OPM Concedes Defeat on Retirement Cuts, and CFPB Encourages Credit Monitoring for Military
A weekly round-up of pay and benefits news.
Office of Personnel Management Director Jeff Pon appears to believe that a controversial proposal to cut federal employees’ retirement benefits stands little chance of becoming law, according to news reports.
According to Federal Times, Pon said a proposal he sent to House Speaker Paul Ryan earlier this year to significantly cut several federal retirement programs was “highly unlikely to happen.” The director spoke at the annual conference of the National Active and Retired Federal Employees Association in Florida on Monday.
In May, Pon sent a letter to Ryan proposing legislation to make a number of cuts to federal employee retirement programs. Initially proposed last year as part of President Trump’s fiscal 2018 budget, the plan included eliminating Federal Employees’ Retirement System supplements for federal workers who retire before Social Security kicks in at age 62; changing the basis of a retiree’s defined benefit annuity payments from their highest three years of salary to their highest five years; and increasing the amount feds contribute to FERS by 1 percentage point per year until their share matches the government’s contribution.
Pon had also suggested eliminating cost-of-living adjustments for FERS retirees—both current and future—and reducing Civil Service Retirement System COLAs by 0.5 percent.
On Monday, Pon reportedly suggested that although his first effort failed, he still believes there needs to be changes to make federal retirement benefits more affordable, noting that the cost of federal health insurance increases 6 percent to 7 percent each year.
“I want to make sure that for the next generation we’re taking a look at a different compensation plan,” Pon said, according to Federal Times. “[Most] of them don’t see a 30-year career or a 20-year career. I think the government has to actually adapt to that.”
The Consumer Financial Protection Bureau last week warned members of the military that they must be vigilant in monitoring their finances and credit score, as the result of recent changes to the security clearance background check process.
“The Department of Defense will now ‘continuously’ monitor the financial status of servicemembers with security clearances,” CFPB wrote on its website. “This means that a past-due bill or an error on your credit report could jeopardize your clearance status.”
CFPB said that going forward, a federal employee or member of the military could have their background reviewed “at any time,” to see if there is a history of failing to meet financial obligations, the accrual of “excessive” debt, or a high debt-to-income ratio. Any of those factors could imperil someone’s security clearance.
The agency suggested frequently checking your credit report, setting up fraud alerts or security freezes, monitoring your credit score, and if necessary, contacting credit reporting companies or submitting a complaint to CFPB.
The article came just days after it was reported that Acting CFPB Director Mick Mulvaney is considering a number of changes to roll back enforcement of provisions of the Military Lending Act. Among the proposals are plans to stop blocking auto lenders from adding overpriced gap insurance onto auto loans, as well as a plan to stop proactively monitoring payday lenders to prevent them from violating the Military Lending Act.