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Key developments in the world of federal employee benefits: health, pay, and much more.
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Budget Hawks Target TSP, Scammers Target TRICARE and More

House Republicans have a lot of ideas about how to save taxpayer dollars. Unfortunately for federal employees, a number of those ideas would come at their expense in the form of retirement and health benefits.

As Eric Katz reported earlier this week, a House Budget Committee report suggests increasing federal employees’ pension contributions, effectively resulting in a pay cut of between 2 percent and 5 percent. Under their plan (which President Obama has said he won’t support), the defined benefit program eventually would be phased out entirely in favor of just a defined contribution system for an estimated savings to the government of $127 billion over 10 years, the committee said. 

House Republicans also proposed phasing out the Federal Employees Retirement System annuity supplement, designed to boost the annuity of young retirees, as well as limiting the rate of return on the Thrift Savings Plan’s Government Securities (G) Fund for an estimated savings of $32 billion over 10 years.

The committee report takes issue with how the interest rate on the G Fund is calculated, noting that “Those who participate in the G Fund are rewarded with a long-term rate on what is essentially a short-term security.”

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Retirement Savings Reassurance, Financial Fears, Vets’ Health Care Changes and More

The federal government officially reached its debt limit on Monday, and that means the Treasury Department had to suspend the daily reinvestment of the government securities (G) fund in the Thrift Savings Plan as part of “extraordinary measures” to avoid a default. That might sound scary to TSP investors, but TSP officials want you to rest assured that your retirement savings are safe. They issued the following statement on Wednesday:

G Fund investors remain fully protected, and G Fund earnings are fully guaranteed by the federal government. This statutory guarantee has effectively protected G Fund investors many times over the past 25 years. G Fund account balances will continue to accrue earnings and will be updated each business day, and loans and withdrawals will be unaffected.

For a deeper look at what happens to the G Fund when the government hits the debt limit, officials referred TSP participants here.

The TSP’s reassurance comes at a time when federal employees might be feeling jittery about their retirement benefits. Both House and Senate Republicans this week unveiled 2016 budget blueprints would ask federal employees to contribute more to their pensions, to help achieve savings. The resolutions both support a 50-50 split...

An 8.7 Percent Pay Cut for Six-Figure Earners, Subjective Measures of Financial Well-Being and More

More than 300,000 federal employees earned six-figure salaries in 2014, according to a recently released partial database of pay information, and at least one lawmaker seems to believe those employees are doing a bit too well.

Rep. Tom Rice, R-S.C., has introduced a bill (H.R. 1137) that would cut the basic pay of civil servants and members of Congress making more than $100,000 a year by 8.7 percent. The reduction would also apply to the president. It would take effect almost immediately after the bill was signed into law for federal employees, and at the beginning of a new term for lawmakers and the president.

The reduction wouldn't necessarily be a one-time deal. After the initial cut, pay for six-figure salaried employees would be adjusted regularly to reflect percentage changes in real median household income in the United States, as calculated by the Census Bureau. High-earners would have to hope that the median household income – after it’s adjusted for inflation -- starts going up. 

Rice’s proposed cuts would be severe enough that the National Federation of Federal Employees called the legislation “one of the most aggressively anti-federal employee bills introduced in recent history...

Steps to Reform Health Benefits, Cut Retirement Pay, Count Calories and More

It usually gives us pause when someone claims to be able to cut costs and improve service, but that’s exactly what two lawmakers—one Republican and one Democrat—say about reforming the Federal Employees Health Benefits Program. And they have plenty of company in making those claims.

In a joint op-ed in The Hill newspaper, Reps. Reid Ribble, R-Wis., and Kurt Schrader, D-Ore., note that the program that serves 8 million federal workers, retirees and their families has remained largely unchanged since 1959—“before the invention of the hand-held calculator, personal computer and the Internet.”  Modernization, they argue, could save taxpayers hundreds of millions of dollars and deliver more comprehensive health plans.

The law limits the types of health plans that the FEHBP can offer, which prevents workers and retirees from benefiting from innovations and health plan options that other large employers—including state and local governments—offer, they wrote:

The Congressional Budget Office recently found that on average, the cost of benefits, including health insurance, was 48 percent higher for federal civilian workers than for their private sector counterparts. Furthermore, a Health Affairs article found that in areas of the country where there was significant competition among health...

Shutdown Pay and Leave, Telework Savings, Rx Tracking and More

While Republicans and Democrats duke it out over Homeland Security funding, lawmakers in both chambers have introduced bills that would guarantee back pay to federal workers affected by any lapse in appropriations for the department.

The Federal Employee Retroactive Pay Fairness Act of 2015, introduced in the Senate by Maryland Democrat Ben Cardin, guarantees full pay for any furloughed DHS employees as a result of a shutdown. The bill also would allow non-furloughed employees to take leave in the event lawmakers fail to reach a funding deal. During the last government shutdown in 2013, the American Federation of Government Employees claimed that managers threatened to discipline non-furloughed feds who declined to work, in some cases to avoid child care costs or other expenses while they weren’t drawing paychecks.   

Fourteen senators have signed the bill, all Democrats plus Vermont Independent Bernie Sanders.

Whether you’re bracing for a potential furlough or not, it never hurts to save for the proverbial rainy day. As it happens, this is Military Saves Week, and Thrift Savings Plan officials are available to help you celebrate with presentations for new and mid-career service members, as well as for those close to retirement.  

TSP’s theme...