Job jitters

Six months ago, the No.1 job-related worry of many feds was that Congress would alter (slightly) the formula used to compute their retirement benefits. The concern was that future annuities would be computed on the basis of the employees’ highest five-year average salary. Currently they are based on length of service plus the highest three-year average.

The proposed change has been around almost since Congress, a long time ago, changed the existing high-five formula to the high-three method. For the past couple of decades, the switch back to the high-five has been on some politicians “to-do list” list as a way to save money. Of course, it has never happened.

Six months ago, feds were also concerned that other benefits were on the chopping block: Various presidential and congressional panels recommended a variety of changes, including requiring feds (and retirees) to pay a bigger share of their health premiums, kicking in more toward their retirement funding and changing the formula used to compute cost-of-living adjustments for retirees.

The White House acted on one recommendation. It imposed a two-year federal pay freeze (rather than the recommended three-year freeze). More recently, the President proposed a 0.5 percent raise for January 2013. But Congress has since extended the freeze(via the just-approved continuing resolution). Technically the 2013 freeze runs only through March. And federal unions have pledged to work to get a retroactive raise. But that is unlikely to happen, and even the most publicly confident and militant concede that the upcoming freeze will continue through the end of next year.


Long-time fed watchers have been somewhat confused about the focus by so many workers on going from the high-five to the high-three. In the first place, the “threat” has been around for decades. But it never happened or even got legs. Also the “cost” to workers would be minimal in most cases. In some instances — especially during the period of a prolonged pay freeze — workers would only have to work a little longer, in some cases months, to bring their high-five benefit up to what it would have been under the more generous high-three.

Benefits expert Tammy Flanagan says she thinks the long- threatened high-three to high-five switch is something people can focus on and understand. Other proposals, like upping employee/retirement health-plan costs and deliberalizing future inflation adjustments would be much more costly to workers and retirees — and save the government more money.

Flanagan and tax expert Bob Leins talked about the legislative options facing feds on yesterday’s For Your Benefit radio program. To listen, click here.

Now the fear du jour is sequestration. Congress has switched gears and set up a Dr. Strangelove-type mechanism that will automatically trigger an 8.1 percent governmentwide spending cut in early January unless Congress and the White House can come up with a deficit-reduction plan to disarm the ticking sequestration time bomb.

So, for now, feds no longer have to worry about changes in their retirement formula.

Instead the immediate threat is sequestration. If it happens, it could mean extended (up to 20 days) furloughs for some employees and, worst-case scenario, layoffs for others. It is also entirely possible, given the confused political climate, that Congress at the last minute decides to simply make sequestration go away. Never a dull moment!


By Jack Moore

Coffee can be deadly if you drink 80 to 100 cups, or about 6 gallons, “in quick succession,” Life’s Little Mysteries reports.


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