Are Federal Employees’ Retirement Benefits On the Line?
Paychecks for all federal employees would shrink and future pension benefits would be less than you were promised if Congress agrees with a series of retirement changes proposed by the White House.
The ideas themselves are not new, and NTEU has successfully defeated them in the past, but the threats to the financial well-being of federal employees are persistent and real.
Jeff Pon, the director of the Office of Personnel Management, put the administration’s wish list for federal retirement cuts in writing in a letter to House Speaker Paul Ryan, R-Wisc., on May 4. Over 10 years, the outrageous and mean-spirited proposals would withhold $143.5 billion from federal employees’ pockets.
“The administration may try to spin this as a way to reduce the federal deficit, but in reality, it is an attack on middle-class civil servants and their families,” National President Tony Reardon said. “You will see NTEU marshal all of its resources, especially the voices of federal employees in every state and congressional district, to defeat these outrageous proposals.”
The cuts are identical to what the White House initially put in its 2019 budget request; and together, they would hurt all current, former and future federal employees:
Employees in the Federal Employees Retirement System (FERS) would pay 1 percentage point more toward their retirement every year until it equals the amount contributed by their employer with no increase in benefits. This is a major cut in take home pay, every year, until the employee is contributing 7.25 percent. Most employees currently contribute 0.8 percent toward their FERS pensions. Future pay raises would be nearly meaningless because of the constantly increasing retirement contributions. And keep in mind, the administration is proposing a pay freeze for 2019.
All future retirement benefits — Civil Service Retirement System (CSRS) and FERS — would be based on the average of the highest five years of salary, not the current three years. This change would reduce the amount of money most employees receive in retirement because the average would be spread across five different salary levels, not just your highest three years.
For those who retire before age 62, the FERS supplement would be eliminated. For those forced to retire early — such as law enforcement personnel at Customs and Border Protection (CBP) — this is a major hit to your retirement security. The supplement is the only way CBP personnel can afford to retire before Social Security benefits are available, and eliminating it would harm federal law enforcement personnel in many agencies.
Cost-of-living allowance (COLA) increases for current and future FERS retirees would be eliminated, making it harder for retirees to keep up with inflation. Seniors on fixed incomes need COLAs to handle the rising costs of food and housing, and eliminating them is yet another attack on those who served their country and deserve to retire with economic security. It would also affect current and f
uture CSRS retirees who would see their COLAs significantly cut by 0.5 percent annually from what the current formula provides.
“Retirement benefits are not some optional bonus or perk that can suddenly be diminished or withdrawn,” Reardon said. “They are part of the deal when people take a government job, and they are rightfully earned after years of public service. This is a time to alert our allies in Congress that the federal employees in their districts and states — plus their families — are depending on them to block this assault on their future financial security.”
Federal employees have already contributed $200 billion in deficit reduction through pay freezes, below-market pay adjustments and previous increases to retirement contributions for new hires. And FERS is fully funded and financially sound with no unfunded liability, meaning the system is stable as it is and doesn’t need reforms.
Visit NTEU’s Legislative Action Center at www.nteu.org to learn more about how you can communicate to your local members of Congress your concerns about these proposed cuts.
Key Federal Employee Legislation You Should Know in 2018
As federal employees, you face significant ongoing scrutiny and threats to your jobs, pay, benefits, and rights from Congress. NTEU is on Capitol Hill advocating for you and your family, and working to make sure legislators are aware of how federal workforce proposals impact you.
To protect your job and employee rights To see your agency properly funded with staffing and resources so you can do your job for the public To get you better salaries, promotions and career opportunities, and a pay raise To make sure you keep your retirement and health care benefit.
Additional Threats To Watch Out For
The administration’s Executive Order reorganizing the federal government by reducing and privatizing jobs.
The administration’s FY19 Budget Request to Congress that freezes pay for 2019, and proposes to: eliminate step increases (within-grades); slash pensions, health care, and workers’ compensation; erode the Thrift Savings Plan (TSP); reduce holidays and leave; and make it easier for agencies and managers to remove employees.
In the wake of the cyberattack, NTEU has filed a lawsuit asking the court to order OPM to provide lifetime credit and ID protection for its NTEU members, take steps to strengthen its IT security program and protect your data from falling into the hands of hackers in the future.
Status Update (May 10, 2018)
On Sept. 19, 2017 the U.S. District Court for the District of Columbia issued a decision dismissing NTEU’s lawsuit. The district judge concluded that NTEU members were not “injured” by the OPM data breaches and that they thus lacked standing to bring their lawsuit against OPM. The district judge further ruled that the constitutional right to informational privacy was not violated by the OPM data breaches (read the decision). On that same date, the court also dismissed a related consolidated lawsuit brought by different plaintiffs.
NTEU strongly believes the district court’s decision is wrong, and immediately filed an appeal of that decision with the U.S. Court of Appeals for the District of Columbia Circuit. NTEU will make its case there that its members were harmed by the breaches and that OPM’s indifference to securing its databases in the years leading up to the breaches violated NTEU members’ constitutional right to informational privacy.
On March 26, 2018, the D.C. Circuit issued a schedule for briefing. NTEU’s opening brief was filed on May 10, 2018. The government’s response will be due June 19, 2018, and NTEU will have an opportunity to file a reply brief on July 9, 2018. Oral argument has yet to be scheduled.