A weekly roundup of pay and benefits news.
It’s no secret that many Republicans on Capitol Hill are eager to slash federal employee pay and retirement benefits, and now it’s becoming clear the Trump administration is of a similar mindset.
White House Press Secretary Sean Spicer said while announcing the hiring freeze last week that federal employees’ compensation package is no longer realistic.
“Federal employee health and retirement benefits continue to be based on antiquated assumptions and require a level of generosity long since abandoned by most of the private sector,” Spicer said. “Those costs are unsustainable for the federal government, just as they are proving to be unsustainable for state and local governments with similar health and retirement packages.”
President Trump won’t have to look too far to find congressional allies on this issue. House Oversight and Government Reform Committee Chairman Rep. Jason Chaffetz, R-Utah, has told Government Executive he will push to move new federal hires to a retirement system where they only receive a defined-contribution benefit, like the Thrift Savings Plan (those already vested in their pensions would be protected).
In perhaps one silver lining, Rep. Gerry Connolly, D-Va., has already started working to secure a pay raise for federal employees next year. On Tuesday he introduced the Federal Adjustment of Income Rates (FAIR) Act, which would give civilians a 2 percent adjustment to their base pay, and a 1.2 percent average increase to their locality pay. The total 3.2 percent raise would be less than Connolly asked for last year (his last effort requested 5.3 percent; feds ended up with a 2.1 percent raise for 2017 and only after an 11th hour increase from then-President Obama).
Feds will probably get their first glimpse at how President Trump views this opening bid when the new commander in chief unveils his fiscal 2018 budget request, which is expected to contain substantial cuts to many civilian agencies. New presidents typically unveil a broad outline of their first budget in mid-to-late February, and then the official, detailed proposal that goes to Congress in the spring.
Meanwhile, retirement investments in the Thrift Savings Plan had another solid month in January, after ending 2016 on a high note. Growth was much more modest than in December, but all of the funds were in the black.
The international stocks in the I Fund performed the best last month, gaining 2.89 percent. They were up 11.31 percent over the past 12 months.
The S Fund, invested in small and midsize companies, was up 2.16 percent for January and a whopping 30.22 percent for the past year. That made it the highest earner for the past 12 months.
Common stocks in the C Fund gained 1.9 percent in January, and an impressive 20.09 percent over the past year.
The more stable government securities (G) fund was up 0.2 percent last month and 1.83 percent for 12 months. The fixed income bonds in the F Fund were up nearly an identical 0.23 percent for January and 1.64 percent for the past 12 months.
The lifecycle funds, which move investors to a more conservative portfolio as they near retirement, all ended January with slight gains as well. L Income -- for people who have already started withdrawing money -- was up 0.61 percent; L 2020, 1.04 percent; L 2030, 1.48 percent; L 2040, 1.7 percent; and L 2050, 1.91 percent. These options also grew over the past 12 months, with L Income increasing 5.17 percent; L 2020, 9.36 percent; L 2030, 12.69 percent; L 2040, 14.57 percent; and L 2050, 16.38 percent.
In other good news for TSP participants, plan officials announced Wednesday that an issue causing form processing delays had been resolved.
Also in retirement news, the TSP will figure prominently into a new blended retirement system for military service members. The Pentagon unveiled the details of that system Wednesday.
New troops will automatically be enrolled in the TSP and receive a matching contribution from the government. The government will contribute between 1 percent and 5 percent of service members’ salaries toward their TSPs, depending on what they elect to contribute themselves, though they will be defaulted into contributing 3 percent of their paychecks. The TSP account will begin 60 days into their service. Those who stay in the military for 20 years, and are thereby entitled to a retirement pension, would receive a less generous calculation for their annuity.
The system -- which moves away from the 20-year, all-or-nothing pension system currently in place for military members, will affect new service members starting Jan. 1, 2018. Current service members are grandfathered into the existing system, but could opt into the new one. For those unsure of what to do, the Pentagon is in the process of educating troops about the modified retirement system, and launched its third of four courses this week. Troops electing to enroll in the blended system must complete the training to be eligible.