Federal Retirement Targeted in President’s FY 2018 Budget Request

Office of Management and Budget in the Executive Office of the President of the United States (seal)According to the Washington Post, and confirmed by the Office of Management and Budget, President Trump’s fiscal year (FY) 2018 budget request, expected to be released next week, will propose significant changes to federal employee retirement benefits. Specifically, the proposal would:

  • Significantly increase Federal Employee Retirement System (FERS) employee contributions by about 1 percentage point each year until they equal the agency contribution rate. It could take approximately five to six years to fully reach the new employee contribution rate of about 6 or 7 percent, translating into a massive pay cut (most FERS employees currently contribute 0.8% of salary towards their future FERS pension, with the agency contributing 13.7%). Employee contributions by federal law enforcement officers, including Customs and Border Protection Officers, would increase by this same amount, but would not equal their greater agency contribution rates.
  • Base future retirement benefits on the average of the high five years of salary instead of the current high three.
  • Eliminate the FERS supplement which approximates the value of Social Security benefits for those who retire before age 62.
  • Eliminate the annual cost of living adjustments (COLA) for the pensions of current and future FERS employees.
  • Reduce the COLA for the pensions of Civil Service Retirement System employees by about 0.5 percent from what the current formula would provide.

Benefits Key Means Advantage Or Reward.This announcement follows a House Oversight Committee hearing yesterday where the Congressional Budget Office, claimed that federal worker’s retirement benefits were more generous than the private sector.

Over the past few years, federal employees have contributed more than $182 billion to deficit reduction due to increased retirement contributions for new hires, pay freezes, reduced pay adjustments, and unpaid furlough days. Should such drastic retirement changes be made to FERS as proposed, it is estimated that employees could lose as much as $5,000 per year in take home pay. Additionally, the loss of an annual adjustment to pensions that is designed to account for the erosion of the underlying pension benefit owing to inflation, would be devastating to federal retiree income security.

This is NTEU CountryI want to assure you that NTEU will fight against these harmful proposals on Capitol Hill and continue to strenuously defend federal workers and retirees from such viscous attacks. I will keep you updated on these proposals once the President’s budget request to Congress is officially released next week.

To see what you can do, visit the NTEU Legislative Action Center.

Pension squeeze