Political gridlock over retiree benefits could be a very good thing for federal employees and retirees indeed, as it basically amounts to a détente.
Federal employees and retirees have just come through two especially harrowing years. With like-minded people running the White House, House and Senate, there have been repeated efforts to cut back on their benefits, particularly retirement benefits.
The House for many years under Republican leadership supported raising the required contributions by all employees to make the agency and employee shares equal, meaning an increase on the employee side—and an offsetting reduction on the agency side—of about 6 percent of salary in most cases. Other proposals have been raised to end the “special retirement supplement” after a future date for most employees under FERS who retire before age 62; to base annuity benefits on the highest five salary years rather than three years, effective for those retiring after a date to be determined; and to reduce the rate of return in the TSP’s government securities G fund.
In addition to those ideas, conservatives have raised the prospect of eliminating the defined benefit portion of retirement benefits, again only for employees hired after a future point, and providing them only the TSP—presumably, but not necessarily, with a greater employer contribution—along with Social Security.
Getting such proposals enacted into law past the Democratic minority in the Senate, however, proved to be another matter—even under the Trump administration’s variant proposal to require higher contributions only from those under FERS, to even up the contributions paid by all employees under that system.
Now that the House is in Democratic hands, some are getting up their hopes of not only brushing away such proposals more easily, but also reversing course.
After all, the last time the House was in Democratic control, various sweeteners were enacted. FERS employees became eligible to count unused sick leave as time credited toward their annuity benefit. Those who left government, took out their retirement contributions, and then returned, were allowed to capture the value of that former time by repaying the money. In both cases, that squared up benefits with the more generous CSRS system—which at the same time benefitted from a fix that had reduced the value of benefits for employees who switched to part-time work later in their careers.
Genie in the Bottle
Now the talk is of another such run. House Democrats are raising the prospect of rolling back the higher contributions required of FERS employees hired since 2012, increases that were enacted during a Democratic White House but mainly at the insistence of a Republican Congress at a time of greater concern about budget deficits.
Some Democrats and their allies in employee organizations even are looking farther back, to a difference between CSRS and FERS COLAs that date to the creation of FERS in the early 1980s. While all CSRS retirees get the full annual inflation adjustment, those under FERS typically aren’t eligible until age 62, and even then the amount is reduced if it exceeds 2 percent.
But such ideas similarly face a difficult path to enactment, since both the Senate and Trump administration would have to consent.
How hard will employee organizations and their friendly members of Congress push? Maybe not as hard as you might expect. Some officials of those organizations, speaking privately, have cautioned for years against pushing too hard to substantially sweeten federal retirement benefits—even though those groups advocate for them in public and the changes would benefit their members—at a time when private sector workers have suffered a substantial degradation of their retirement benefits.
Their reasoning: by opening up the system for a rewrite, you create a golden opportunity for those who want to move benefits in the opposite direction. Once that genie is out of the bottle, you can’t shove him back in.
Looked at another way: At the end of a Cold War-era James Bond movie, Bond and a Soviet general who have been after a piece of technology face off on a mountain top. Just when it appears the general is going to take it and fly off in a helicopter, Bond flings it off a cliff and it smashes to pieces. He says something to the effect of “That’s détente, comrade. You don’t have it, we don’t have it.”
After what federal employees and retirees have experienced in recent years, gridlock that produces détente doesn’t look bad at all.