Despite a range of proposals, the TSP has not been in the cross hairs in terms of government matching or vesting requirements. Image: Konstantin L/Shutterstock.com
By: John GrobeWe’re seeing renewed threats to federal retirement and benefits in Congress. These are not new threats; we’ve seen them before, many times. Will it be different this time? Or will the changes fail to be enacted as was the case in the past? Only time will tell. Although most recently most of the federal employment related provisions being considered in the Senate (and already passed by the House) were pared from the 2025 budget bill – although they’ve never advanced so far.
Part of me wants to pooh-pooh these threats. I’ve heard about a switch from a high-three to a high-five ever since I was a 25 year-old letter carrier and I’m more than three times that age today. It’s never happened.
Another part of me worries because, a little over a decade ago, FERS contributions were raised for all new hires with no concomitant increase in benefits.
Here are some changes that have been proposed:
• Increasing FERS contributions to 4.4% of salary for those who had previously been grandfathered at lower contribution rates.
• Switching from the high-three to the high-five. An interesting fact is that when the CSRS retirement system was introduced over 100 years ago, it had a high-five calculation.
• Doing away with the Retiree Annuity Supplement for all employees. The supplement is a benefit unique to federal retirees.
In the past we feds have benefited from what I refer to as “Congressional Insurance”. Those who would vote to cut our retirement would be cutting their own retirement as well. Despite rumors of a special Congressional retirement plan, our congresspeople share the same benefits as regular FERS employees (except for those who have been in Congress for forever, who will still be covered under the more generous CSRS system). I’ve never met a politician who would pick his/her own pocket.
What hasn’t been threatened by those intent on cutting our benefits? The Thrift Savings Plan, that’s what. There’s been no talk of cutting the government match or of increasing vesting requirements.
What can you do?
• Contact your representatives and senators. They may not pay attention, but that’s no reason not to let them know what you think.
• If you haven’t done so already, get serious about investing in your TSP and outside retirement instruments such as Individual Retirement Arrangements (IRAs).
o If some of the threats turn into reality, you’ll need everything you have set aside. You can make a difference.
o If this batch of threats peters out, as similar threats have done in the past, you’ll have that much more in the TSP to help you enjoy your retirement.
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See also
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