federal retirement benefits

TSP Approves Budget for 2022 Fiscal Year. By: Aaron Steele

September 18, 2021 /by aaron steele

On Tuesday, August 24, 2021, the Federal Thrift Investment Board approved its 2022 budget. The new budget is $496.8 million, a slight decrease from the $498.4 million that the board approved for the 2021 fiscal year. The board oversees the Thrift Savings Plan (TSP), a retirement savings plan scheme for federal employees.

The board made the decision during its monthly meeting on August 24. Ravindra Deo, the board’s executive director, explained that the 2022 budget is the second-highest spending plan since 2020. The board has been spending more on projects since 2020, but the 2021 budget has been the highest spending period so far.

Deo explained that the board aims to focus more on the TSP and its participants over the next five years. The executive director added that the board had been more focused on technology and cybersecurity over the past five years. However, it has more confidence in the progress it has made in those areas over the years. The board members will now prefer to focus more on the agency and the participants of the scheme. Deo added that TSP participants should expect better services from the board.

The TSP has had a three-year spending uptick period. A part of the focus is the agency’s project — Converge. The project is geared towards helping the agency change its recordkeeping method. Converge is expected to take effect in 2022 and will allow for better services, including services that participants have been clamoring for, such as a mobile application and access to mutual funds.

Apart from Converge, the board is also looking at initiating other upgrades with the increased budget. Such initiatives will include an upgrade to the agency’s information technology (IT) and financial services management. In about two years, the executives of the board predict that the agency’s funding will fall to about $445 million.

More people are expected to join the savings scheme, and this, Deo said, will reduce the budget’s cost to each participant from $79 to $57. Deo said this change is expected to take place in 2026. According to the executive director, next year’s budget is 6.8 points, but that of 2026 will be around 4.5 basis points. The basis points, measured in ratio or percentage, compare the agency’s budgets to its assets.

Deo also explained that the board would determine the success of each project by examining how fast employees learn the new systems. The executive director added that the new model would pose a new challenge for employees, who need to evolve and adapt to it. Deo also maintained that the participants remain the priority even as the agency adjusts to the new changes.

Federal Retirement benefits reporting addressed by FASB

February 21, 2016 /by Matt Pierce

Recently FASB has come in the news because they released two different proposals this past week that are aimed at addressing some of the reporting issues that federal officers face regarding their Federal Retirement Benefits.

FASB’s proposals address federal retirement benefits concerns:

Proposed Accounting Standards Update (ASU), Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post retirement Benefit Cost is the name of the proposal put forward by the agency. It addresses the major concern of presenting the fixed benefit cost on a net basis to combine elements with a variety of predictable values. All the users of such statements have let FASB know that the net benefit cost’s service cost component is almost always treated in a different manner when compared to other constituents.

According to this proposal, the employer would file the cost component of the service in the same line of items as the other costs of compensation that arise from the rendered services of the employees that have been affected by the period. There is other information in this regard mentioned in the proposal as well.

All the changes that have been made complying to the proposal would be applicable to all the employers regardless of the fact that they are for-profit or not. The only requirement is that they should offer benefit plans that are defined or other post-federal retirement benefit plans or any other benefits for that matter.

Federal Employees Could Face Higher Medicare Premiums

August 10, 2015 /by Tamila McDonald

Rising Medicare Costs

A law fluke could cause a price hike in Medicare costs for individuals receiving federal retirement benefits. This hike could affect several hundred thousand retired federal employees. The law fluke conspiring with low inflation rates could see retirees paying a significantly more per month for Medicare premiums than other retirees receiving the benefits do. Projections show that the increased premiums for retired federal employees could jump beginning in late 2016. According to a Medicare report, the premiums will not increase until October and some 70 percent of recipients will not even see a premium increase. However, the vast majority of the 30 percent of do are recipients of federal benefits, according to an article in the Washington Post.

Unqualified for “Hold Harmless”

The reason retired federal employees would see the increase is because most individuals who take part in the Civil Service Retirement System, do not qualify for the “hold harmless” provision, which helps maintain a Medicare Part B premium steady, if social security benefits do not increase to help offset the increased cost of medical coverage. This provision is designed to help keep Medicare affordable. Low inflation prices have the rate indicator (which also helps determine military retirement benefits payments) is current at negative 0.2 percent. Despite the low number, recent indications show that positive numbers may be in the future. Combined with a low projected cost of living adjustment, the indicator predicts rates increases could fall into effect later next year.

While the vast majority of Medicare recipients will not see an increase, the 30 percent who do, including retired federal employees, will likely include new Part B enrollees, individuals with no social security premium and individuals with an income-related premium. Projections for this increase are due in part to a possible low cost of living adjustment for social security recipients. If the cost of living adjustment does not provide enough to cover the additional cost of Medicare, individuals who qualify for the “hold harmless” clause will not have to foot the cost of the additional fees. However, those who do not qualify for hold harmless will have higher premium rates to offset the loss of those extra premiums.

CSRS equals no protection

Because most of the individuals who utilize the CSRS do not receive social security, they are not even eligible for any protection against rate increases. This leaves the burden of offsetting the low cost of living adjustment on their shoulders. While some retired federal employees utilizing the CSRS do receive social security via another employer, an estimated 800,000 retirees on the CSRS could have to pay higher premium rates next year. Some estimates say that there may not even be any COLA this year, which could increase the cost of premiums even more. ‘

Retired federal employees do not have to enroll in Medicare because they are covered via the Federal Employee Health Benefits Program (FEHB). However, many employees opt for Medicare at age 65 to receive better benefits. If they opt not to pay the higher premium, they could still receive coverage from FHBP.

Tag: federal retirement benefits

federal retirement benefits

TSP Approves Budget for 2022 Fiscal Year. By: Aaron Steele

Federal Retirement benefits reporting addressed by FASB

FASB’s proposals address federal retirement benefits concerns:

Federal Employees Could Face Higher Medicare Premiums

Rising Medicare Costs

Other CSRS Related Articles

TSP & Retirement

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