European Stars And Stripes (Newspaper) - August 28, 1986, Darmstadt, Hesse                                Thursday August 28, 1986 the stars and stripes Page 9 financial ne\v.s. New Federal pension option planned workers May pick tax deferred investments by Mike cause Washington Post Washington Federal workers will have a Chance next year to unroll in a new investment plan thai will Cut their taxes and allow them to make pay Roll deduction investments in guaranteed government securities or the Stock Market. The government already has set aside millions of dollars in Matching funds for the investment a Qunti of employees who join a new pension plan that begins in january. The government has banked1 percent of each employee s salary retroactive to either Jan. I 1984, or Date of hire whichever Slater. For the typical Washington area Federal worker earning about $31,000 a year that starter account could be Worth More than $900. The new option which permits up to 15 percent of salaries to be put into a tax deferred investment account is part of the Federal employees retirement system that will go into effect in january. Coverage under the system will be automatic for l ic?00,000 workers hired since 1984 and optional for people hired before then. Pre-1984 hires will have a six month open season next year to decide whether to stick with the current Cuvi service retirement program or switch. Full coverage under the new system Means that employees can invest up to 10 percent of their pay in one of three special new funds. The government will make Matching contributions of up to 5 percent. Contributions and earnings will be lax deferred until employees retire or withdraw the Money. Legislation creating the system Stales that pre-1984 hires must wait until july i to participate in the invest ment program. But the Senate and House Are consid ering advancing that Date. The budget reconciliation Bill approved by the House would allow investments to begin in january. The Senate version of budget re conciliation would allow those employee to begin making investment contribution april i. Employees who elect to remain under the current civil service pension program will be allowed to invest up to i percent of their salaries in the lax deferred Thrift plan. They will not however get any govern ment contributions. Under the new system benefits will come from three sources social Security a modified civil serv ice pension and earnings from optional investments. Workers automatically covered by the new system or those who elect to join it will be allowed to invest in one of three special funds fund a invested in special government securities. Fund a fixed income securities such As govern ment investment contracts Bank certificates of depositor other private sector securities. Fund a sometimes called the High risk option invested in stocks selected by manager of the fund. Investors will be Able to change their investments every six months. Employees who remain outside of the new system will be allowed to invest Only in fund a. Benefits from the Thrift investment plan can be paid As an annuity either for life or a fixed term in Cash at retirement death or disability or Ai a rollover Toan individual retirement account at the termination of the individual s employment headaches in buying renting Homes outlined new York up the headlines trumpeting a vigorous Home building Market Are masking these rious problems faced by Young people who want to own a Home and those americans who live in rental housing a University study said tuesday the joint Center for housing studies of the Massachusetts Institute of technology and Harvard univer sity warned that unless there Are significant economic changes in the housing Market Many More Young famines than in the past will find themselves unable to Purchase a  the Center s third annual report titled Home ownership and housing affordability in the United Stales detailed the obstacles faced by first time Home buyers and in a special Section the increasing burdens on the nation s expanding number of renters. In the midst of our Boom in the housing Market there Are Tome red flags out there said James Brown director of the Mit Harvard Center and audit refine study. Residential construction activity is being stimulated primarily by current owners moving up to higher Quality housing whereas Home ownership rates among younger households less than 35 years of age declined again in 1985 and Are now Well below the 19bo level the report said. Brown said the drop in the Overall Home ownership rate was one of the most startling findings of the  rates have fallen every year from 1980 through 1981, declining from 65.6 percent to 64.1 percent with the greatest decline reflected in the younger households the reason for this decline is that the total costs of Home owning for first Lime buyers remains at an unprecedented level three times the average of the 1970s," the report said. Furthermore the Cash costs of owning require the tint time buyer to spend Over 31 percent of Bis or her the Price of Homes in percent of Homes sold in 1985 by Price category under $60,000 $150.000 and Over 5100-119,999 $120-149,999 o Chicago Arlbon Gnu some Gutu Bureau income to Purchase and maintain a Home compared with about 26 percent in the 1970s, the study found. In addition first Lime buyers also Are hurl by the size of the Down payment. According to the report a typical buyer had to make a Down payment of about one third of his or her in come in 1978 by 1985, the share had risen to to per cent. Another reason first Lime buyers Are less Able to save Money for their Down payments than in the past n in the midst of our Boom on the housing Market there Are some red flags out  James Brown because of mounting rental costs Brown  renters the situation is no less troublesome. The study found that current renters must devote 19percent of their income to rent compared with 20 percent in 1974. Brown noted in the study that there were some Posi Tive developments lower interest rates have permitted some additional households to qualify for homeowners in and condominiums and cooperatives which Are generally smaller and less expensive to buy than single family houses Are making it possible for younger buy ers to accumulate some housing  . Efforts to return unclaimed tax refunds faulted Seattle a the Federal government does not try hard enough to return the millions of Dollar to owes to people who have not claimed the Money says the head of a group of stale officials meeting Here this week. The irs is holding More than $100 million in undelivered tax refund checks and the civil service retire ment fund has $26 million in unclaimed Ben Elitt owed w 338.000 people says Iowa to treasurer Michael Fitzgerald. The situation is a National scandal Fitzgerald told the National association of unclaimed property administrators he said the state try harder through advertising and other Means than the Federal government does to return unclaimed funds. Millioni of americans have been cheated out of their hand named Money by the Sharp practices of hundreds of government agencies m mra ply pocket ing their lost or forgotten funds Fitzgerald said. He said the chief offenders Are the internal Revenue service the civil service retirement fund and the . Treasury he noted the Treasury reported in 1973 that it was holding More than 700,000 . Savings Bonds with a face value of Iso million and a redemption value of probably twice that most of it owed to veterans. Fitzgerald said 49 states have Laws requiring the state to collect unclaimed Money from sources like inactive Bank accounts and insurance company re funds and then seek the owners. One method of seeking owners will be set of at this year s Washington state fair in Puyallup the stale department of Revenue will have computer terminals available to allow people to see if they Are among those owed some of Iso million in unclaimed funds. Former Washington gov. Dixy Lee Ray is one of those who has Money coming to her according to a similar computer set up at monday s meeting. She left s27.24 in the Washington slate employees credit Union. Kay said monday from her Fox Island Home that she had received a notice about the Money but she d been too Busy to be concerned about it the business of collecting lost or unclaimed loot can be profitable to the Stales. There is no time limit on when a rightful owner can claim his or her Money but Only 40 to 60 percent Ever do. The state keep the rest. Fitzgerald said his group supports legislation introduced by sen. On Hatch Rulah that would require the Federal government to search its record for the names and addresses of missing owners and to deliver the property to the slates so it can be resumed. About 160 people representing 37 states Are at tending the Seattle meeting