Trump’s 2018 Budget Reportedly Targets Federal Retirement Programs
Employees would see increased contribution requirements, COLA cuts.
President Trump’s fiscal 2018 budget proposal reportedly will seek to cut contributions to federal employees’ retirement programs in a number of ways.
According to a report in the Washington Post, Trump’s spending plan, which is set to be released formally on Tuesday, will require federal workers to contribute an additional percentage point to the Federal Employee Retirement System each year until they match the federal contribution, likely within five to six years. The total increase in cost to employees would be around 6 percent at the end of the phase-in period.
Additionally, the government would base the value of employees’ retirement benefits on the average of their highest five years of earnings, instead of the highest three years. This effectively would reduce payments for retirees.
The plan also eliminates cost of living adjustments for current and future FERS employees, and it would cut Civil Service Retirement System COLA adjustments by 0.5 percent. Unlike CSRS employees, FERS retirees receive Social Security benefits, which are adjusted for inflation each year.
Finally, the proposal would eliminate supplemental payments for FERS employees who retire before Social Security kicks in at age 62, beginning for those who retire in 2018.
The proposal, expected next week, follows Office of Management and Budget Director Mick Mulvaney’s announcement last month that civilian employees would receive a 1.9 percent pay increase in fiscal 2018, and members of the military would see a 2.1 percent raise.
The proposed cuts to retirement benefits sparked swift condemnation by Democrats and groups representing federal workers and retirees. Richard Thissen, national president of the National Active and Retired Federal Employees Association, called the proposal an “egregious attack on federal service and seniors” and “unconscionable.”
“The president purports to defend government annuities like Social Security and then proposes to eliminate cost-of-living adjustments for some and limit COLAs for those already retired and living on fixed incomes,” Thissen said. “It is beyond insulting. It is downright mean. Simultaneously promoting tax cuts and forcing a tax on just federal employees, through an increase in retirement contributions, is the height of hypocrisy.”
J. David Cox, national president of the American Federation of Government Employees blasted the plan as something that “defies reason.”
“The American people knows what’s fair, and raiding the already-modest retirement benefits of the people who inspect our food and lock up dangerous criminals is beyond the pale,” Cox said. “These proposals portray an astounding misplacement of priorities that the American public should not soon forget.”
And Rep. Gerry Connolly, D-Va., said cuts to federal retirement benefits will hurt the government’s ability to attract workers capable of fulfilling the missions of various federal agencies. “The biggest losers from President Trump’s draconian cuts to federal employee pay and benefits will be the American people who count on dedicated federal employees to care for our veterans, maintain our national parks, and process Social Security checks each and every day,” Connolly said. “Cuts of this magnitude will make it impossible to recruit and retain the qualified workforce we need to meet our nation’s challenges.”