FERS Retirement Benefits in 2019 and Beyond
The FERS, or Federal Employee Retirement System, might be reaching a breaking point in 2019. FERS is responsible for 95 percent of currently working federal employees, while the majority of the retirees are covered under the CSRS or Civil Service Retirement System.
The difference in 2019 as opposed to the past two years is that the House of Representatives is now a majority Democrat, a change that might change the previous assaults on the system from the legislative branch.
FERS covers postal employees, NASA engineers, CIA workers, park rangers, and other federal workers. Many House Republicans who had advocated for cuts to his fund have not been reelected, or are reduced to minority status. Incoming Republicans who had been recently elected have mostly been ambivalent in regards to any proposed cuts, with some going so far as to advocate for pay raises for federal employees.
One of the largest expenditures of the United States government is retirement payments, so an overhaul in the FERS is something that both sides of aisle usually agree on. It’s just the method of these changes that is up for debate. Some of the items discussed are paid vacation time, and sick leave, which can be accrued and then applied as a monetary credit after retirement, the 5 percent match that the government does on 401Ks, and pay raises every one to three years due to longevity.
A reduction in cost of living adjustments for currently retired citizens, with those particular benefits eliminated entirely for anyone retiring in the future, is one of the proposed changes the FERS in the current White House plan. Ideally, CSRS recipients get the same cost of living adjustment as those who receive Social Security, each one set to evenly match any rise in the inflation rate from the year before. Already people under FERS they get a lower COLA than those with Social Security, at a rate of one percent less. The Republican budget plan before Congress would mean that all COLAs would be eliminated. There’d be no adjustments. And, over time, inflation would lower the value of pensions that are frozen.
Another part of the proposal is an adjustment in how inflation is measured in regards to COLAs. Currently, this is based on the Consumer Price Index-W, where it figures out the costs of workers in urban areas across the nation. Previously, a Chained CPI was what most politicians endorsed, but that too lowered cost of living adjustments and resulted in a reduction of buying power for retired peoples.
Led by Rep. John Garamendi from California, House Democrats are now pushing back with something called the Fair COLA for Seniors Act. If passed into law, it would mean COLAs would be determined by the CPI-E, which is an index that takes into account the usually higher medical costs of retirees and people over the age of 62, thus providing a more accurate picture of actual inflation, and would result in higher COLAs for future retired peoples.
The administration has a lot to deal with, budget-wise, this year, and a divided Congress means that the current retirement package might not be under a major assault with the new proposal, but either way, with a great balance between Democrats and Republicans in the House, things are going to change at some point for retirees and workers.
