Potential Benefits Cuts: Where Things Stand
5:32 PM ET
Earlier this year, I wrote about the proposed cuts to federal retirement benefits included in President Trump's budget. Here, to recap, is what the budget proposal included:
- Cost-of-living allowances for current and future FERS retirees would be eliminated altogether.
- COLAs for CSRS retirees would be reduced by 0.5 percent each year from what they would have been otherwise.
- FERS employees would see employee contributions to their annuities increased by 1 percent each year for the next six years, without any corresponding benefit increase.
- The FERS annuity supplement would be eliminated for new retirees starting in 2018. That change alone would save the federal government $5 billion by 2026.
- Federal pensions would be based on the average of the highest five years of salary instead of the highest three. According to Congressional Budget Office estimates, that change would save the federal government $2 billion from 2018 to 2026.
These would clearly be dramatic changes to the federal retirement system, and they have caused alarm among some federal employees. But they have to be approved by Congress, and many lawmakers share employees' concerns about their impact.
So where do things stand now? To give you an idea, here are some Government Executive headlines that have appeared since my earlier column was published on June 1:
- Proposed Retirement Benefits Cuts Could Hurt TSP Contribution Levels (June 2)
- House Democrats Pen Letter Blasting Proposed Federal Retirement Cuts (June 15)
- House Republicans Express Concern With Trump's Proposed Federal Retirement Program Cuts (June 27)
- House GOP Takes Cues From Trump, Targets Federal Retirement (July 18)
- Ten Republicans Urge Oversight Committee Chair Not to Cut Retirement Benefits for Feds (July 27)
- Senate Democrats Join Din of Retirement Cut Opposition (July 28)
- CBO Outlines Potential Changes to Federal Retirement Benefits (Aug. 29)
In short, there hasn't been a tremendous amount of momentum yet in the direction of trimming retirement benefits as a cost-savings measure. But Congress has put off its real budget work until this fall, with a looming deadline of early December before a continuing resolution runs out. So stay tuned.
Photo: Flickr user Ian Stannard
5:32 PM ET
Posted by: sarah_oz@yahoo.com
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