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It’s been a long-accepted maxim regarding federal employment: the pay isn’t that great, but the benefits help make up for it. The federal government largely has held the line on benefits at a time when private sector employers have been cutting back. Outside the federal workforce, the traditional defined benefit retirement annuity, a guaranteed payment for life based on service time and salary level, is largely gone. It has been largely replaced, if it has been replaced at all, with defined contribution plans such as 401(k) savings plans that largely shift the responsibility for funding retirement from the employer to the employee.

Meanwhile, many private employers have either dropped health insurance programs or have scaled them back—for example, by requiring enrollees to pay larger shares of the premiums, excluding persons from coverage if hired after a certain date, and dropping continued eligibility for retirees. There has been pressure for the federal government to make similar moves. On health insurance, proposals have been raised for example to create a “voucher” system that would shift more cost to the enrollee on average. Proposals regarding retirement have included changing to a less generous COLA payout called the chained CPI, reducing the payout formula and many others.

Balanced against this is the recognition—in some quarters, at least—that the government has to be competitive as an employer if it is to attract and retain a good quality workforce. Part of that competitiveness lies in the role benefits play. That’s largely why, despite the precedent being set elsewhere, the main federal employee benefit programs have remained relatively untouched. The Federal Employees Health Benefits program continues to offer a wide range of choices, with the government paying about 70 percent of the total cost on average—and with that same share continuing for its retirees. And the government not only continues to offer a defined benefit retirement program— employees are covered by either the Civil Service Retirement System or the Federal Employees Retirement System—it also offers a defined contribution program, the Thrift Savings Plan. The main change has been to raise required contributions for newly hired employees, although that does not affect the benefit they eventually will receive.

The government also continues to offer life insurance coverage under essentially the same terms it has for decades, with an employer contribution toward the basic benefit and individuals responsible for paying any optional coverage they choose above that. Further, the government in recent times has added a long-term care insurance program and vision and dental insurance, although enrollees are responsible for the entire premium in those programs.

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