In 1986, the Federal Employees Retirement System (FERS) was created to replace the original Civil Service Retirement System (CSRS). The retirement age, annuity calculation, cost of living adjustment formula and basic benefit formula are all less generous than the earlier CSRS retirement system. As designed, FERS is fully funded and financially sound with no unfunded liability. Today, FERS is frequently pointed to as a model by a diverse group of pension experts for its three‐legged stool structure (defined benefit, defined contribution, and Social Security), and by workforce experts for meeting workers’ job portability needs. Federal employees contribute a portion of their pay toward their retirement to achieve an average FERS pension of approximately $1500 per month, a modest retirement income.
Since 2010, Congress has used the federal retirement program to help close the federal deficit, essentially cutting the take‐home pay of new FDA employees. Federal employees have contributed $21 billion to deficit reduction through increased retirement contributions. Those hired after December 31, 2012, saw an increase of 2.3% of their salaries going toward retirement, and those hired after December 31, 2013, saw an increase of an additional 1.3%. New FDA employees now pay 3.6% more than other employees for the same retirement benefit.
In recent years, numerous congressional proposals have been considered to change the federal retirement system, including significantly increasing employee contributions, altering key benefit formulas, ending the annuity portion of FERS, changing the high‐3 to the high‐5, ending the FERS supplement, and changing the interest rate of the G Fund in the Thrift Savings Plan (TSP). This last proposal could be devastating to the TSP. The G Fund is an important part of the TSP and of federal and military personnel’s retirement planning as evidenced by the fact that it is by far the most popular fund in the TSP. The G Fund is the TSP’s sole fund that fully protects federal and military retirees’ earned nest eggs from market volatility and inflation erosion. Any change to the G Fund interest rate will effectively remove the only safe harbor in the TSP.
America is facing a retirement crisis. Half of all Americans have less than $10,000 saved for retirement. Do‐it‐yourself pension plans have been a failure – the difference between what people have saved for retirement and what they should have saved is estimated at $6.6 trillion. We should not substantially increase the number of retirees unable to support themselves in their senior years by diminishing or dismantling the federal retirement system.
NTEU opposes any further reductions in the value of federal retirement benefits and to eliminate the pension contribution increases for new hires. FERS is a carefully crafted and fully funded retirement system that is a critical factor for successful recruitment and retention in the federal government.
NTEU urges Congress to:
- Oppose further reductions in the value of federal retirement benefits
- Eliminate recent pension contribution increases for new hires
Please contact your members of Congress and let them know you support the FDA and its employees.