded under the Federal Employees’ Compensation Act (FECA) to individuals suffering work-related injuries or illnesses are adjusted according to each calendar year’s percentage change in the CPI-W. October’s index is 1.7 percent higher than the December 2012 base index of 225.889.

The CPI represents purchases of food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. Included are various government fees, such as water charges, auto registration fees, and sales and excise taxes.

Month

October 2013 November December

THIS CHART is provided as a service to NARFE members who enrolled in the Thrift Savings Plan while employed by the federal government. Retirees are not eligible for enrollment. These returns are net of the effect of accrued administrative expenses and investment expenses/costs. Percentages in () are negative. Source: TSP

January 2014 February March April

G Fund: Government securities (specially issued to the TSP) F Fund: Government, corporate and mortgage-backed bonds C Fund: Stocks of large- and medium-size U.S. companies S Fund: Stocks of small- to medium-size U.S. companies (not included in the C Fund) I Fund: International stocks of 21 developed countries L Fund: Invested in the G, F, C, S and I Funds (The proportion of L Fund balance invested in each of the individual TSP funds depends on the L Fund chosen.)

38

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May June July August September

CPI-W

229.735

Monthly % Change

-0.3

% Change from 230.327

-0.26

Donate to NARFE Programs Support Alzheimer’s Research

Your charitable contribution is tax-deductible to the fullest extent allowed by law.

Write your chapter number on check; make it payable to: NARFE-Alzheimer’s Research

Enclosed is my NARFE-Alzheimer’s contribution: $ Every cent that is contributed is used for research.

Please circle: Mr. Mrs. Miss Ms. and mail to: Name: Alzheimer’s Association Address: 225 N. Michigan Ave., 17th Floor City: State: ZIP: Chicago, IL 60601-7633 Chapter Number: Credit Card Information:

MasterCard Visa NARFE members contributed for If you have any questions, write to:

Discover AMEX Alzheimer’s research: $11 Million Fund National Committee Chair Card Number: Jane Rodgers, P.O. Box 234 Expiration Date: (mm)/ (yy) Wadesville, IN 47638-0234 *Total as of October 31, 2013 3-Digit Security Code: 100% of all contributed funds go to Name: (please print) Email: ajrodgers@tds.net

$10,538,826* Alzheimer’s research.

Signature

Join the Silver CIrcle Clip this contribution form and mail to: NARFE Silver Circle, 606 N. Washington St. Alexandria, VA 22314

•For a contribution of $25 or more, you will receive a Silver Circle pin, and your name will be listed in narfe magazine with other contributors.

•For a contribution of $1,000 or more, your name will be placed on the “Wall of Fame” at NARFE Headquarters.

YOUR CHARITABLE CONTRIBUTION IS TAX-DEDUCTIBLE TO THE FULLEST EXTENT ALLOWED BY LAW.

/

Enclosed is my Silver Circle contribution: $ ID # (ID # may be found on your narfe magazine label or your NARFE membership card)

Name: Address:

Silver Circle contributions are NOT deductible for federal income tax purposes.

Installment Plan Wall of Fame 12-month installment plan

Give to the Scholarship and Disaster Funds

Please mail coupon and check to: FEEA 3333 S. Wadsworth Blvd., Suite 300 Lakewood, CO 80227

/

All donations go to the NARFE General Fund to support NARFE programs and operations.

My check is enclosed

(Please make check payable to NARFE Silver Circle.)

Please charge my credit card Card type MasterCard Visa

Discover AMEX Card Number: Expiration Date: (mm)/ (yy) Name: (please print)

Signature

Make check payable to: NARFE-FEEA Disaster Fund or NARFE-FEEA Scholarship Fund.

Date

YES!

Date

/

/

I would like to help with my contribution.

Please check appropriate box(es). To make credit-card contributions, call 800-338-0755. Scholarships are available to children, grandchildren and great-grandchildren of federal civilian retirees and current federal employees who are NARFE members.

NARFE-FEEA Disaster Fund

Name: Address:

Amount: $

NARFE News

Philippine Disaster

Panel Looks at NARFE’s Future

A

12-member committee began meeting in September 2013. tasked by National PresiAmong the topics the committee dent Joseph A. Beaudoin has considered are: governance, to address the future course of the structure, membership, electronic Association made its first report to and other communications, dues, the National Executive Board in Nopractices of other organizations and vember. “We believe we have made change strategies. solid progress toward common ideas In addition, the committee said it to strengthen NARFE in keeping is looking at approaches to advowith our charge,” said the Future of cacy, budget issues, bylaws, retainLife Membership Apl_New Design 3/26/13 3:49 PM Page 1 NARFE (FON) Committee, which ing current members and attracting

NARFE members who had losses due to Typhoon Haiyan in the Philippines may be eligible for a $500 grant from the NARFE-FEEA Disaster Fund. To apply, contact the Federal Employee Education & Assistance Fund at 800-338-0755.

To donate, see p. 39, or go to www.feea.org, click on “Give Now,” then “Check this list for links” and select “NARFE Relief Fund.”

new ones, and matters that may come before the 2014 NARFE National Convention in August.

It plans to make recommendations to Beaudoin, the other National Officers and the Board.

In the photo, FON Committee co-chairs William Shackelford, Virginia; and Evelyn Kirby, Region II vice president, Maryland, confer before reporting to the Board.

NARFE NATIONAL LIFE MEMBERSHIP APPLICATION Life Membership Fee Schedule Ages

Contact Information n Mr. n Mrs. n Miss n Ms. Full Name _____________________________________________ Street Address _________________________________________ Apt./Unit______________________________________________ City _______________________ State _____ ZIP _____________ Phone (__________) ____________________________________ Email_________________________________________________ Date of Birth _________ /_________ /___________________ dd

mm

yyyy

Recruiter ID # (if applicable) _________________________________ Chapter Number _______________________________________ (call 800-456-8410 for chapter information) Membership Information Member Number: ______________________________________ (New members) Membership is open to civilians in any agency of the federal or D.C. (before Oct. 1, 1987) governments eligible for a federal annuity.

Thank you for becoming a National Member for Life. You will receive a membership card, certificate and special lapel pin.

Please allow six weeks for processing. Dues payments & gift contributions to NARFE are not deductible as charitable contributions for income tax purposes.

40

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Single or Quarterly Payment Installments 30-39 $1,796 $450.25 40-50 1,408 353.25 51-55 1,127 283.00 56-60 960 241.25 61-65 801 201.50 66-70 653 164.50 71-75 514 129.75 76-80 392 99.25 81-90 251 64.00 91-100+ 127 33.00

I am a (check all that apply) n Active Federal Employee n Active Federal Employee Spouse n Annuitant n Annuitant Spouse n Survivor Annuitant

PAYMENT INFORMATION n Single Payment or n Quarterly Installments (4 payments) Life Membership fee amount: $ ______________________ PAYMENT OPTIONS n Check or Money Order (Payable to NARFE) n Charge my: n MasterCard n VISA n Discover n American Express Card No. __________________________________________ Expiration Date _________ /_________ mm

yyyy

Name on Card ______________________________________ Signature ____________________________ Date ________ MAIL THIS APPLICATION TO NARFE Member Records 606 N. Washington St. / Alexandria, VA 22314-1914

August 24-28

rlando 33rd Biennial NARFE Convention

NARFE will hold its 33rd Biennial National Convention August 24-28 at the Rosen Centre Hotel in Orlando, FL. The theme for the Convention is “NARFE Is In Your Future: Embrace the mission. Share the vision.”

NARFE National President Joseph A. Beaudoin says the convention promises to be one of the most important in the Association’s history. “It could shape the future of NARFE,” says Beaudoin, who is optimistic that proposals from the Future of NARFE Committee will be voted on at the convention. (See story, p. 40.)

Training Opportunities. Delegates will have several training opportunities. “Lunch and Learn” and “Breakfast and Learn” sessions are planned on membership marketing, legislation and the Online Activities Module.

Location, Location, Location.

It won’t be all work. Ken Thomas, president of the Florida Federation and chair of the Convention Host Committee, issued an invitation to enjoy the famous Florida sunshine.

“While you certainly know Orlando as America’s favorite family destination, we have found even more offerings that will give you additional reasons to attend the 2014 NARFE National Convention and may entice you to stay longer,” Thomas says.

See the Host Committee website, www.narfefl.us, for additional information on local attractions.

Register Online. Starting in January, you can pay for your convention and banquet registration online at www.narfe.org. Or you can make your reservations by mail using the forms on p. 42.

All convention activities will be held at the hotel. Note: The convention banquet takes place from 6-11 p.m. on Thursday, August 28, so hotel reservations will be re-

quired for the night of August 28 if you plan to attend the banquet.

Delegate Information. Deadlines for candidate statements, committee assignment requests, delegate forms, resolutions and convention registration are on p. 43.

Proposed revised bylaws and resolutions will be published and mailed to all chapters and delegates prior to the convention. These documents also will be available online at the convention home page at www.narfe. org.

Travel Arrangements

Hotel Registration

Rosen Centre Hotel 9840 International Dr. Orlando, FL 32819 800-204-7234 www.RosenCentre.com NARFE Rate: $95 + 13.1% tax =$107.45 single/double occupancy per night. Additional person: $20 For NARFE group rate, please use Group Code 50485.

Reservation Cutoff Date: Monday, July 21

Airline Discounts Delta Airlines, www.delta.com. When booking online, select Meeting Events Code and enter the meeting ID: NMGND in the box provided on the Search Flight page. A direct ticket charge of $25 will apply if booking by phone (800-328-1111).

United Airlines, www.united.com. When booking online, enter the Z Code: ZCQJH, then the Agreement Code: 825302. A $25 service fee will be collected per ticket for all tickets issued by phone through United Meetings reservations, 800-426-1122.

w w w. n a r f e . o r g

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41

NARFE 2014 National Convention Orlando, Florida August 24-28

PREREGISTRATION FORM NARFE ID #:_ _________________________________ Name:______________________________________ Address:_____________________________________ ___________________________________________ Name for badge:_______________________________ Chapter #:___________________________________ Location:_ ___________________________________

Please check: o (Guest) Member o (Guest) Nonmember

o Delegate* o Delegate-at-Large* o Alternate*

*NOTE: This is NOT a voter registration form. Voter registration is confirmed by your chapter on Form C/14-2. n

n n n

A nonrefundable fee of $75 (payable to NARFE) must accompany this form.

Onsite registration fee will be $90.

Each attendee must complete a separate registration form.

Form must be postmarked by August 1, 2014.

Notify in case of emergency: Name:______________________________________ Phone Number:_ ______________________________ Form C/14-4

o Charge to my credit card: o MasterCard o Visa o Discover o AMEX Card#:_ ____________________________________ Expiration Date:_________ /_ ______

Make check payable to NARFE and send to: NARFE, Treasurer’s Office 606 N. Washington St. Alexandria, VA 22314-1914

BANQUET REGISTRATION FORM

August 28, 2014 NARFE ID #:_ _________________________________ Name:______________________________________ Address:_____________________________________ ___________________________________________ Chapter #:___________________________________ Nonmember Guest:_____________________________

(mm)

(yy)

Name on card (print):___________________________ Signature:_ _________________________________

NARFE 2014 National Convention Orlando, Florida August 24-28

n

n n

n

n

n

Tables will be assigned on a first-come, first-served basis.

Tables seat 10 people.

RESERVATIONS LIMITED TO 2,000 PEOPLE. Groups wishing to sit together should submit only one request specifying number of seats desired. Please attach name list.

A receipt will be mailed to you by August 1 acknowledging payment and showing your table assignment.

All banquet tickets will be held for pickup at the convention registration area at Junior Ballroom F, 1st Floor.

BANQUET REFUNDS AVAILABLE ONLY IF RESERVATIONS ARE CANCELLED 72 HOURS PRIOR TO THE BANQUET.

Please reserve _ _____ tickets at $65 each, total $_______ Form C/14-16

Make check payable to NARFE and send to: NARFE, Treasurer’s Office 606 N. Washington St. Alexandria, VA 22314-1914

o Charge to my credit card: o MasterCard o Visa o Discover o AMEX Card#:_ ____________________________________ Expiration Date:_________ /_ ______ (mm)

(yy)

Name on card (print):___________________________ Signature:_ _________________________________

Convention Deadlines

Candidate Statements: March 1 NARFE’s four National Officers – President, Vice President, Secretary and Treasurer – and its 10 regional vice presidents will be elected at the National Convention.

Candidates may submit their qualifications and/or platforms for narfe magazine publication. Candidate statements will be published in the May issue only. This will allow NARFE members to view all candidates for office at once. This is a change from previous years, when statements were published as submitted over the course of four months.

The statements must be limited to 400 words and may be emailed to communications@narfe.org as a Microsoft Word attachment. No copy corrections will be made, including spelling, so statements should be carefully proofread before submission. Candidates should submit a head-and-shoulders photograph for publication with their statement.

Photos should be emailed in JPG format to communications@narfe. org. Deadline for statements and photos is March 1.

Candidates also are entitled to send statements to the membership via NARFE’s global email messaging system (GEMS). Statements must be limited to 400 words, and two may be sent between February 1 and July 31. Send statements as Microsoft Word attachments to IT@narfe.org.

Committee Assignment Requests: March 1 Delegates wishing to be appointed to a National Convention committee must submit their request on Form C/14-22, Request for Committee Assignment. The form is available at www.narfe.org. Simply log in, go to the National Convention page and click on Forms. The form should be completed online. When completed, click “submit,” and the form is sent

to NARFE Headquarters and copied to the chaper president, federation president and regional vice president. Anyone wishing to have the form mailed to them should call or send the request to Headquarters, Attn: Linda Parsons (lparsons@ narfe.org). Committee members must be convention delegates.

Requests must be received by the Office of the National President no later than March 1. After reviewing the requests and considering the regional vice presidents’ comments, the National President will appoint the committees. Candidates for national officer or regional vice president positions will not be assigned to certain committees.

The convention committees are: Ballot & Teller, Bylaws, Credentials, Legislative, Membership, Resolutions, Rules, Sergeant-at-Arms, Secretary and Timekeeper.

Resolutions: No later than May 13 All resolutions must be received by the Office of the National Secretary no later than May 13. This deadline is essential if NARFE is to comply with publication requirements set down in Article VIII, Section 2.A, of NARFE’s National Bylaws.

tive, Form C/14-2 must be received by the Office of the National Secretary no later than June 28.

If a chapter does not send a delegate to the National Convention, a proxy delegate may be selected to represent it. Chapters wishing to designate a proxy delegate must submit Form C/14-2 to the Office of the National Secretary no later than August 9. (If mailed, it must be postmarked by that date.) A delegate cannot hold proxies for more than three chapters.

Registration: Postmarked

by August 1 The registration fee for all convention attendees is $75 if Preregistration Form C/14-4 is used and payment is postmarked or submitted online no later than August 1. The onsite registration cost is $90.

Banquet tickets are $65 per person. They are available on a firstcome, first-served basis. Refunds will be available only if reservations are canceled at least 72 hours prior to the banquet. The Preregistration (C/14-4) and Banquet Reservation (C/14-16) forms appear in this issue, p. 42, and will be available online at www.narfe.org.

Delegate Form: June 28 Proxy Form: August 9 Chapters should appoint or elect convention delegates as soon as possible. Form C/14-2, Designation of Chapter Delegates, Voting Representative and Proxy will be posted on the NARFE website in late April.

The forms will be interactive. When completed, click “submit” to send the form to Headquarters. Anyone wishing to have a form mailed to them should send the request to Headquarters, Attn: Office of the National Secretary (natsec@narfe.org).

When used to designate chapter delegates and the voting representaw w w. n a r f e . o r g

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43

Active and Retired Federal Employees ...

JOIN NARFE TODAY!

National Active and Retired Federal Employees Association The only organization dedicated solely to protecting and preserving the benefits of all federal workers and retirees, NARFE informs you of any developments and proposals that affect your compensation, retirement and health benefits, AND provides clear answers to your benefit questions.

Who Should Join?

Three Easy Ways To Join 1.

2.

3.

N A R F E M E M B E R S H I P A P P L I C AT I O N n YES. I want to join NARFE. n Mr. n Mrs. n Miss n Ms. Full Name ________________________________________ Street Address ____________________________________ Apt./Unit ________________________________________

I am a (check all that apply) n n n n n

Active Federal Employee Active Federal Employee Spouse Annuitant Annuitant Spouse Survivor Annuitant

n Please enroll my spouse

City _______________________ State _____ zIp ________

Spouse’s Full Name ________________________________

phone (__________) _______________________________

Spouse’s Email ____________________________________

Email____________________________________________

NARFE respects the privacy of our members. Personal information is used to provide content and relevant communications to our members, and will not be sold or rented to third parties without your express permission.

Choose Your Membership Type o eNARFE Chapter Online Membership – $40 NARFE’s electronic chapter. Receive narfe magazine by mail each month, and all other communications by email and on eNARFE.org. Get important updates and legislative action alerts, and have access to the eNARFE blog.

OR

o Local Chapter Close-to-Home Membership – $40*

PAYMENT OPTIONS n Check, Money Order or Bill pay (payable to NARFE) n Bill me (NARFE membership will start when payment is received.) n Charge my: n MasterCard n VISA n Discover n American Express Card No. _____________________________________ Expiration Date _________ /_________

Affiliation with the NARFE chapter closest to your home.

Receive narfe magazine each month; attend meetings, often with invited speakers; network; and get involved in grass-roots lobbying efforts.

Name on Card _________________________________

Chapter Affiliation: Chapter # __ __ __ __(if known, otherwise enroll me in the chapter closest to my zIp code).

Date _________________________________________

*First-year dues. Subsequent years, $40 plus local chapter dues.

Total Dues $40 First-Year Dues X __________ = __________ per person # Enrolling Total Dues

mm

yyyy

Signature _____________________________________

MAY WE THANK SOMEONE? If applicable, please provide the name, membership and chapter number of the member who introduced you to NARFE: Recruiter’s Name __________________________________ Recruiter’s Membership ID __________________________ Recruiter’s Chapter Number _________________________

MAIL THIS APPLICATION TO NARFE Member Records / 606 N. Washington St. / Alexandria, VA 22314-1914

NARFE’s Dues Withholding Program What is dues withholding?

It is a dues-payment method that gives NARFE members (retirees) the option of having their annual NARFE membership dues deducted from their annuities on a monthly basis.

How does it work?

One-twelfth of your total dues is automatically deducted from your monthly annuity. Your monthly deduction is determined by the following formula: (National dues ÷ 12) + (Chapter dues ÷ 12) = Total Monthly Deduction

Advantages • Save 15% off your annual membership dues!

• Sign up your spouse and double your savings!

• You’ll never get another dues reminder from us!

• Your monthly payment is affordable and convenient!

• You may cancel your dues withholding at any time!

Application process It takes 60-90 days to process your application. Once the process is complete, you will receive a special membership card distinguishing you as a NARFE dues-withholding member.

To learn more about dues withholding, call 800-627-3394.

Retirees, spouses of retirees and annuitant survivors are eligible for dues withholding.

NARFE Dues Withholding Application for Retirees n YES. I want to enroll in NARFE’s Dues Withholding Program (Annual dues of $34 plus Chapter dues of record to be withheld annually.)

Social Security Number (9-digit number)

–

Civil Service Annuity Number

–

C S

–

–

–

(Include prefix, CSA or CSF) (Include any applicable suffix)

n Mr. n Mrs. n Miss n Ms. Full Name _______________________________________

NARFE MEMBERSHIP INFORMATION

Street Address ___________________________________

NARFE Membership ID ____________________________________

Apt./Unit________________________________________

NARFE Chapter Number____________________________________

City _________________________ State _____ ZIP _____

n YES. I Also Authorize My (NARFE Member) Spouse’s Dues To Be

Phone (__________) ______________________________ Email ___________________________________________ Date of Birth _________ /_________ / ____________________ dd

mm

yyyy

Withheld From My Annuity. (Additional annual dues of $34 plus Chapter dues of record to be withheld annually.)

If YES, enter spouse’s information below.

Spouse’s Name ___________________________________________ Spouse’s Membership ID ___________________________________

AUTHORIZATION (Withholding will begin in 60-90 days). No payment should be forwarded with application.

I authorize the United States Office of Personnel Management to make appropriate deductions from my annuity payments, not to exceed the amount certified by the National Active and Retired Federal Employees Association as the amount of dues for which I am annually obligated, in accordance with elections I make below, and to pay the deducted sum to the National Active and Retired Federal Employees Association (NARFE). This authorization shall also apply to any and all dues changes certified by NARFE membership in accordance with elections I make below: Please allow 60-90 days for processing.

I understand that this authorization shall be valid until NARFE receives and processes my written notice of cancellation in accordance with its agreement with the Office of Personnel Management and that any disputes regarding this authorization shall be a matter between NARFE and myself. I hold the Office of Personnel Management harmless for any erroneous allotment deduction made pursuant to this authorization. ___________________________________________________________________________ _______________________________

Signature of Annuitant or Survivor-Annuitant

Date

Dues payments and gifts or contributions to NARFE are not deductible as charitable contributions for federal income tax purposes.

MAIL THIS FORM TO: NARFE, ATTN: Member Records, 606 N. Washington St., Alexandria, VA 22314-1914 www.narfe.org 800-627-3394 rr@narfe.org Do not send money with this form

DW-2 (08/12)

Member Perks

NARFE Member Perks

are designed to provide NARFE members with a quality option in their search for commonly used products and services.

NARFE makes no guarantee on any products and services listed, and encourages its members to shop and compare before making a decision on any financial matter.

Credit Union

NARFE Premier Federal Credit Union 800-328-1500 www.NARFEpremierfcu.org As a member of NARFE, you have the privilege of joining NARFE Premier Federal Credit Union, which has been serving members since 1935. We offer extensive services at competitive rates to members nationwide. Your savings are federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. For more information, call the number above, email jparish@narfepremierfcu.org or visit the website.

insurance

NARFE Insurance Services 800-233-5764 www.narfeinsurance.com Designed and administered by Marsh U.S. Consumer, a service of Seabury & Smith, Inc., exclusively for NARFE members: Senior Whole Life, Term Life, Medicare Supplements, Hospital Income Plan, Short Term Recovery Insurance, Pet Insurance, Accidental Death & Dismemberment, Cancer Care, Enhanced Dental Insurance and Long Term Care. Go to the website for more information on these programs.

GEICO 800-368-2734 NARFE members with good driving records may be eligible for quality automobile insurance from GEICO. Ask about the NARFE discount available to members in many states. Call to46

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day for your free, no-obligation rate quote. Be sure to mention that you’re a NARFE member!

• Discount amount varies in some states • Discount not available in all states or in all GEICO companies • One group discount applicable per policy.

Federal Long Term Care Insurance Program 800-LTC FEDS www.LTCFEDS.com Make long-term care insurance part of your retirement plan. With benefits designed specifically for the federal family, the Federal Long Term Care Insurance Program offers a smart way to help protect savings and assets, and remain independent should you need long-term care services someday. Start planning for the future. Visit www.LTCFEDS.com today.

Vacation rentals

Government Employees Travel Opportunities® 877-867-3639 www.getravelop.com/narfe Offers government employees, retirees and their families 7-night stays for only $349 on accommodations at popular destinations worldwide.

Book online and save on your next vacation stay.

hotels

Choice Hotels International 800-258-2847 www.choicehotels.com With 6,000 hotels in the United States and throughout the world, Choice Hotels® offers something for everyone. Join the Choice Privileges® rewards program and earn points with every qualifying stay toward free nights, Airline Rewards, gift cards and more. As a NARFE member, receive 20% off your next stay at participating hotels when you use Special Rate ID 00801967. This offer is subject to availability and cannot be combined with any other offer. Advance reservations required.

Wyndham Hotel Group 877-670-7088 As a member of NARFE, you will receive up to 20% off the “Best Available Rate” at participating locations.

Call and give the agent your special discount ID number, 8000002694, at time of booking to receive discount.

Whether you are looking for an upscale hotel, an all-inclusive resort or something more cost-effective, we have the right hotel for you... and at the right price. So start saving now.

Call our special member-benefits hotline 877-670-7088 and reserve your room today at one of these fine hotels: Wyndham Hotels and Resorts®, Days Inn®, Ramada Worldwide®, Super 8®, Wingate By Wyndham®, Baymont Inns and Suites®, Hawthorn Suites® By Wyndham, Microtel Inns and Suites®, Howard Johnson®, Travelodge® and Knights Inn®.

car rentals

National You Drive A Hard Bargain. Receive up to 20% off rentals at National Car Rental. To make a reservation call National Car Rental at 1-800-CAR-

RENT® and reference Contract ID 5282909.

Alamo Drive Happy® with Alamo® where NARFE members receive year-round discounts. Call 1-800-462-5266 and reference Contract ID 262544.

Avis The employees/owners of Avis offer guaranteed low rates and quality services to members of NARFE. Call 800-331-1441 and mention ID# A991900.

*State restrictions apply. Call or visit website for details.

Bekins Van Lines 800-248-4810 www. narfe@bekins.com All NARFE members will receive discounted pricing for all interstate shipments. Discount will apply to packing and moving services and valuation protection. All intrastate shipments, local moves and international moves will be competitive based on your geographical location. Please mention you are a NARFE member and ask for Traci.

emergency services

narfe merchandise

NARFE General Store 855-99NARFE (855-996-2733) www.narfegeneralstore.com Official NARFE name badges, customizable logo products and plaques.

MASA 800-423-3226 Medical Air Services Association has been the industry leader in prepaid emergency assistance services for more than 30 years. NARFE members have experienced MASA’s “peace of mind” services since 2001. Now NARFE members are entitled to even more: air ambulance transportation, helicopter transportation, ground ambulance, vehicle return, mortal remains transport, and much more!

Call MASA Today. It Could Save Your Life!

3. Atrial Fibrillation 4. Peripheral Arterial Disease.

You will receive a confidential written report within 21 days. Life Line Screening and NARFE encourage you to share these test results with your doctor. All four screenings cost just $135. To schedule an appointment, please call the number above and give the operator code number BKHN075 or visit the website. Coverage may vary and may not be available in all states.

education

Ivy Bridge College 877-615-9246 http://ivybridge.tiffin.edu/ narfe Want to earn your associate’s degree before you transfer to a four-year school? Ivy Bridge College offers a variety of degree programs that will help put you on the right track. No matter which program you choose, an education with Ivy Bridge will provide you with a solid foundation for a rewarding future. NARFE members and their families can enjoy an exclusive 5 percent savings on tuition at Ivy Bridge, a unique online institution that provides a highly supported pathway to a bachelor’s degree. To learn more, call or visit the website.

Moving services

NARFE Member HomeBenefits 800-666-9203 http://narfe. myhomebenefits.com • Earn thousands in cash-back rewards when you buy or sell a home* • Shop competitive mortgage rates, receive discounts on closing costs, plus take advantage of your VA Loan Benefits • Receive preferred pricing on interstate moving services with the nation’s most trusted moving company – Allied Van Lines!

health screening

Life Line Screening 800-324-9906 www.lifelinescreening.com/ NARFE

NOT A MEMBER?

Life Line Screening, America’s leading provider of community-based preventive health screenings, will conduct the following screenings using state-of-the-art ultrasound technology in your neighborhood:

TURN TO PAGE 44: Fill out the Membership Application and mail it to NARFE to receive all the perks of being a NARFE member.

1. Stroke/Carotid Artery 2. Abdominal Aortic Aneurysm

GO ONLINE: It’s easy to join online at www.narfe.org. Click “Join NARFE.”

Call (Toll-Free) 800-627-3394.

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47

The Way We Worked

Did you know?

The Immigration and Naturalization Service was dismantled in 2003, and the immigration service functions of the federal government became the U.S. Citizenship and Immigration Services (USCIS), a component of the new Department of Homeland Security. Today, 18,000 government employees and contractors work at 250 USCIS offices around the world.

INDEXing at the INS In this 1962 photo, Immigration and Naturalization Service (INS) employees Alice Durant, left, and Marion Jackson operate mechanical index machines that housed the INS’ Master Index at its Washington, DC, headquarters. Sixty of the cabinets held 30 million cards referencing files stored in INS offices nationwide. Rotating trays brought the proper card to the operator at the push of a button.

Today, U.S. Citizenship and Immigration Services uses digitized images of the cards to locate historical records.

Photo courtesy of the U.S. Citizenship and Immigration Services (USCIS) History Office and Library; Zack Wilske, historian, USCIS; in collaboration with the Society for History in the Federal Government (SHFG), bringing together government professionals, academics, consultants, students and citizens interested in understanding federal history work and the historical development of the federal government. Website: http://shfg.org/shfg/.

Attention NARFE Retirees

SIGN UP FOR DUES WITHHOLDING NOW AND SAVE BIG! WHAT IS DUES WITHHOLDING?

It is a dues payment method that gives NARFE members (retirees) the option of having their annual NARFE membership dues deducted from their annuities on a monthly basis.

ADVANTAGES OF DUES WITHHOLDING • Save 15% off your annual membership dues!

• Sign up your spouse and double your savings!

• You’ll never get another dues reminder from us!

• Your monthly payment is affordable and convenient!

• You may cancel your dues at any time!

HOW DOES IT WORK?

One-twelfth of your total dues is automatically deducted from your monthly annuity.

Your monthly deduction is determined by the following formula: (National dues ÷ 12) + (Chapter dues ÷ 12) = Total Monthly Deduction

APPLICATION PROCESS

It takes 60-90 days to process your application. Once the process is complete, you will receive a special membership card distinguishing you as a NARFE dues-withholding member.

TO LEARN MORE ABOUT DUES WITHHOLDING, CALL 800-627-3394.

Retirees, spouses of retirees and annuitant survivors are all eligible for dues withholding.

Life members, active federal employees and honorary members do not qualify.

Never Send in Another Dues Payment Again!

TO SIGN UP, FILL OUT THE APPLICATION ON PAGE 45.

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When you pay by check, you authorize us to use information from your check to clear it electronically. Funds may be withdrawn from your account as soon as the same day we receive your payment, and you will not receive your check back from your financial institution.

For Faster Service Call: 1-800-543-4810 or visit www.Haband.com/bestdeals