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Key developments in the world of federal employee benefits: health, pay, and much more.

Mileage Reimbursement Hike, Retirement Savings Resolutions and More

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With Republicans now in control of both chambers of Congress, federal pay and benefits will be much more vulnerable to attack. Cost-cutting proposals that previously died in the Senate will have a better chance of making it to President Obama’s desk, as one federal union leader pointed out after the election in November. Those proposals have already started pouring in, from across-the-board budget cuts to freezing congressional pay.

But putting aside that risk, 2015 is off to a solid start. Federal retirees received a 1.7 percent cost-of-living adjustment, and civilian employees are enjoying a 1 percent pay raise for the second year in a row, following a three-year pay freeze. Those who use their cars for work will get a bump in their mileage reimbursement rate as well. The General Services Administration last week increased the rate 2.7 percent to 57.5 cents per mile, The Washington Post reported. The increase comes despite dropping gas prices, the Post noted.

Most troops (aside from general and flag officers) rang in the New Year with a 1 percent salary boost, in addition to increases in basic housing and basic subsistence allowances. Indeed, more than half (51 percent) of middle class military families feel they are better off financially than they were a year ago, according to new survey results released by First Command Financial Services. Just 8 percent believe they are worse off, with the other 40 percent placing themselves in roughly the same position. The monthly survey went to about 530 consumers.

Still, military members are watching their wallets. Thirty-seven percent of respondents to the First Command survey set a 2015 resolution to get out of debt, while 29 percent planned to cut back on “excessive” spending and 28 percent vowed to track finances and “learn to budget responsibly.” Other goals included improving credit scores and saving more for retirement.

Those extra savings could come in handy, as both military and civilian retirement benefits are likely to remain targets in cost-cutting efforts.

The outgoing postmaster general went so far as to argue it doesn’t make sense for Uncle Sam to continue offering pensions as part of its retirement package. The federal government should look at moving exclusively to a defined contribution model such as the Thrift Savings Plan, rather than the current hybrid approach, Patrick Donahoe said Tuesday during a farewell speech in Washington.

Donahoe – who has crusaded for postal reform – said the U.S. Postal Service would be a good test bed for pay and benefits changes that could eventually expand governmentwide. Health care benefits are another area ripe for an overhaul, he said.

“I don’t think anyone would argue that the federal government isn’t massively overpaying for employee and retiree health care benefits,” Donahoe told his audience.  “Let the Postal Service develop a more cost-effective approach.” 

Feds may want to count their pay and benefits blessings now. 

(Image via Richard Semik/Shutterstock.com)

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