There’s been a lot of activity lately on provisions that could affect your retirement plans.
There has been a fair amount of activity on Capitol Hill and in the executive branch lately with regard to provisions that could affect the retirement planning process for federal employees.
In case you missed them, here are links to some important recent news stories that are worth taking into consideration as you weigh your options.
The Office of Personnel Management received fewer retirement claims in April than expected, after a spike in applications submitted during the first three months of 2012.
OPM received 6,616 claims last month -- 1,384 less than the 8,000 claims expected and 474 less than the number the agency received in March. The slowdown likely helped OPM chip away at its 50,000-plus backlog of claims: The backlog currently stands at 51,016 claims, down 1,258 from March. Since January, the backlog is down 17 percent from 61,108 claims. The agency projected it would have a backlog of 55,078 claims in April, so by those measures, OPM is ahead of the game.
Some federal employees could see their Thrift Savings Plan contribution levels increase automatically under draft legislation circulating on Capitol Hill.
Sen. Daniel Akaka, D-Hawaii, has sought input on a bill tying automatic enrollment in the government’s 401(k) style retirement plan to annual increases in the amount of money employees contribute to those retirement accounts.
Currently civilian employees who choose to enroll automatically into the TSP contribute a rate of 3 percent of basic pay to the G Fund, unless they choose to terminate their contributions or change the amount. According to Akaka’s draft bill the individual’s contribution rate would increase by 1 percent annually at least until the full match takes effect (typically two years under the current formula). The agency’s full TSP matching rate is 5 percent.
More than half of Thrift Savings Plan funds finished April in the red after posting mostly positive returns in 2012.
The I Fund, invested in international stocks, lost the most in April, dropping 1.87 percent. The fund, often troubled in 2011, experienced a small uptick in March and posted positive returns in both February and January of this year. The I Fund has posted losses of more than 12 percent in the past 12 months.
Among other provisions, the legislation the Senate passed in a 62-37 vote would restructure the payment schedule related to the agency’s obligation to prefund retirement health benefits, require USPS to negotiate with its unions to develop a new employee health care plan outside the Federal Employees Health Benefits Program, and transfer more than $11 billion from the Civil Service Retirement and Disability Fund to the Postal Service to help process the large number of USPS employees scheduled to retire in the next few years….
The House version would allow USPS to make a partial retiree health care funding payment in 2012 -- roughly $1 billion -- and pay the balance in equal installments in fiscal 2015 and 2016; it also would refund about $13 billion in overpayments the agency made to the two federal retirement systems.
Eighty-six percent of those surveyed said they were satisfied with the TSP’s competitiveness with other private sector plans, its accessibility, safety and security -- a 5 percent increase from the previous survey in 2008. In addition, 54 percent of civilians currently are contributing to their TSP accounts…. Seventy-four percent of survey participants who identified themselves as militaryservice members said they currently contribute to TSP accounts. TSP satisfaction on average was higher among older and better paid employees, according to the data. In addition, TSP participation rose slightly among civilian federal employees and service members from February to March.
Federal workers would have to contribute more to their government pensions under a bill approved by the House Oversight and Government Reform Committee.
The legislation requires current federal employees to pay 5 percent more toward their retirement over the next five years, beginning in 2013. Members of Congress would have to contribute an additional 8.5 percent to their defined benefit plan during the same time period.
After winning a set of Republican primaries, presumptive GOP presidential nominee Mitt Romney debuted his general election message, including federal pay and benefits in a list of items he considers to be unfair.
"We will stop the unfairness of government workers getting better pay and benefits than the taxpayers they serve," Romney said.
A measure that would have required eligible postal service employees to retire without buyout incentives failed in the Senate. The amendment, introduced by Sen. Tom Coburn, R-Okla., would have reduced the cash-strapped agency’s expenses by reducing its large percentage of retirement-eligible workers. It failed in a 33-65 vote.
A House panel voted unanimously to advance legislation that would allow retirement-eligible employees to work part time and to roll unused annual leave into their Thrift Savings Plans.
The bill, H.R. 4363, would amend U.S. law to allow federal employees to continue working part time while partially retired.
The Thrift Savings Plan Roth option slated to launch May 7 will not be available to civilian Defense Department employees and service members until summer or early fall.
The Federal Retirement Thrift Investment Board, which oversees the TSP, said earlier this week that not all federal agencies have completed the transition required to implement the Roth 401(k) and some would need additional time after May 7.
NEXT STORY: Retirement claims backlog shrinks