FRANK ENDRIS- Congress recently started taking steps to change FERS to make it more like private pension plans and less costly. There are a variety of suggested changes, but some primary aspects of the plan would be raising current employee contributions to FERS by six percent over a six-year period. Another plan that has definite potential to affect any employee in the federal government is President Trump’s proposed pay freeze that would mean pay would stay static in 2019. This would, of course, mean that standard adjustments for inflation would not apply, effectively reducing effective income. The National Active and Retired Federal Employees Association’s National President, Richard Thissen, said that the budget would ‘single out federal workers by implementing a pay freeze, which is perplexing given the president’s continual praise of the strong economy and rising wage growth.’
Primarily, these proposals have come from the GOP’s side of the House, and a large portion of Democrats, as well as some Republicans, oppose the proposals. One outspoken Republican senator, Sen. James Lankford (R-OK) called the pay freeze ‘ill-advised,’ and said that it would ‘hurt…recruitment.’ The fact that 2018 is an election year contributes to the confusion. Forty House Republicans are leaving, retiring, or running for a different office. Speaker Paul Ryan’s announcement of his retirement also means that there are major dynamic shifts in an already struggling GOP. The Cook Political Report projected that 80 Republican-held seats would be competitive in November, as opposed to just 16 Democratic seats.
If the bill does not go through, then the Federal Employees Pay Comparability Act will set cost-of-living raises under the General Schedule. This covers the majority of white-collar workers in the Federal space, whether they are professional, technical, administrative, or clerical. The relevant aspect of the GS is that the President has the authority, through executive order, to change the GS pay rate. If Trump wanted to freeze the pay raises scheduled, he would be able to do it at the beginning of the calendar year.
In an unstable financial situation like this, the best way to go forward is to consult with a financial expert about your options. Whether you are in the process of retirement or you are years and years away, it is always a good idea to make sure that you have a solid plan. Keystone Financial Partners and Frank Endris can help you understand your options and the best way to go forward with your financial future.