Lots of e-mails from folks who are understandably confused about the last-minute (and surprise) congressional action on federal retirement benefits. Bottom line: It did not extend the federal pay freeze another year. But that idea is still out there.
After months of talk and deadlock, House-Senate conferees agreed that future federal workers would finance the on-going payroll tax cut for American workers who pay into Social Security. For the full story, click here.
Under the deal, people who pay into Social Security each paycheck will contribute 2 percent less than they did before Congress and the White House decided this was a way to jumpstart the economy. The fact that Social Security is going broke, and six out of 10 Americans haven’t noticed their pay “raise” seems lost in the political-economic clutter.
But for feds, the bottom line is that anyone hired after Dec. 31, 2012 — unless they have previously had five years of vested federal service — will be forced to contribute a total of 3.1 percent to their FERS annuity benefit. Current employees — for now — will continue to pay only 0.8 percent.
The problem for numbers crunchers is that the future “savings” to the federal retirement fund are just that. Future savings. Not a penny will be saved or banked until next January. It will be years before savings that offset the revenue loss in the temporary Social Security tax cut are significant.
That’s why many insiders believe that the next step is for Congress to go after current workers, both CSRS and FERS. Forcing them to pay more — up to 4 percent for FERS employees and 8 percent total for CSRS employees under one plan — would produce immediate results. And it might be a blessing for members of Congress who want to downsize operations 10 percent by 2015. If current employees were forced to pay more for their retirement, some (maybe many) would likely resign before the change went into effect.
Congress-watchers say there is a good chance the federal pay-benefits package will take more hits before summer.
Secrets of the TSP
Why do John Bogle, founder of Vanguard mutual funds, and CBS MoneyWatch columnist Allan Roth wish they could get into the federal Thrift Savings Plan? Is Uncle Sam’s 401(k) plan, the biggest in the world, really the best too? Or did Congress set up the TSP to keep entrepreneurial federal investors from making money? Is it, in fact, a tool of the Nanny State? We’ll find out today.
At 10:30 a.m. today on our Your Turn show, Tom Trabucco, director of external affairs for the TSP will be our guest. He’s spent 31 years in government and has been with the TSP since it was established. Before that, he spent nine years working for the National Federation of Federal Employees, and the National Active and Retired Federal Employees. And he’s retiring Feb. 29th. As a short-timer, he’s got nothing to lose, right? So we are going to carefully pick his brain and hopefully, find out what’s REALLY going on.
The show starts at 10 a.m. with Federal Timesmen Stephen Losey and Sean Reilly talking about what changes Congress has made in your benefits package, and what might be ahead. It will be archived here so you can listen later on.
The Chile Pepper Institute at New Mexico State University has declared the Trinidad Moruga Scorpion the hottest pepper. During the harvesting of the pepper, the compound that causes its spiciness, “burned through the latex gloves of the researchers assigned to pick it,” according to Harper’s Weekly Review.
Congress targets federal workers for savings Advocates for federal workers are crying foul, saying the two-year pay freeze means the nation’s 2 million civil servants already have contributed more than $60 billion to reducing government costs.