Retirement cuts, pay freeze: ‘A realistic menace?’

It’s Friday the 13th, so let’s start from there, OK?

Whether your retirement date is this year or decades away, you have a stake in what Congress does (or doesn’t) do this year to realign the FERS retirement program to make it less costly and more like private pension plans. In addition to current workers, people already retired under either the FERS or CSRS programs would also be impacted if changes are made.

As one pro-fed lobbyist put it, “If people aren’t worried, they haven’t been paying attention” to the attention that active and retired feds have been getting on Capitol Hill.

Here’s a question/comment from a current fed who wonders what his retirement will be like.

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“Thanks for tracking these issues thoughtfully.

“What are the odds that the effort to cut retirement benefits will bring significant cuts to FERS checks?

“Who is sponsoring these proposals? Where do they stand? Headed for hearings? Silly grandstanding?

“Is this a realistic menace to people who worked for many years with the understanding they would earn a certain amount in retirement and now face a broken promise?” Jim R

Among the proposals (which were also debated last year) is one to raise current employee contributions to the FERS program by 6 percent over a six-year period. That would cut into take-home pay and erase the impact of most pay raises when, and if, you get one. President Donald Trump has proposed skipping any 2019 pay raise called for by the FEPCA pay law. Another plan would eliminate cost-of-living adjustments in future for all FERS (current and future) retirees. If that happened the buying power of retirees would be reduced dramatically, especially if inflation picks up as expected. Congress also considered a proposal last year to eliminate the “gap payment” (which can be worth thousands of dollars) for people who retire before they are age 62 and eligible to collect Social Security. Also in play is the long-standing proposal to base retirement benefits on the employees highest 5-year average salary (it’s now 3), and to reduce future COLAs for all CSRS retirees by 0.5 percent of the actual rise in living costs.

Most of the proposals come from the GOP wing in the House. Democrats (and a handful of Republicans) oppose the changes. There have been no hearings this year. Because this is an election year Congress (especially the House side) will spend the minimum amount of time in Washington. Forty House Republicans are leaving, retiring or running for other office. The announcement that Speaker Paul Ryan (R-Wis.) will retire in January has added to the confusion. Which may be good for you.

For a reality check we went to an expert who has been watching the civil service legislative process for a long time. This was the response: “Probably too early to know whether this will be a true short session or not. Yes, an election year, but depending on who wins, could make for a jam-packed heavy December legislative session.

“At the moment , pay is the biggest issue—if Congress does not appropriate a raise for January 2019, then given the current administration’s plan for a pay freeze, that’s a real probable that is facing feds.”

Nearly Useless Factoid

By Michael O’Connell

The 2018 RC-MoonPie Festival will take place June 16, in Bell Buckle, Tennessee.

Source: Bell Buckle Chamber