Fedweek

OPM has estimated that the savings to the government–and thus the cost to employees and retirees– of the Trump administration’s budgetary proposals on federal pay and benefits at $143.5 billion over 10 years.

That estimate came in draft legislation OPM sent to Congress to turn into law the administration’s budgetary proposals to reduce the value of federal retirement benefits in several ways–some of them affecting only those who retire in the future but others affecting current retirees as well–while requiring most current employees to contribute more toward their retirement benefits.

Those proposals were in the administration’s budget plan three months ago but that did not spell out the dollar impact. The new document projects that they would be effective with fiscal year 2019, which begins in October, although there is little chance of a budget being approved by then.

Most FERS employees currently pay 0.8, 3.1 or 4.4 percent of salary toward retirement, depending on the year they were first hired. Those amounts would be phased up until they reached 7.25 percent for each; increases would be not as steep for law enforcement officers and others already paying higher amounts under special retirement provisions. The total would be a required increase in the employee shares–and an offsetting reduction in the government share–of $68.7 billion over 10 years.

The higher contributions would not apply to those under CSRS, who now constitute only about 5 percent of the workforce. They generally pay 7 percent already, although they do not pay the 6.2 percent of pay Social Security contribution that FERS employees also pay.

Currently, all CSRS retirees receive COLAs under the same inflation index used for Social Security benefits, while most of those under FERS do not receive COLAs until age 62 and there can be a reduction depending on the level of inflation. The administration proposes to shave a half-percentage point off CSRS COLAs and to eliminate those on the civil service portion of FERS–which would apply to both current and future retirees–and to make various technical changes to disability retirement benefits. The projected loss to retirees would be $50.2 billion over 10 years.

Two proposals would apply only to those retiring in the future: changing the benefit calculation from a high-3 to a high-5 salary base, both under CSRS and FERS, and ending the special retirement supplement paid only under FERS, to most of those who retire before age 62 and continuing to that age when they can begin drawing Social Security benefits. The document projects a 10-year cost to future retirees of $5.9 billion for the former and $18.7 billion for the latter.

The document does not address other proposals contained in the budget, including to deny a general federal pay raise in January and to stretch out the waiting periods for within-grade raises by one year at each step, while creating a $1 billion fund to reward top performers and to pay incentives in hard-to-fill occupations.