Three relatively new federal workers decide to go to lunch. It’s a sort of celebration. Either they all got new ball-point pens or a fresh supply of Post-It notes. Or a shared stapler. Doesn’t really matter. They are young. Life is good. Let’s party!
Up to a point! How wild can you get in 30 minutes at a lunch counter?
All of the revelers are in the same GS grade. They each do the same job. All three are under the FERS retirement program, which offers them the same level of benefits. They even look alike. Could be brothers and sisters. Except one of the trio has more spendable cash than the other two and therefore offers to pick up the check? So..
Who is it? And why is it?
What determines who the generous, lunch-is-on-me, colleague is? And why is he/she better off financially than the others?
Is it the newest fed who came on board last month? Is it his/her colleague who was hired in 2013? Or is it the “dean” of the group who’s been a fed since 2012?
The correct answer, the fed with the most spending money is: The old-timer of the group. The employee who was hired before 2013. For two reasons: First it is likely that the pre-2012 fed has had a couple of within-grade-raises (worth about 3 percent) since being hired. That’s despite the three-year freeze on regular pay raises.
Secondly, that fortunate person is required to kick in only 0.8 percent of salary into the FERS retirement plan.
Thanks to Congress and the White House, feds hired in 2013 get the same FERS plan and benefits, but they are required to contribute 3.1 percent of salary into the program.
Last, and in this case least too, is the worker who was hired this year. Since January 2014. That employee will be required to kick in 4.4 percent of their pay into the FERS system although he or she, at the end of the day, will retire under the same benefit formula.
The above example is unusual but not confined to government. In some unionized companies, new workers have been hired at salary and benefits levels that are lower than so-called “old contract” workers. But it is unusual for government. Up until now.
Nobody knows what else, if anything, politicians will do to feds and benefits this year. It’s unlikely there will be another shutdown. Furloughs, if they happen, will not be on the scale of the unpaid furloughs of 2013. Buyouts are still an unknown quantity.
But there are holdover plans out there that could do further damage to the take-home pay of federal and postal workers. One plan, which the White House backed last year, would hit all workers under both the FERS and those under the older CSRS program, by increasing retirement contributions by 1.2 percentage points over three years. Each year, contributions would go up 0.4 percent. There was also a House plan that would have boosted employee contributions much more than that. It’s not likely to come back but, given the political situation, buckle your seat belts, just in case!
Nominations now open for 2014 Causey Awards Federal News Radio’s 5th Annual Causey Awards seek to recognize and honor the good works of people who challenged the status quo and changed, for the better, human capital management. Nominate someone today for his or her outstanding achievements and important human capital/human resources contributions. While we’re looking for people who made a difference in the HR world, they don’t necessarily have to work in an HR role. In the past, we’ve honored CIOs, a chief of staff, and an inspector general, in addition to human resources professionals, all for their contributions in the HR arena.
Will IRS budget pleas be ignored in Congress? IRS Commissioner John Koskinen told members of the House Appropriations Subcommittee on Financial Services and General Government that budget and staffing reductions are impacting the agency’s core missions of customer service and tax collection. The agency projects it will only be able to answer 61 percent of phone calls this year, meaning some 20 million phone calls will go unanswered.
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