Tamila McDonald Articles
Federal IRS Employees Bear the Brunt
Federal IRS employees
Federal IRS employees yet again bear the brunt of the public’s displeasure about their service in 2015. The service levels given to customers in 2015 are at an all-time low, but one that many realize is not the individual employee’s fault.
IRS Customer Service?
Many realize trying to get a live person on the phone from the IRS is like seeing Haley’s Comet; it may happen once in a lifetime. The live person answer happens only 38% of the time. For retired employees or those with time to wait or call back and wait multiple times, 1 out of 3 calls may not seem bad. However, if you are employed and cannot wait on hold for hours on end, you can often go multiple calls and never get in contact with a real person.
The Government Accountability Office confirms that customer service on the phone for the IRS hit an all-time low in 2015. Last year, 51 million Americans called the IRS for help, advice or to ask a question about the ever-increasing complexity of US tax laws. Unfortunately the vast majority of these calls go unanswered.
More Complex, More Help
The last real overhaul of the tax code was in 1986 and even that only closed loopholes that amounted to recovering 6% of tax losses. Instead, since then, tax code has substantially increased in complexity as lobbyists continually search for the next benefit in a loop-hole to their clients. As this code gets ever-larger, the average client has more difficulty in understanding their obligations requiring either professional help or advice from the IRS.
Unfortunately, in 2015 the IRS itself had to deal with 15,000 fewer employees and $1.2 billion fewer dollars than just five years earlier in 2010 due to federal cut backs. If you were hoping the recent hiring of 1000 IRS employees will help with this in 2016, it probably will not. These employees have to be trained and may not be on the “front line” answering calls by the time you need them.
How to Get Answers?
Another result of the system as it stands is the system is complex and inefficient. Your best bet to actually get answers to your questions is to contact a professional that is not with the IRS. If you already have an accountant or tax professional they would be your best bet to get a question answered. If you do not have one of these professionals on speed dial or email, your options are limited.
First, you might want to scour the IRS website to see if your answer is posted in their information sections. Generally, their website is quite helpful in most situations, if you know how and where to look. Getting acquainted with its layout would be helpful. Another option is to post questions in public forums where some of these tax professionals may be. Of course, you need to be extremely careful as any advice taken is still up to you to verify or trust of your own accord; after all it will be your tax form submitted.
However, at the end of the day, with less 1% of all Americans getting audited in a given year, your chances are quite small. The next time you want to get upset at an IRS federal employee, remember they are severely understaffed for the volume expected. It might be better to get angry at your member of congress to effect change.
Retirement Social Security Filing Changes to be Aware of in 2016
If you were looking to retire in 2016, the new omnibus bill and other legislation that just passed in the last couple months may throw a wrench into your retirement funding plans. You may need to adjust your filing strategies accordingly to the rule changes as outlined below.
Suspending your Benefits
The first and possibly the largest change to Social Security filing strategies is that you can no longer suspend your benefits when you apply for them. The “File and Suspend” strategy would allow those seeking retirement to file and then immediately suspend their benefits, for those 66 and over. During the suspension, delay credits would accumulate giving you a larger benefit when you finally did start to collect your Social Security.
With the update repealing this strategy many retirees will need to rethink their retirement funding strategies. If you had a 401K or other pension fund that was going to be used upon retirement, until it ran out and then rely on the increased Social Security amount from the suspension, this is no longer possible. This essentially eliminates potentially hundreds of thousands of dollars for a couple over their lifetime. This strategy is currently set to end 1st May 2016. If you are 66 years or older prior to April 30, 2015, it is wise to ‘file and suspend’ as soon as possible to keep these options open.
This strategy affects most couples that were depending on this strategy for retirement. While the suspended benefits were accruing credits to the tune of 8% per year during suspension, spouses were also able to claim a benefit based on this reduced earnings record. The new law states that you need to be actually receiving the benefit in order for spouses to receive the benefit as well.
Restricted Application changes
The other strategy in use was called a “restricted application.” With this strategy you would apply to receive only your spousal benefit from Social Security allowing your own benefit to accrue credits as described above allowing half of a family to accrue an extra 8% a year in additional Social Security benefits. This was allowed up to as late as 70 years old significantly increasing benefits when they were actually taken at a later time.
This option will no longer be available to couples as of 1 January 2015. However if you are 62 or older by the end of 2015, this option will remain open to you. If so, it would be wise to explore your options with a financial advisor about which option would better suit your family. All those currently exercising these options will continue to be ‘grandfathered’ into the system allowing these strategies to continue for them.
Younger than 62 years old
If you are younger than 62 years old and are looking to retire in the next few years, you may have some tough choices. With the “file and suspend” option being removed it is a $9.5 Billion annual benefit being removed from retirees living allowances. If you were planning on using your share of these ‘extra’ benefits, you will need to recalculate your retirement income, needs and potentially even your retirement date.
These measures were targeted by the administration to put a stop to higher-income families from taking advantage of the loop-hole.
Leaders Seek Emergency Payment to Offset No COLA Increase
The Internal Revenue Service and Social Security Administration confirmed that the Cost of Living (COLA) in the United States did not increase enough to justify an increase in the COLA for Medicare. There will also be no compensation for contribution limits to retirement plans or medicate compensation. Many financial experts attribute this lack of change to lower gas prices.
This news means that Medicare COLA will not increase for the year of 2016. This was largely expected by experts, but it does cause trouble for some individuals. In addition to no increase, many expect an increase in Medicare Part B premiums. This means that 1/3 of Medicare patients will see a significant increase in their premium payment. This year marks the third in the last five years that the COLA did not increase at the beginning of the year.
Lawmakers Pushing for Emergency COLA
While reports suggest that the COLA will not change this year, some lawmakers are pushing for an emergency COLA payment, to help offset no increase this year. More than 20 senators had joined the petition to give federal retirees a one-time payment of 3.9 percent of their annuities. On average, retirees would get around $580. The bill, which would apply to more than 70 million Americans, would offer money so that retirees could pay for necessities.
“The legislation will help 1.1 million seniors, veterans of Social Security age and federal retirees in Maryland so they aren’t left out in the cold when it comes to Social Security benefits they’ve earned and deserve. I will continue to fight so that seniors, veterans and federal employees have a government on their side,” Senator Barbara Mikulski, a democrat from Maryland told reporters.
Federal Retirement Plan Limits
Federal retirees will also see some adjustment to their federal retirement plans limits. The changes affect contribution limits, and will affect 401k plans, IRAs, simplified employee pensions and SIMPLE plans. While most of the limitations stay the same, the IRS says that the increase in cost-of-living index was not substantial enough to justify changes.
Limitation amounts will not change for 401k, 403b, Federal Thrift Savings Plan and some 457 plans. Federal employees can contribute up to $18,000 in 2016 and federal employees (over the age off 50) can contribute an extra $6,000 to catch up for missed year.
Limits on contributions for the IRA stays at $5,500 and employees over 50 can contribute and extra $1,000. Limits also remain the same for the annual compensation, SEP and SIMPLE retirement accounts.
Federal employees will notice a limitation increase in the following federal retirement programs:
- IRA AGI Deduction Phase-out Range: The limitation is raised from $183,000 to $193,000 and $184,000 to $194,000 for married individuals filing jointly. This change is will affect individuals who contribute but are not covered by any workplace plan, but is married to someone who is.
- Multiemployer Plans: The ceiling that decides whether this type of plan is offered raised from $1 million to $1, 012,000,000.
- Retirement Savings Contribution Credit: The savers credit has increased minimally for all groups covered under the AGI Limit. Contribution increases totaled $500 for each group (married filing jointly, head of household, single etc.)
- Roth IRA Phase-out Range: The same increases for the AGI Deduction phase are seen here. In addition, singles and heads of households see an increase from $116,000 to $131,000.
Demoted Federal Employees Still Eligible for More Money
Head of the St. Paul Veterans Benefits office, Kimberly Graves, was demoted after allegations that she participated in a scandal involving the use of the VA hiring system to manipulate a lower-ranking job with better pay for herself and one other employee.
Government officials accused Graves and Diana Rubens, from the Philadelphia office, of forcing lower-ranking managers to take job transfers in other locations and then took the vacated positions themselves. They pocketed thousands of dollars in moving expenses and maintained their higher salary despite a reduction in job responsibilities.
Rubens Pocketed $275K
Records indicate that Rubens pocketed some $275,000 in moving expenses to transfer from Washington D.C. to Philadelphia (these figures included a loss from the sale of her home). Graves pocketed close to $130,000.
The VA announced the demotion November 20, saying: “Today the Department took final action to demote two Veterans Benefits Administration Senior Executives to General Schedule positions.
Diana Rubens, Director of the VBA’s Philadelphia Regional Office and Kimberly Graves, Director at the St. Paul Regional Office have been assigned to assistant director positions at other VBA regional offices. These actions return the employees immediately to general schedule positions within the VBA.”
The press release continued by noting that the actions followed protocol according to Veterans’ Access Choice and Accountability Act of 2014, which allows reassignment based on performance of employee conduct.
Lawmakers Speaking Out
Some lawmakers are speaking out against the transfers claiming that this action is not enough to make up for the actions of the two federal employees. The Veterans’ Affairs Committee Chairman, Jeff Miller, a Republican from Florida expressed his disappointment with the decision.
“VA aggressively pursues the recoupment of overpayment of benefits made to veterans… even when the overpayments are due to the VA’s own errors. I am sure you appreciate the lunacy of a policy that is stricter on veteran beneficiaries of earned benefits as compared to corrupt government employees… The right way to deal with corrupt employees is to fire them. The VA way to deal with corrupt employees is to protect and coddle them,” Miller told reporters.
To add to the irony, Graves and Rubens may be eligible to receive more money to fund their new locations. Rubens and Graves may receive more money because the transfers include an involuntary cross-country move. This means they may apply for several department relocation reimbursements. While they are not likely to benefit from the home sale program (which helps cover losses of a home sale due to a transfer) because the program has been halted pending further investigation, taxpayers could foot the rest of their moving expenses.
Miller responded to this news with frustration. “It seems VA’s taxpayer abuse is never ending. Now we hear that VA leaders, who refuse to fire Rubens and Graves despite their proven corruption, are planning to reward them with a publicly funded move,” Miller said.
The change in position will cost the two women thousands of in the loss of federal benefits and salary. Both women may appeal their demotions, if they file an appeal by the end of the week.
Federal Workers Underpaid, According to Federal Salary Council
Federal Salary Council Releases Report
Whether federal employees make too much or too little is a common topic of debate. One recent report by the U.S. Bureau of Economic Analysis, federal employees make about 78 percent more money than private-sector workers and over 40 percent more than state and city government workers.
This report referred to the federal government as “an elite island of secure and high-paid employment, separated from the ocean of average Americans competing in the economy.”
The Federal Salary Council does not agree. They did find a similar pay gap, though they say the federal workers only make about 35 percent less than market value over the last two years. Despite the pay gap, the Federal Salary Council recommended that more federal employees should move into new locality pay areas so they can receive pay increases next year.
Is the Federal Salary Council Correct?
Howard Risher, a financial expert believes the FSC may be stretching the facts. He said, “The recommendations submitted by the pay agent to the president have been rejected annually for two decades. It is clear that the reported conclusions are not credible. I doubt if even the union members of the Federal Salary Council believe employees on average are paid 34 percent below market rates.”
The FSC works to help unions increase salaries for federal employees without going through Congress for approval.
Whether the difference between pay is large or small, federal employees do have other advantages including layoffs and discharges are significantly lower than the public sector with occurrence rates at 25 percent of public jobs. Additionally, the Bureau of Economic Analysis determined that the number of federal employees fired for any reason happened at 1/6 the rate of private sector jobs.
The Congressional Budget office disagreed with both sides of the argument stating that when you add wages and together, the federal government only pays about 16 percent more than comparable jobs in the private sector.
New Locality Pay
The federal government approved a proposal to add 13 new locality pay areas that will include just over 100,000 federal employees. These new areas will give employees a pay raise. In addition, the Federal Salary Council added an addition two new localities earlier this week. These two new localities will not take effect until 2017.
The new localities include Albany, New York; Albuquerque, New Mexico; Austin, Texas; Charlotte, North Carolina; Colorado Spring, Colorado; Davenport, Iowa; Harrisburg Pennsylvania; Kansas City, Missouri; Laredo, Texas; Las Vegas, Nevada; Pal Bay, Florida; St. Louis, Missouri and Tucson, Arizona. Other areas have asked to be included as a locality pay area.
A study by the Bureau of Labor Statistics showed that employees in the areas approved for new localities made significantly less money than those in similar civil positions. The new localities provide a way to help reduce the pay disparity by offering a pay increase.
In 2015, locality adjustments ranged up to 30 percent. New locality rates are likely to be around 10 percent in most of these areas. Other federal employees are set to receive a one percent raise during the 2016 fiscal year.
Thrift Savings Plans see Changes in October, November
What are the Changes To Thrift Savings Plans?
Federal Retirees and employees can breathe a small sigh of relief as each of the Thrift Savings Plan funds were in the black last a month, a first since August and September’s less than stellar numbers. The C Fund showed the biggest gains with an increase of 8.45 percent and the I Fund jumped just over 7 percent. Smaller companies also did well last month with S Funds rising 5.61 percent.
The G fund had small increases with a 0.17 rise and the F fund only budged about 0.2 percent. While these increases are small compared to the others, both of these funds were already in the black at the end of September, the only two funds in the TSP to do so.
L Funds Posted Positive Returns
New federal employees are likely a little relieved after the lifecycle offers (L Funds) finally posted positive returns. In September, L funds were down causing some retirees concern. L Income rose 1.64 percent, the L 2020 was up 3.72 percent, L 2030 rose 4.88 percent, L 20540 increased 5.58 percent and the L 2050 went up 6.31 percent. Despite scary rates in September, year-to-date rates were all in the black at the end of October.
Thrift Savings Plans were faced with a potential issue when Congress could not find a way to extend the nation’s debt limit. Congress faced a deadline of October 30. If they failed to find a way to extend the debt limit, the Treasury would have had to stop investing in the Thrift Savings Plan’s G fund to help save money until November 3, when the Treasury would have reached their debt limit.
Congress eventually voted to raise the debt ceiling, much to the dismay of several members of the government. Despite dismay at the nation’s increasing debt, the National President spoke out about the debt ceiling saying, “A vote to raise the debt ceiling isn’t a vote to increase our debt. It is about paying the bills that Congress has already approved … Every American is expected to pay his or her bills on time. Congress needs to do the same thing.”
G Fund Slowed Down in March
In anticipation of meeting the debt ceiling, the Treasury slowed down their investments into the Fund back in March. This move was to help preserve additional funds. Federal employees and retirees who invest in the G fund would not notice any difference if the suspension had taken place and none noticed changes during the slower investment period as G fund earnings are guaranteed by the make-whole provision that protected investors in the event of a debt crisis.
The debt ceiling raise only gives Congress until December 11 to come up with 2016 fiscal spending bills. Congress can pass spending bills on their own or create an omnibus package, which would combine all of the spending bills into one larger bill. If government officials cannot find a way to create a budget, the country could face another government shutdown.
Lifecycle Fund Changes approved by TSP Board
Lifecycle Fund Changes Approved By TSP Board
At the beginning of September, the Thrift Investment Board directed all investments by new federal employees into life cycle funds by default. This change in policy redirected the funds from the popular G fund to L-funds, unless the employee asks for something else. The purpose of this change was to help distribute investments more evenly.
Since the passing of these new changes, the TSP board has now started to tackle changes to how the board distributes the investments.
Proposed Changes Explained
Director of the External Affairs of the Federal Retirement Thrift Investment Board, Kim Weaver, explained the proposed changes to reporters. “What we’ve determined is given the way interest rates have been remarkably low, we’re going to change some allocations … move it a little bit more to the G fund, a little less to the F fund, a little less to the S fund and a little higher to the I fund.”
These changes come after two months of poor performances for the L funds. Specifically, this last quarter was the worst quarter for the TSP funds since 2008. The G-fund had the highest increases for the month of September and that increase was only .18 percent.
The L Funds of the TSP revolve around five different funds including the G fund (government) F Fund, C Fund, the S Fund and the I Fund. The S fund, which revolves around domestic stocks and the F funds, which revolve around corporate bonds, have performed poorly as of late.
Some board members were concerned that failing to be more aggressive with investments in the L funds would take away from retirement fund goals.
Weaver said that she does not believe that more aggressive investment options would work well for older investors. “As you get closer to retirement you could possibly be in danger of losing capital, which is not good for the person’s retirement. It’s not something we’re taking any look at.”
G-Fund the Safe Fund
Prior to the changes of investments last month, employees were automatically enrolled in the G-fund. However, Weaver said they board noticed that about a quarter of the employees who automatically enrolled in the G-fund never changed their investment. She noted that while the G-fund is safe (you will not lose money) it does not offer the opportunity to earn the bigger returns that are essential over the life of an investment.
The proposed changes to the investments would allow federal employees to diversify their investment portfolio and provide the option for future federal retirees to access better returns on their money. New employees are enrolled in the L funds automatically, however, current and older employees are not automatically shifted to the L Fund, but the TSP board has been marketing the L-funds heavily.
Current investment strategies allow TSP investments to change on a regular schedule. This adjusts investments from riskier options to safer alternatives (like the G fund) over time so that older employees facing retirement do not risk as much as new employees who have more time to add to their retirement investment.
While the proposed changes from this week are designed to take advantage of the L funds that offer better, or more stable, rates of return, the move must first be approved of by Congress.
Federal Benefits Protected by New Budget
The Senate averted a potential government shutdown by passing a two-year budget that raised the debt ceiling. The package will now go to President Obama for approval. Congress passed the bill to prevent the nation from reaching its debt limit.
Conservatives opposed the bill, which involved a month-long negotiation and puts off another debt crisis until March of 2017. In addition to keeping Congress away from another debt ceiling for two years, the bill also keeps federal employees pay and benefits safe.
No Targeting of Federal Employee Benefits
Congress passed the bill without any provisions that would target federal employee benefits or pay. The final draft of the bill is very different from earlier agreements including the 2014 deal, which forced new employees to contribute more to their pension.
The President of the National Active and Retired Federal Employees Association gave his approval of the deal to the press saying, “We hope our leaders in Washington are learning, finally, that they cannot balance the budget on the backs of federal workers and retirees,” Richard Thissen said.
Federal retirees received more reprieve in this Bipartisan Budget. This year there was no cost of living adjustment due to lower inflation. This lack of COLA adjustment raised major concerns because of the rising costs of Medicare. The lack of a cost of living adjustment means that individuals who are not “held harmless” under their Medicare plan would have to pay an extra $54 per month to help offset the loss of income from those who would not see a raise in premium because of no COLA.
The bipartisan bill prevents some federal retirees, including individuals qualified under the Civil Service Retirement System (CSRS) from having to pay the additional costs. The new act protects individuals for this year, but does nothing to address a possible increase for next year.
Thissen addressed this portion of the agreement saying that the compromise is good but more needs to be done. “While I believe this is a good compromise for the 2016 premiums, Congress and the administration must fix this situation… Millions of individuals should not have to live with financial uncertainty just because their Medicare premiums do no come from social security,” he said.
Potential Government Shutdown Still Exists
While the new budget agreement protects federal benefits and federal retiree benefits, it does not solve other funding problems, including the ability to provide funding or some agencies. If the White House does not come up with a way to fund agencies before the end of the year, we could still see a government shutdown. Congress has until December 11 to either come up with a resolution or pass a spending package to avoid closing doors.
New Speaker of the House Paul Ryan spoke out against the budget deal. Despite efforts to filibuster against the bill, the debate ended on Wednesday while Paul was away at a debate. Paul did speak in opposition to the bill and asked legislators to accept his more balanced budget. Paul took to Twitter and the media to encourage Senators to vote against the new agreement, but the senate voted to approve the bill around 1 a.m. Congress will be back in action on Monday to take on further spending issues to avoid a government shutdown next month.
TSP Funds and Stocks Struggle in October
TSP Funds and Stocks Struggle in October 
This year has not been friendly to the stock market and federal employees and federal retirees are feeling the pinch. In fact, TSP funds took a brutal hit this year, showing just how poorly the stock market is doing. This last quarter was the worst for the stock market since 2011.
In recent years, the worst representation for TSP Funds were in October of 2008 when the C Fund dropped 17 percent and the S and I funds dropped a staggering 21 percent each. So far this month, the S Fund has a return of -5.98 percent, with a decline of 5.24 percent this year. The I fund fares slightly better with a decline of 4.33 percent this year.
While the G fund is the safest option for federal employees and has the highest monthly increase (.18 percent), all of the TSP funds are down for the month and for year-to-date.
This decline is in spite of a recent influx of some $2.3 billion to the G fund and $219 million to the F fund during the month of August. These new investments took a hit when investors withdrew some $986 million from the S fund, $432 million from the C fund and $450 million from the I fund. The average FERS TSP sits at close to $114,380, while investors in the CSRS TSP seem to fair a little better with an average of $115.710.
Automatic Enrollment Starts
In September, new federal employees were automatically enrolled in a Lifecycle fund (L Fund), a riskier alternative to the G fund. New employees have the option to switch to a G fund, but must actively select the investment option. Currently, some 36 percent of all federal TSP funds consist of the G fund. Currently, the L fund only makes up about 17 percent of all TSP investments. Automatically enrolling new employees into the alternative program could help spread investments over a broader range of options.
Many federal employees choose the G fund because it is the only TSP fund insured by the government. Despite the benefit of security, it generally sees lower rates of return than the other funds, which, while more volatile offer the potential for higher returns. According to TSP data, the G fund has a 10-year average of about 3.19 percent, while the F fund has a 10-year average of 4.89 percent. The C and S fund have even high 10-year return averages with 7.72 percent and 9.44 percent respectively.
TSP Accounts Decreasing
The number of TSP accounts are dropping as federal employees are opting for other alternatives (including traditional and Roth IRAs) to avoid low stock prices. While the number of Roth accounts increased by 2.3 percent in August and September, the number of TSP investments dropped by about $13 billion.
While the L fund sits at a -.51 percent for the month, year to date averages are .31 percent and 1.45 percent over the last 12 months. This new change is part of the TSP management team’s plan to help reduce the number of investments they lose when federal employees retire. Many federal employees opt to transfer their investments to IRAs because they offer more security.
Gas Prices Eliminate Social Security Increase
Gas Prices Eliminate Social Security Increase
Individuals receiving social security, disabled veterans and retired federal employees will not see an increase in their benefits during the next fiscal year. Over 20 percent of Americans are impacted by this news. This is only the third time in 40 years that this federal benefit has failed to see an increase.
According to government inflation rules on the cost of living adjustment, increases in benefits are based on inflation. Lower gas prices are keeping the cost of living lower, which means no increase in federal benefits for millions. More than 70 million Americans will receive no benefit increase this year including some 60 million retired federal employees, 4 million disabled veterans and about 10.5 million who receive supplemental benefits.
Lack of Adjustment to Cost of Living
On Thursday, the government will officially announce the lack of adjustment for cost of living at the same time they announce Consumer Price index details for the month. While the government has yet to make the announcement official, financial experts say that inflation rates have been very low this year and they do not expect that September’s numbers will do enough to necessitate a benefit increase.
According to inflation measures, overall prices have actually gone down since last year. Economist Polina Vlasenko told NBC News that, “Other prices – other than energy would have to jump. It would have to be a very sizable increase that would be visible and I don’t think that’s happened.”
Inflation measures were down 0.3 percent year over the last year (ending in August). This decline is attributed to a 23 percent drop in gas prices nationwide. Economists attribute the lower gas prices to smaller demand for oil. Many economies in Europe and Asia are at a standstill or barely growing. Additionally, gasoline prices have dropped because the increase in U.S. oil production has resulted in a surplus of oil. Add in potential access to Iranian oil and gas prices dropped even further.
Since 1975—Two Years Without an Increase
Since 1975, when Congress introduced automatic increases for social security there have only been two years where no increase occurred. Both of those years were in the last five years: 2010 and 2011. Typically, federal benefit increases hover around 4 percent. Following 2011, increases have been between 1.7 and 2 percent, nearly half of the average increase.
While the idea of lower prices may sound appealing to most Americans, the increase, or lack thereof, does not consider the spending habits of recipients. While older Americans on Social Security benefits may not benefit from the lower gas prices, they will not get an increase to help cover the cost of medical care because of the lower gas prices.
One study showed that despite increases since 2000, most seniors receiving the federal benefits have lost about 22 percent buying power. Last year the average benefit increased by just over $20 per month.
Many federal retirees will likely see a major increase in Medicare costs. No cost of living adjustment for social security means that individuals with Medicare benefits “held harmless” cannot be charged regular price increases. This leaves everyone else on the plan footing the bill. Estimates place the increases around $55 per month (of 50 percent) for beneficiaries that do not qualify for the “held harmless” exemption.
Political Climate Affects Federal Benefits
Political Climate Affects Federal Benefits 
Among one of the hot-button topics for presidential candidate debates is federal pay and benefits, though democratic candidates seem to have taken less of a hit than Republican candidates have on the issue in recent debates.
On October 13, Democrat presidential candidates addressed federal benefits including health care and education resources for veterans. They also addressed paid family leave. While both Bernie Sanders and Hillary Clinton said they would like to make paid family leave federally mandated, some federal employers are taking steps in advance of any mandated requirements.
Better Maternity and Family Leave Federal Benefits
Federal employees working in the Navy will receive more than three times the previous amount of leave for maternity. Sailors and Marines are now eligible for 18 weeks of maternity leave. In addition, the Navy is discussing increasing the amount of paternity leave available. New fathers only get 10 days of leave to help care for a new child. According to reports by the Associated Press, the Navy may consider a 30-day leave for fathers.
Any new policies for federal family leave benefits would be in addition to Obama’s recent extension of federal employees. Obama recently ordered up to six weeks of paid leave for federal employees and asked that an additional 6-week of leave for maternity. Despite positive reception, Congress has yet to pass the changes.
Federal Benefits at Risk
The current political climate is putting other federal benefits in danger due to an ending resolution currently funding the government. The administration has until December 10 to come to a resolution. Obama has already said he will not sign another stopgap spending measure or continue sequestration.
In particular, federal retirement benefits are at risk. In 2013, representatives created a plan to break sequester gaps during the last 2 years. That agreement included a requirement that in 2015 new federal employees must increase the amount of money they fund to their retirement. This essentially lowers income levels of federal employees. While lawmakers have largely blocked this in the past, that may not be possible this year.
Other possible threats to federal benefits programs include changing the Thrift Saving Plan’s rate of return in the G fund. This change would require the calculation of pension benefits based on an average of five years of employment instead of three. This could effectively reduce the rate of return for thousands of federal retirees.
Other federal employees who could face a hit if Congress does not come up with a solution by December includes federal employees with the military. Obama could veto a 2016 Defense Authorization act that included a pay increase of about 1.3 percent for military troops. The act also included changes for retirement benefits.
Some presidential candidates have addressed federal employees and federal benefits including Republican candidate Carly Fiorina who addressed the need for reform in how federal employees are paid. “The government needs to get off seniority systems and go to meritocracies… pay for performance,” she told reporters. Fiorina also suggested a major hiring freeze to help reduce expenses and clean out the federal employee system.
HUD first to Offer Phased Retirement for Federal Employees
HUD first to Offer Phased Retirement for Federal Employees
The Housin
g and Urban Development (HUD) announced plans to roll out a phased retirement plan that would allow federal employees to partially retire and still work part-time. Congress passed a law in 2012 that would allow federal agencies to manage their workforce with different retirement options.
The new phased retirement program will be open to non-bargaining employees and the National Federation of Federal Employees bargaining employees who meet set requirements. Despite the ability to implement phased retirement, government agencies have been struggling to work out how to make the program work for federal employees.
Among decisions each agency faces are choosing which jobs are eligible for phased retirement, deciding which activities to include and setting a period for length of partial retirement. In addition, each agency has to decide when eligible employees can apply for phased retirement and how to implement the new federal employee retirement option.
20 Hour Work Week
Federal employees that qualify for this retirement benefit are eligible to work up to 20 hours per week, receiving half of their pay. During this time, they have access to half of their retirement annuity. To qualify for phased retirement, federal employees must spend at least 8 hours per pay period mentoring other employees. The purpose of this is to help skilled, experienced employees provide knowledge and skill for a longer period while allowing them to train others to take over when they fully retire.
The Office of Personnel Management released rules about federal employee phased retirement last summer including an announcement that federal employees could begin submitting applications for early retirement as early as November of last year. However, most could not take advantage of this federal employee retirement because most agencies have not been able to create a viable phased retirement plan that satisfy collective bargaining agreements, agency missions and benefit eligibility.
Ken Zawodny, the associate director for retirement services at the OPM told reporters that while current regulations only allow for up to 20 hours per week, these regulations could change in the future. He also told reporters, “Upon retirement the employee will be entitled to a greater annuity than if the employee had fully retired at the time of transition to phased retirement, but less than if the employee continued on a full-time basis.”
Phased Retirement – Good Option for Some Retirees
This means that a phased retirement benefit could be a good option for retirees who no longer want to work full-time hours, but aren’t sure they can afford full retirement either. Once federal employees take advantage of phased retirement they will be treated largely as part-time employees in regards to leave and pay. However, they will retain their federal health benefits as if they were still working full-time and they will still receive full health benefits contribution so that the cost of their health care stays the same.
A current backlog could cause some delay in retirement processing, though Zawodny said he does not anticipate a major impact on workload. “We hope it is spread out enough so that the impact is not going to be an issue.”
The Library of Congress has also implemented phased retirement options for federal employees.
VA Federal Employees Face Charges for Misuse of Funds
VA Federal Employees Face Charges for Misuse of Funds
Two senior Veterans Affairs managers face criminal charges after a watchdog group reported that these federal employees gave employees large salaries and relocation reimbursements as an incentive to reward executives.
The inspector general of the Veterans Affairs Department said that the two federal employees received some $400,000 in total for a relocation of about 140 miles. Moving expenses are allowable expenditures for the agency; however, evidence indicates that Kimberly Graves and Diana Rubens rigged the system to create job openings for which they could apply.
In addition to arranging new positions for themselves, the two federal workers kept their higher paying salaries despite the new positions sitting on a lower federal pay scale. Ironically, Rubens moved to her new position in Philadelphia to clean up that VA office following a range of scandals including changing benefit claim dates and retaliation against whistle blowers.
These two women could face criminal charges and their case is at the U.S. Attorney’s office.
Scheme of Increasing Salaries
While the case of fraudulent behavior by federal employees is startling, the Inspector General detailed a bigger scheme that involve increasing salaries for many executives. The report showed that some 22 federal VA employees received promotions to executive positions or relocated over about 3-years. The report that these promotions/relocations were used to justify salary increases. All but 1 of the 22 employees listed received a substantial pay increase following their promotion or relocation.
The Attorney General’s report said “Annual salary increases totaled about $321,000 with relocation expenses totaling about $1.3 million.” In addition, the report further detailed another $140,000 in relocation incentives. In total, federal employees spent some $1.8 million on reassignment.
Jeff Miller, the House Veteran’s Affairs Committee Chairman said that the finding align with recent investigations into the organization.
“It is clear from this report that Undersecretary (Allison) Hickey and others in VA leadership knew they could use fear, intimidation and timely relocation incentives to coerce subordinates to relocate to jobs they didn’t apply for, at the taxpayers’ expense. These VA managers knew what they were doing and it is clear that from day one that VA officials were using the relocation expenses program to enrich themselves.”
The VA Response
The VA responded to the allegations, agreeing with the attorney general. The released the following statement: “As a result of their findings, VA leadership will conduct a 30-day review of all incentive and relocation procedures in the department… The VA will full cooperate with other federal agencies as required as we continue our daily effort…”
Federal employees have come under fire his year as numerous reports have shown that this federal benefits program is riddled with fraud and mismanagement. Reports have included mishandling of healthcare requests, changing the dates on applications, and unaccounted spending of about $6 billion per year, and a shortfall of some $2.6 billion this summer that nearly caused several VA hospitals to shut down.
Republican representative Dan Benishek expressed frustration earlier this year. “Do we have to listen to this repeatedly? Obviously, there are some problems that really need to be fixed. It’s unbelievable that this is happening.” He continued, “It seems to be a new revelation every month about some incompetence.”
The VA is responsible for managing and distributing federal benefits for military veterans. The purpose of the VA is to help veterans receive proper medical care, compensation and insurance coverage.
Survivors Wait Years for Federal Death Benefits
Every year, hundreds of families wait a year or more to receive death benefits following the loss of their spouse or other family member in the line of duty. In 1976, the government introduced the Public Safety Officers’ Benefits Program. This program provides benefits to individuals and/or family members following death or debilitating injury that occurred in the line of duty.
According to the Bureau of Justice Assistance website, the program reviews some 900 claims each year for public servants who were “catastrophically disabled” or killed while on duty. The total benefit for death and disabilities is currently $339,210, in addition to a one-month stipend of $1,018.
What Did the Investigation Reveal?
USA Today conducted an investigation of roughly 1500 claims filed since 2008 and discovered that the program is full of delays. These delays come in spite of millions of dollars spend on outside audits and efforts by the program to hire more help to reduce delays in processing claims. The latest numbers (from last month) indicated that roughly 750 families were still waiting for the BJA to process their claims.
The investigation by USA Today included access to tracking records from the Justice Department. Findings included data from over 5 years and nearly 1,500 claims.
Tracking records showed that the PSOB spent an average of 391 days processing and reaching a decision on federal employee claims. This average falls short of the agency’s goal of a one-year maximum turnaround time. Further study of the fed benefits documents showed that 42 percent of cases take more than a year, while 100 families waited over two years and another 25 families waited three or more years for a decision.
The study also revealed that 71 percent of cases listed as pending earlier this spring had already been waiting for over a year, Some 200 families had been waiting for two years and about 50 families had been waiting four or more years for a benefit decision.
Family Member Frustration
Rightfully frustrated, loved ones of the deceased (or disabled) federal employees did not receive much insight as to why the wait has been so long. The agency claimed that the cases are “complex” and suffer from family members or agencies failing to provide enough documentation.
Family members are not the only parties expressing frustration at the delays. Senator Charles Grassley, a Republican from Iowa, has routinely pushed the government to proceed with investigations to determine why the program is taking so long to help families. Grassley told reporters, “Excuses at this point don’t meet the smell test. The families of these fallen officers deserve timely answers. And… the office doesn’t have a legitimate answer for why it allows so many of these cases to languish.”
Research shows that the Justice Department has known about the delay in these federal benefits for more than a decade. Despite a directive from U.S. Attorney General, John Ashcroft in 2004, to make decisions within 90 days, the PSOB has never even come anywhere near that goal.
While the agency claims that improvements are coming and that they have changed claim instructions to ensure completion of appropriate documents, waiting families say they do not expect a resolution to happen quickly.
Federal Employees Could Receive Six Weeks of Paid Leave
Federal Employees Could Receive Six Weeks Of Paid Leave
Senators Brian Schatz, a democrat from Hawaii and Barbara Mikulski, a Democrat from Maryland, presented the Senate with proposed legislation that would provide six weeks of paid administrative leave to take care of a new child. Birth, adoption and foster placement would all be acceptable uses of this new federal employee benefit.
The legislation stipulated that the six weeks of paid leave would be separate from sick and annual leave accruements and those federal employees would not have to dip into those allotted hours as part of their paid leave.
Unpaid Leave
Most federal employee benefits include access to 12 weeks of unpaid leave through the Family and Medical Leave Act. This act applies to both private and public sectors and these hours apply towards the birth, adoption or foster placement of a child as well as medical leave (in which the employee is caring for a seriously ill family member). Employees who qualify for these 12-weeks often use up their sick and annual leave to avoid losing paychecks.
While this option is viable, many feel that federal employee health benefits should include paid leave so workers do not have to tap into their earned sick and personal leave.
Senator Schatz told the Senate, “While private companies are beginning to see the benefits of providing paid family leave, America is still the only industrial nation in the world without a program that gives working parents the time off and income they need to care for a new child.”
Representative Carolyn Maloney, a Democrat from New York introduced a companion bill to the House on Tuesday. Maloney commented on the current U.S. program during a press conference, saying, “This is embarrassing. I would say that it is shameful, and it’s a disgrace.”
The goal for a better program for new parents is not a new one for Maloney who has been working since 2000 to provide paid time off for federal employees who have new children. While Maloney’s legislation has passed the house twice in 13 years, it has yet to get through the Senate.
Support for Leave
Both senators and Maloney have the support of several groups in support of federal employee benefits including the American Federation of Government Employees, the Retired Federal Employees Association, the National Treasury Employees Union and the National Active and Retired Federal Employees Association. The groups referred to this bill as commonsense and encouraged lawmakers to act on the legislation quickly.
Proponents of the bill have argued that this legislation would not add to the nation’s already staggering deficit and the Congressional Budget Office also found that new legislation providing these hours would not create any extra direct spending. The study by the Congressional Budget Office valued the time off payments at $140 million for four weeks of paid leave and roughly $209 million for 8 weeks.
Maloney and other proponents of the bill countered arguments of loss of productivity by saying employees would just have to help pick up the slack while their coworkers are on leave.
Recent moves by Obama indicate his support for more paid time off through employee benefits and administrative leave.
Federal Retirement Backlog Still Backed Up
Federal Retirement Backlog Still Backed Up
Despite efforts to reduce a massive federal retirement backlog, the Office of Personnel Management did not make much headway in August, according to numbers released by the OPM. The OPM began tracking their progress in May of 2014 as a way to help reduce the retirement benefits backlog.
Currently the Office of Personnel Management has a backlog of 16,350 applications for federal retirement. This number is only down by 105 from July. Although the Office of Personnel Management processed just under 7500 retirement claims last month, they fell short of their goal by about 150. Compounded with the 7,341 new government retirement claims received in August, (roughly 550 more than received the same time last year) the numbers may not be dropping anytime soon.
The Numbers Keep Growing
The Office of Personnel Management saw progress in backlog reduction from March through May, but new applications grew the backlog by almost 2,000 applications in June and July. The backlog grew from 14,511 to 16,455 between June and July. The OPM had projected a backlog of about 11,442 by July, but were stymied by the unexpected influx of new applications. As of May, the backlog of federal retirement benefits was reduced by 15.6 percent.
Percentages of claims processed each month have dropped 12 percent from the high of 83.7 percent in December of 2014. In the last six months, they have averaged just over 70 percent, with some months dropping as low as 68 percent processing.
In most years, the OPM receives a high volume or retirement applications in January, with levels lowering to a steadier flow throughout the year. It is common for some months to spike though.
Budget Cuts Complicate Matters
Retired federal employees may be concerned because government-wide budget cuts take effect in October, reducing the amount of overtime the OPM can pay to claims handlers. The budget cuts will also reduce the OPM’s ability to hire new employees to help tackle the overflow.
In addition, retired federal employees may face longer delays if the government cannot reach a budget agreement for funding agencies by midnight, October 1. A government shutdown would delay retirement benefits processing and potentially add to the backlog.
The OPM has struggled to clear the backlog for years and frequently deals with frustrated retired federal employees and complaints from Congress. The Office of Personnel Management set a goal to reduce the number of claims by just over 11,000 by the end of September, which does not appear to be likely.
According to the OPM website, retired federal employees should expect their first payment within 5 to 7 days from the time the OPM receives the electronic files. The OPM says that delays may be caused by missing information and that some 23 percent of applications filed are missing some information and about 11 percent fail to meet the 30-day deadline. The OPM typically attributes these errors to the agency from which the retiree completed their service.
August’s low numbers follow a backlog growth of 13 percent in July.
