Pay, Pensions Facing Firing Squad?

According to legend, members of firing squads are handed pre-loaded rifles. One of the rifles has a blank instead of a bullet. The idea is that each member of the firing party can convince himself he fired the blank and therefore didn’t take a life.

In reality, Congress and the White House sometimes do the same thing. Especially when the goal is to reduce federal spending/pork without angering special interest groups with something to lose.

The congressional version of the substituting a blank for a bullet often comes in the form of a special blue-ribbon, bipartisan commission. It is set up to study the problem and recommend hard choices that go into effect unless politicians veto the entire package. Like the base-closing BRAC which allowed many members of Congress to act innocent when local bases were shut down and jobs lost, or transferred elsewhere.

Much the same sort of thing is happening now, only on a potentially grander scale. The White House has set up a National Commission on Fiscal Responsibility and Reform. It will look at virtually all federal spending programs and recommend cuts in some/many/most of them – including federal pay raises and retirement benefits. Deadline for the all-or-nothing recommendations is December.

Groups representing active and retired federal and postal workers are well aware that anytime anyone contemplates ways to cut or reduce federal spending that civil service retirement benefits are always on the menu. Especially the full-COLA inflation catch-up that goes to the majority of current retirees who are under the old CSRS program.

In the past there have been suggestions and even feeble (in retrospect) efforts to reduce government annuities. The to-do list either proposes freezing benefits for a specific time period, or eliminating in part the full inflation-catch-up enjoyed by CSRS, until last year when the government said their was no inflation to catch up to.

Because of deflation, retirees didn’t get a COLA this year and probably won’t get one next January. But there is a good chance the commission will seriously consider a return-to-inflation plan that would put all federal retirees on diet-COLAs. That is an annual increase that is one or two percentage points less than the actual rate of inflation. Or delay the COLA payments until retirees hit age 62, as is the case now with the FERS retirement plan.

It’s too soon to panic. And there may not be any cause to panic in the future. But keep your eye on the Commission and, if you belong to a union or association representing feds, postals, managers, executive or retirees, follow what they are doing to protect the pension package.

Benefits Update

For more on the potential threat to your retirement benefits, listen to our Your Turn with Mike Causey radio show today (10am EDT). Our first guest will be Dan Adcock, legislative director of the National Active and Retired Federal Employees. At 10:30 a.m. benefits strategist John Elliott will bring you up to speed on how to make the most of your federal benefits package.

To reach me:

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