President Trump’s decision Monday to revive plans to freeze federal employee pay in 2020 and to institute a series of cuts to federal employee retirement programs was met with great consternation from stakeholder groups, although the ideas stand little chance of becoming law.
Increasing employee contributions toward federal defined benefit annuity programs by 1 percent per year until those payments reach 50 percent of the total cost.
Eliminating cost of living adjustments for FERS retirees, and reducing CSRS cost of living adjustments by 0.5 percent.
Eliminating the FERS supplement for employees forced to retire before Social Security kicks in at age 62.
Changing annuity calculations for federal workers' retirement to be based on the average of their highest five years of salary, rather than the current highest three years.
Reducing the interest rate of the Thrift Savings Plan’s government securities (G) fund, basing it on the yield of either the three-month or four-week U.S. Treasury bill, rather than a weighted average of all Treasury investments.
The administration will not reveal the precise details of these proposals until next week. But each idea has been floated in some form in both 2017 and 2018, and Congress has not implemented any. The likelihood of any of these proposals being included in a final appropriations bill seems even slimmer now, with Democrats now in control of the House.
Management groups also criticized the White House’s approach to federal employee compensation. Although the Senior Executives Association was less overtly critical in its reaction, SEA President Bill Valdez said that the more positive elements of the fiscal roadmap would be undermined in practice by the decision to disinvest in the workforce.
“Even as the budget proposal suggests that our national and homeland security requires additional staffing in the military and along our borders, the budget reiterates penny-wise and pound-foolish proposals to enact federal pay freezes and benefit and retirement cuts, thus implicitly assuring applicants interested in those posts that working for the federal government would mean enduring instability and ceaseless attacks surrounding even their most basic compensation,” Valdez said.