Flickr user Josh Escobedo

Benefits Cuts Are (Probably Not) Coming!

Federal employees have been down this road before.

In 1986, not long before the implementation of the Federal Employees Retirement System, CQ Researcher reported on the Reagan administration’s plans to replace the existing Civil Service Retirement System.

“The president's 1987 budget once again proposes to make the new federal retirement system akin to private pension plans, but with one big difference,” the report stated. “Unlike most private sector workers, federal employees contribute directly to their pensions—currently 7 percent of salary under CSRS, after taxes, which Reagan wants to increase to 9 percent. He objects to federal retirement without penalty as early as age 55, after 30 years of service. The president would raise the retirement age to 62. He also has asked Congress to limit cost-of-living increases in pension benefits, a provision most private-sector plans do not offer.”

Does any of this sound familiar?

Fast-forward to 2018, and President Trump’s new management agenda reiterates a proposal to alter retirement benefits. Office of Personnel Management Director Jeff Pon says requiring feds to wait five years to vest in their pensions “just doesn’t make sense” for the modern workforce. The administration recommends moving away from pensions altogether and toward a defined contribution-only system. This, officials say, would better align federal retirement benefits with those offered by private sector employers.

The National Active and Retired Federal Employees Association has identified nine areas where the president’s fiscal 2019 budget would have a negative impact on federal employee retirement benefits:

  • Eliminating COLAs for current and future FERS retirees.
  • Reducing COLAs for CSRS retirees by 0.5 percent each year from what they would have been otherwise.
  • Increasing FERS employees’ contributions to their annuities by 1 percent each year for the next six years, without any corresponding benefit increase.
  • Eliminating the FERS annuity supplement for new retirees.
  • Reducing the rate of return on the Thrift Savings Plan’s government securities (G) Fund.
  • Basing pensions for new retirees on the average of the highest five years of salary instead of the highest three.
  • Freezing federal employee pay in calendar year 2019.
  • Reducing total paid time off by combining sick and annual leave into one pool. This proposal could decrease annuities, because unused sick leave is counted towards creditable federal service.
  • Cutting working and retirement-age benefits for federal workers disabled through their service.

The Trump administration’s budget also proposes to change how the Office of Personnel Management determines the employer contribution under the Federal Employees Health Benefits Program, replacing the current 72 percent of the weighted average of all plan premiums. “Under this proposal, the government contribution would range between 65-75 percent depending on a plan’s performance,” administration officials wrote in a fact sheet on the budget. “This proposal would encourage enrollment in high-performing health plans.”

These ideas are nothing new to federal employees. The creation of FERS, for example, was held up partially due to a compromise that resulted in a “delayed, diet COLA” for FERS retirement benefits.

So how should federal employees react to the latest proposals? Some have decided to get out before anything changes—although changes to COLAs and to premiums for health benefits also would affect retirees. Others hope these changes can be avoided as they have been in the past through lobbying efforts by groups representing federal workers and retirees.

In the midst of all of the discussion of retirement benefits, it’s important to remember that the Civil Service Retirement and Disability Fund has been deemed solvent and able to pay out benefits for the next 75 years. Based on this projection, there seems to be no need to change current retirement benefits. FERS solved long-term funding problems more than 30 years ago.

Remember, a legislative proposal faces a long journey before becoming law. (And some current proposals actually would boost benefits for certain employees.) I don’t  recommend making a decision to retire solely on policy proposals that are unlikely to be implemented this year, if ever.

Photo: Flickr user Josh Escobedo

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.