Is your career on a fast-track race to the bottom? Many believe it could be, if Congress approves some, any or all of the proposed changes in the Trump administration’s proposed plan for the two primary federal retirement programs.

Many nervous civil servants are crying foul and talking about a breach-of-contract action.

Like most things, there is good news as well as bad news.

The good news is that Congress never gives the president everything on his fiscal year shopping list. Even if, as now, one political party controls the White House, the Senate and the House of Representatives. And, some would argue, a majority on the Supreme Court, too.

The not-so-good news is that even if only a couple of items on the Trump budget are approved, it could mean reduced take-home pay for current workers and reduced or frozen retirement benefits for current and future retirees.

One proposal in the Trump budget plan would raise retirement plan contributions for current workers under the FERS plan by 1 percent a year for six years.

Another would eliminate cost-of-living adjustments in the future for the majority of current federal employees who are under the FERS retirement program. It would also apply to already retired FERS employees who, if it becomes law, would no longer get COLAs, regardless of the increase in inflation. Over time, the reverse compounding effect would eat into the buying power of retirees each year.

CSRS retirees would continue to get COLAs under the Trump budget plan. But those January adjustments would be reduced by 0.5 percent of the actual increase in inflation. Each year, assuming there is some inflation, the retirees would fall further and further behind because their annuities wouldn’t keep up with rising costs.

Yet another budget proposal would base future retirement benefits on the employee’s age, salary, length of service and his or her highest five-year average salary. Curre, tly the annuity formula is based on the employees high-three year average. The so-called high-five plan gets trotted out by almost every new administration or Congress. And while it bothers employees, it’s impact would be minimal, especially when pay raises are very small or during periods of a pay freeze, like that of the Obama administration.

The Trump budget does call for a 1.9 pay raise for civilian federal employees. And while something is better than nothing, the plan to increase employee contributions by 6 percent takes some of the joy out of a small pay raise.

So what’s next? Today at 10 a.m., on our Your Turn radio show, we’ll be talking with Greg Stanford of the Federal Managers Association. FMA is part of a coalition of federal and postal unions, associations representing professionals, managers, senior executives and federal retirees. They’ve already mobilized to fight for the 5.2 millions feds and retirees. But what can they do against what appears to be a stacked political deck? Listen if you can, either online, or, in the DC area, at 1500 AM. You can also call in at (202) 465-3080 or send me questions or comments at: mcausey@federalnewsradio.com.

It is way too early to panic. But it is time to start getting a little nervous!

Nearly Useless Factoid

By Jory Heckman

The town of Nalcrest, Florida is a retirement community where you have to be a retired postal worker to live there. Ironically, there is no mail delivery service. Residents have to pick up their mail at the post office.

Source: Wikipedia

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