Fedweek

Washington DC, Mar 11 2019 - Acting Office of Management and Budget director Russ Vought speaks during the daily press briefing at the White House about President's 2020 budget proposal.

President Trump has called on Congress to provide no federal employee pay raise in January 2020 and to increase the required employee contributions toward retirement while eroding the value of those benefits—particular for future retirees but also for current retirees.

The proposal already has run into opposition in Congress, where leading House Democrats on federal workforce issues have vowed not to even consider benefit cuts; they further are advocating for a raise of 3.6 percent. They were instrumental in enactment last month of an average 1.9 percent pay raise retroactive to January 6 to replace the salary rate freeze that Trump imposed at the start of this year when a raise figure was not legislated last year.

In addition to again calling for a pay freeze—in contrast to the 3.1 percent raise being sought for the uniformed military—the budget proposal contains other provisions Trump previously sought, unsuccessfully. While short on details, it identifies the proposed changes in a listing of their budgetary impact, the largest of which would be to shift from the government to employees more of the cost—$79.8 billion of it through 2029—of retirement benefits.

That would be done, as has been proposed before, by increasing employee contributions by 1 percent of salary per year until the two shares are equal. In most cases, that would require employees to pay about 6 percent of salary more than they currently pay, although FERS employees hired since 2012 already are paying at higher rates so the increase for them presumably would not be as steep.

The proposal also once again seeks to end the COLA on the civil service portion of a FERS annuity while shaving 0.5 percentage points off COLAs for CSRS retirees. That would yield a savings to the government (and thus cost retirees) of $56 billion through 2029. Social Security COLAs would not be affected.

Also repeated were proposals to:

* base annuities of future retirees on the high-5 consecutive salary years rather than high-3 ($7 billion);

* reduce the government contribution toward FEHB ($1.9 billion);

* for future retirees, end the “special retirement supplement” paid to those under FERS who retire under age 62 and which is paid until they turn that age ($18.6 billion); and

* reduce the G fund rate of return nearly to zero ($16.5 billion).