By larry1235 / Shutterstock.com

White House Revives Controversial Retirement Cut Proposals

The Trump administration’s fiscal 2021 budget proposal would require federal workers to contribute more to their retirement benefit programs and reduce annual cost of living adjustments.

President Trump on Monday revived a series of controversial proposals to cut federal employees’ retirement and health benefits, according to the White House’s fiscal 2021 budget proposal.

Nearly all of the proposed changes to retirement benefits for federal workers were part of the Trump administration’s first three budget proposals, and each year Congress declined to include them in spending packages.

Trump’s fiscal 2021 budget would require employees enrolled in the Federal Employees Retirement System to contribute 1% more per year to their retirement accounts, until the government and employees each contribute 50%. It also proposes eliminating annual cost of living adjustments for future FERS retirees and reducing COLAs for retirees in the Civil Service Retirement System by 0.5%.

The budget also calls for the elimination of the FERS special retirement supplement, designed for employees who retire before they reach the age of 62, when they become eligible for Social Security. The supplement is primarily aimed at helping workers in federal law enforcement jobs that require them to retire at age 59. And when employees retire, their defined benefit annuity would be calculated as an average of their highest five salary years, rather than the current “High-3” model.

The budget request says that most of these changes are aimed at bringing federal compensation in line with the private sector, which has largely moved away from offering workers defined-benefit pensions.

“FERS and CSRS [cost of living adjustments] for annuitants are currently determined based on statutory formulas tied to the Consumer Price Index,” the budget stated. “However, FERS annuitants are somewhat protected from economic effects, because their retirement packages include Social Security benefits and the Thrift Savings Plan . . . in addition to the FERS annuity. Eliminating the FERS COLA and reducing the CSRS COLA payments would reduce both FERS and CSRS annuity benefits, bringing compensation more in line with the private sector.”

The White House also proposed reducing the statutorily mandated interest rate on the Thrift Savings Plan’s G Fund, which is made up of government securities, to match the yield on either the three-month or four-week Treasury bill. That proposal has been decried by both federal employee groups and officials at the agency that administers the TSP.

“As we have in the past, we oppose a change to the G Fund interest rate, as it would make the G Fund inadequate and ineffective for TSP investors, and would meaningfully impact the retirement savings of millions of Thrift Savings Plan participants,” TSP spokeswoman Kim Weaver said on Monday.

Despite the budget’s language citing the various changes as reductions in benefits for employees, Office of Management and Budget Deputy Director Margaret Weichert said the aim of the proposals is to realign compensation to be more performance-based. She noted that the budget also calls for allowing term employees to have access to the Thrift Savings Plan, although not FERS.

“[The changes] are not reductions in benefits to anyone currently receiving retirement payments, but they do reflect leading practices in terms of contributions,” Weichert said. “As it relates to other compensation issues, the core unifying factor is not a reduction in pay or benefits, but rather a realignment to more incentive-driven performance pools.”

The budget also proposes a reduction in how much the government will contribute to insurance premiums in the Federal Employees Health Benefits Program. Currently, the government pays 72% of a weighted average of all plan premiums or 75% of a given plan’s premiums, whichever is lower. The budget proposes reducing the government contribution to 71% of the weighted average.

Federal managers and labor groups blasted the revival of proposed benefits cuts Monday.

“For an administration that has added $3 trillion to the federal debt, gouging federal employee pay and benefits in the name of deficit reduction is ridiculous,” said Tony Reardon, national president of the National Treasury Employees Union. “NTEU will fight these regressive proposals on retirement while supporting existing legislation calling for a 3.5% pay increase in 2021.”

American Federation of Government Employees National Secretary Treasurer Everett Kelley said the proposals are “punitive and ridiculous.”

“The federal workforce vehemently opposes losing up to half of their retirement benefits and AFGE members will be fighting this proposal at every turn,” Kelley said. “The administration’s rhetoric about affordability is laughable; the federal retirement system is modest, fully funded, and is the only aspect of federal employee compensation that meets private sector comparability.”

Federal Managers Association President Renee Johnson said these proposals would significantly hurt the federal government’s ability to recruit and retain workers if implemented.

“Like last year’s proposed cuts, in addition to hurting current and even retired feds, these proposals would only increase the ongoing challenges of recruitment and retention,” Johnson said. “Only 6% of the federal workforce is under the age of 30. In comparison, that age group makes up nearly 25% of the private sector. Continual budget uncertainty and even more cutting of benefits will certainly make the task of attracting the best and the brightest that much more difficult.”

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.