Trump Administration Releases Its 2021 Budget Proposal By Wray Mathews
Trump Administration Releases Its 2021 Budget Proposal, Affecting Federal Workers
In the 2021 budget proposal from the White House, President Donald Trump is bringing back up some controversial issues targeting federal employees’ health and retirement benefits as per described by Wray Mathews.
Most of the changes asked of federal workers’ retirement benefits are similar or the same as the ones the Trump administration wanted in the first three budget proposals. Every year Congress has refused to entertain the idea.
In this 2021 fiscal budget, Trump requires employees who are enrolled in the FERS program (Federal Employment Retirement System) to donate an additional one percent a year to their accounts until the contribution of both employees and the government is 50 percent. It would eliminate the yearly cost of living adjustments for future FERS retirees and decrease COLAs for Civil Service Retirement System retirees by 0.5 percent as per Wray Mathews.
Trump’s budget is asking for the abolition of the FERA special retirement supplement, which is a program developed to help people who retire before 62 years of age (Social Security availability age). This supplement is designed to help federal law enforcement employees who must retire at 59. Wray Mathews said at retirement, a person’s defined benefit annuity would be based on the High-5 salary instead of the present-day High-3 one.
The idea behind these budget requests is to bring federal compensation on par with the private sector. Unfortunately, the private sector has been moving away from offering benefits to its workers.
The budget states both the FERS and CSRS for people are factored on statutory formulas linked with the Consumer Price Index. The FERS annuitants have some protection from the economic effects because the retirement package is tied with their TSP and Social Security benefits along with the FERS annuity.
With the elimination of the FERS COLA and a drop in the CSRS COLA payments, it would effectively decrease both CSRS annuity and FERS benefits, which would ensure it matches the private sector’s benefits.
Another option the White House proposed was to decrease the statutorily-mandated interest rate of the G Fund on the TSP. The G Fund comprises government securities, so it matches the yield on either a four-week or three-month Treasury bill. TSP-administering agency officials and federal employees group are firmly against this.
Kim Weaver, a TSP spokesperson, said that in the past the agency was fervently against any changes to the G Fund interest rate, as it would become ineffective for investors and would have a significant impact on TSP participants’ retirement savings.
According to Margaret Weichert, deputy director of the Office of Management and Budget, the goal is to ensure that compensation is based on performance. She said the budget would also allow term employees access to the TSP but not for FERS.
Weichart said the benefit reductions are not applicable to current retirees, but for those still contributing to their retirement. She said the idea is to bring it in alignment with incentive-driven performance groups.
Another proposal is aimed at decreasing the amount the government contributes to insurance premiums of the Federal Employees Health Benefits Program. Right now, the government pays 72 or 75 percent of a plan’s premium, depending on which one is less. The goal is to reduce the government’s contribution to 71 percent.
These proposals are not going over well with labor groups and federal managers.
National Treasury Employees Union National President Tony Reardon said that it’s not right for an administration to gouge federal employee pay and benefits to reduce the deficit they added $3 trillion to. He also said that the NTEU would fight aggressively against these proposals and back legislation that calls for a pay increase.
Everett Kelley, national secretary treasurer of the American Federation of Government Employees, believed that the proposals are outrageous. He said that federal employees are firmly against the loss of nearly half their retirement benefits, and the AFGE will fight against it as well. Kelley also said the administration’s continued focus on affordability is nonsense. He said that the federal retirement system is fully funded and the only compensation aspect that compares to the private sector.
Renee Johnson, president of the Federal Managers Association, said that the move would hinder the federal government from hiring and keeping workers. Similar to last year’s cuts suggestions, the proposal would add to the constant challenges in recruiting and retaining employees as per described by Wray Mathews. Just six percent of the federal workforce is 30 years or younger compared to 25 percent in the private sector.
With the uncertainty in the budget and the constant need to cut benefits, it would make it difficult to attain and retain the best of the best.
