Three GS-7 civil servants go out for dinner. One has been on the job since 2012. The others were hired in 2013 and this year, respectively. In a burst of chivalry, one of the group offers to pick up the check since he has more money. The pay range for a GS-7 in the Washington-Baltimore area runs from $42,631 to $55,421. So who gets the tab?
One may be sightly senior to the others, but it can’t be much, right? Wrong! Remember this is the government we are talking about and politicians make the rules for the civil service. So…
All things being equal, the person who’s been on the job since 2012 would pay. Because, despite the three-year pay freeze and this year’s tiny 1 percent pay increase, the 2012 model makes more money than the other two. Maybe a lot more.
Even during the pay freeze, the 2012 fed would most likely have gotten a 3 percent within-grade raise on his/her first anniversary on the job and another 3 percent on the second. And although all three are under the same retirement program, FERS, each contributes a different amount toward retirement.
The 2012 worker contributes 0.8 percent to FERS. The fed hired in 2013 pays 3.1 percent. The employee hired this year pays 4.4 percent.
Workers under the old Civil Service Retirement System all contribute the same amount. But FERS, thanks to Congress and the White House, now has a three-tier contribution system. That could change next with a fourth level (with a higher employee contribution rate) being added for future hires.
Congress has also been reforming/tampering with the congressional retirement benefits program. In one move, it lowered slightly the amount members contribute to their pension plan. Last month the House approved a GOP plan, sometimes called the Ryan budget, that would require FERS employees and members of Congress to fund 50 percent of their annuity package. That plan is DOA on the Senate side, but it could be an indicator of things to come, including pending proposals that would end the defined-benefit portion of the federal pension package (eliminating FERS for future hires) prospectively. In that unlikely event, feds would have to finance their own retirement through Social Security and investments in the Thrift Savings Plan.
Meantime, in the world of retirement benefits, it is still much, much better to be a member of Congress — House or Senate — than a rank-and-file or even senior civil servant. Last month, Government Executive reported that (as of 2012) members of Congress who retired under the FERS program got benefits of $40,560 per year compared to $14,000 for feds who retired under the same program. Salaries do make a big difference. In 2012, the average member of Congress got $174,000 per year compared to an average federal salary of almost $75,000 for a full-time, permanent, non-seasonal worker.
In March, the Congressional Research Service issued its most recent report on retirement benefits for members of Congress. This report also contains an excellent explanation of FERS, CSRS and the CSRS Offset programs. If you want to see how the other half lives — and retires — click here.
If a player loses the first round of “Rock, Paper, Scissors,” he or she usually switches their action in a clockwise direction, meaning rock changes to paper, paper to scissors, scissors to rock. The winner usually sticks with their first move.
‘Broken’ pay system driving SES out of government More than half of senior executives surveyed by the Senior Executives Association are reporting “low” or “very low” morale with their jobs. The problem lies with a pay-for-performance system where some supervisors make less money than the people they lead. Increasing numbers of senior executive service members are ready to leave the federal government altogether.