Expert's View

Dear FERS employees, something happened while you were sleeping. Beginning with the first pay period on or after October 1, 2010, new contribution rates went into effect for all FERS employees. Got your attention, didn’t I? I’ll bet some of you reached for your last pay slip to see if your income went down. Relax. It didn’t. The rates I’m talking about are the ones your agency pays into the retirement fund for you, which are over and above what you contribute. And what you contribute is, comparatively speaking, chump change.

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Think about it. Most FERS employees only contribute 0.8 percent of their basic pay, with special category employees contributing 0.5 percentage points more. What you may not have realized is that FERS is a fully funded retirement system, and the only way it can stay that way is if your agency pays big money to the retirement trust fund. Because it does that, you’ll be able to receive a decent annuity when you retire, not the one you’d be entitled to if it was based entirely on what you contribute.

Until the agency contribution rates changed for most employees, agencies were contributing 11.2 percent. Now they’re paying 11.7 percent. But that isn’t anything compared to what agencies have to contribute to shore up the retirement benefits of special category employees. Take a look:

* Military reserve technicians cost 14.0 percent; now they cost 14.5.

* Air traffic controllers cost 24.5 percent; now they cost 25.5.

* Law enforcement officers and firefighters cost 24.9 percent; now they cost 25.7.

When you add to those numbers the fact that your agency is also paying the employer’s share of your Social Security contributions, one third of your Basic life insurance premiums, and an average of 70 percent of your health benefits premiums, federal employment—from the employer’s perspective—isn’t exactly cheap. And that fact, plus your salaries, could affect how many employees a budget starved agency can afford to keep on board.