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Benefits Spared the Budget Ax

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The House voted Thursday to approve the Senate’s version of the fiscal 2018 budget resolution, an action that was noteworthy because that version does not mandate reductions to federal retirement benefits.

The House’s initial version of the budget resolution had directed the Oversight and Government Reform Committee to come up with $32 billion in savings over the next 10 years. Since the panel oversees federal compensation spending, that level of reductions would likely have involved changes to retirement benefits.

The Senate, however, declined to require savings in the area of employee compensation and benefits in its resolution, and the House ultimately went along with the Senate’s approach.

This doesn’t mean that feds are out of the woods, though. Even though the budget resolution doesn’t require benefits cuts, some reductions could ultimately be included in the fiscal 2018 spending measures Congress comes up with after the current continuing resolution funding federal agencies runs out in early December.

Then there’s the issue of next year’s budget. Last week, a memo from members of the White House Domestic Policy Council surfaced that recommended a number of retirement benefits cuts be included in the Trump administration’s fiscal 2019 budget. That proposed budget will be sent to Congress next February.

As GovExec’s Erich Wagner reported, the memo backs eliminating the defined benefit portion of the Federal Employees Retirement System for new employees and denying new hires access to the Federal Employees Health Benefits Program after they retire. It also calls on Congress to “enact all the FERS reforms for existing hires” laid out in Trump’s fiscal 2018 budget request.

As I wrote earlier this year, those proposals included:

  • Eliminating cost-of-living allowances for current and future FERS retirees.
  • Increasing employee contributions to their annuities by 1 percent each year for the next six years, without any corresponding benefit increase.
  • Eliminating the FERS annuity supplement for new retirees starting in 2018.
  • Basing federal pensions on the average of the highest five years of salary instead of the highest three.

It’s never easy to make changes to federal retirement benefits, because employees, retirees and their representatives in Congress are well-organized to oppose them. But that doesn’t mean policymakers will stop trying.

Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at tammyflanagan.com and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on NITPInc.com.

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