Budget Proposal Has Reappearance of Cuts To Benefits and Pay of Federal Workers Sponsored by:Bill Hoff
Bill hoff said Earlier this month, the Trump Administration reintroduced proposals within the fiscal 2021 budget proposal, which includes reducing the health and retirement benefits of federal workers.
A majority of the suggestions on retirement benefits for federal employees have been in the past proposals in the last three years, which was not favored nor put through by Congress.
In the most recent budget proposal, the Administration would like to have current FERS (Federal Employees’ Retirement System) contribute an additional 1 percent annually to their retirement annuity until the contribution is 50/50 between both the employees and the government. They wish to also reduce cost-of-living adjustments by .5 percent for those that are retired under CSRS (Civil Service Retirement System), along with taking these adjustments entirely off the table for future retirees under FERS.
The budget also proposes to remove the FERS special retirement supplement benefit. This supplement is for federal workers that retire before 62 years of age, which is the minimum age limit to begin Social Security benefits. This supplement is a significant benefit, especially for those that are in federal law enforcement positions that mandatorily have them retire at 59.
The reason for these proposals is that the Administration wishes to make the federal pay system more like the private sector of the United States. In this day and age, the private sector has mostly abandoned the pension systems and has focused more on IRAs, such as the 401(k).
There is also a proposal to cut the (mandated by law) interest rate on the G Fund of the TSP (Thrift Savings Plan). This fund is focused on government securities, and the Trump Administration wishes to have the yield of this fund be equivalent to the 4-week or 3-month Treasury bill.
The Federal Retirement Thrift Investment Board, the agency that manages the TSP, is not in favor of this proposal to change the interest rate on the G Fund. A spokeswoman for the agency state that this change would make the G Fund inefficient and almost fruitless for participants in the TSP, which would negatively affect millions of federal workers savings’ for retirement.
Deputy Director, Margaret Weichert, of OMB (Office of Management and Budget), states that the goal of these proposed changes is to change the current compensation system to one that is based more on performance and ability.
Bill hoff said Another proposal is to reduce the government’s contribution amount for insurance premiums of participants in FEHB (Federal Employees’ Health Benefits program) to 71 percent of the weighted average of premiums. At this time, 72 percent of the weighted average of premiums on all plans or 75 percent of the premium of a given plan, whichever is the lower amount, is paid by the government.
According to Bill hoff, The Trump Administration’s budget proposal has had many vocal critics, such as the National Treasury Employees Union’s National President, Tony Reardon. Reardon says that these proposals to take away the benefits and wages of federal workers are ludicrous, especially when the Administration has put an additional weight to the federal debt in the tune of $3 trillion. Reardon states that the union will oppose these suggestions and will advocate for those wanting a 3.5 percent increase in federal pay for the next year.
