‘Draining the swamp’ while saving your retirement package

The Trump administration wants to make the federal retirement plan more costly to workers and less valuable to retirees. But officials could probably “drain the swamp” of several hundred thousand long-time bureaucrats if they made one simple change to their proposal: Make the plan’s changes effective sometime in early 2019 rather than upon enactment.

Worst case scenario for most feds is that could happen this year. The White House said the savings to the government would be more than $143 billion over the next 10 years. Put another way, that is how much current and future feds and retirees would lose.

Giving on-the-job feds a deadline and a major incentive to retire before their pension plan changes would likely jump start retirements, which have been down since President Donald Trump was elected. This is despite predictions of a tidal wave of Trumpian proportions.

The number of people retiring last month was 9 percent less than in May 2017. This has got to be frustrating to cabinet officers suspicious of the size and loyalty of workforces they inherited.

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The White House wants workers under the Federal Employees Retirement System to contribute an additional 6 percent of salary to their pension package. At the same time it would eliminate cost of living adjustments for current and future retirees. The combination would mean a sharp reduction in take home pay and annuities that would be frozen at retirement.

There would be no annual inflation adjustments no matter how long the individual was retired or how much the cost of living goes up. Civil Service Retirement System retirees would get, in essence, diet-COLAs that are 0.5 percent less than the actual increase in inflation. Imagine 20 or 30 years in retirement without a COLA?

The administration also wants Congress to eliminate the FERS-Social Security gap payment which is currently worth thousands of dollars to workers whose jobs force them to retire at age 57, five years before they become eligible for Social Security. Mandatory early retirement applies to air traffic controllers, law enforcement officers, firefighters and others with dangerous or high-stress jobs.

The National Active and Retired Federal Employees estimates that eliminating the COLA for current and future retirees would reduce their buying power by one-third over a lifetime in retirement. Many workers and retirees consider the proposed changes an act of bad faith and a breach of contract involving the retirement program, which is the jewel in the crown of the federal benefits package.

Fear of reduced COLAs has caused some federal and postal workers to rethink whether they will ever retire since their pensions would remain flat for life. Making the effective date prospective, instead of upon enactment, would likely cause many workers to retire to beat the new rules. People hired in future would understand what their FERS benefits would cost them and that when they retire, like most other Americans with pension plans, there would be no COLAs.

While there would be no immediate savings to the government in the retirement plan. But the likely mass exodus of feds leaving to beat the clock would more than accomplish the administration’s plans to downsize most nondefense operations.

Such an occurrence would be a blessing for many agency and cabinet heads who view the entrenched bureaucracy with suspicion and contempt. Giving feds an incentive to leave ASAP would open up slots for, uh, newcomers who do not expect or get the perks available to current long-time workers. Those rookies might also have a different view of what serving the government means.

Maybe a win-win for both sides?

Nearly Useless Factoid

By Amelia Brust

Since 1997, people around the world have participated in an activity known as “extreme ironing.” It  involves taking an ironing board, iron and wrinkled clothing to a remote or exotic location and smoothing out the creases. An Englishman named Phil Shaw is thought to have invented the sport and since then, people have been photographed ironing while skydiving, scuba diving, cycling and rock climbing.

Sources: Time