The FERS system has the employee paying social security premiums at 7%, plus the Federal Government pays an automatic 1% in the Govt. 401(k) plan [called Thrift Savings Plan] but it will match up to 5% of what the employee contributes in their 401(k). So an employee can put in 5% and the Govt. will match the 5%. This is very similar to big business where the Company provides matching contributions. Heck, even my parents and their small business did something similar.
Reagan had said the annuity retirement plan (CSRS) had to be replaced or it would fail of its own weight. Now that was 26 years ago. Reagan did the right thing. Plus now I believe the employees are more mobile. When I worked, I could not take my CSRS pension with me to the private sector. That was another issue Reagan tried to fix.
Hope this helps.
thanks for the info. TVA (which some may not know is a Federal agency) has its own retirement system, TVARS. They also have a real 401K, operated by Fidelity. There is a match up to a certain amount, but I don't know what that is. Probably fashioned similar to FERS, but separate (separate but equal, interesting concept). Reagan was trying, at the time, to spin off or privatize TVA but congress wouldn't go along with that. I think he was setting it up as a self-sustaining entity, which it mostly is these days.
They did NOT institute FERS because the CSRS system had a problem. They instituted FERS in order to SAVE SOCIAL SECURITY by putting millions of Federal workers as new payers into that (still failing) system. CSRS was doing fine.