Kiss your pay raise, COLA goodbye? Again

NARFE president Ken Thomas says last year's White House budget proposal “breaks promises to both current and future retirees."

This column has been updated.

Will the White House and Congress stick with their regular game plan of seeking major cuts in the federal retirement programs again this year? Will the budget coming next week once again seek major cuts in federal retirement programs, even though previous attempts have failed, but not before scaring many government workers and retirees?

If so, President Donald Trump’s popularity with the huge federal law enforcement community, whether real or imagined, could take a major hit this year if prospective changes in their Federal Employees Retirement System plan plan are made in an election year. If so, much of the damage would be absorbed by incumbent GOP House members seeking reelection in California, Arizona, New Mexico, Texas, Florida and key electoral vote states that are major federal jobs centers or jam-packed with federal retirees and their significant others — or both.

For a variety of reasons, including political survival, House GOP members, who will first deal with the upcoming budget, should run — not walk — away from it as they have in the past in nonelection years. The president last year proposed a pay freeze for 2020 but didn’t object when Congress approved a 3.1% raise that took effect last month. The current proposal isn’t new, it’s one of the round-up-the-usual-suspects bills proposed, and generally ignored, year after year. But bringing them up again, when they’ve fizzled in the past, in a year of impeachment and elections is politically dumb with a capital D!

The next White House budget, if it follows past practice, could produce a triple financial whammy for the law enforcement officer community. In addition to denying them and other federal workers a pay raise next January, the budget would eliminate millions of dollars from their future retirement benefits by reducing future cost of living adjustments for those under the Civil Service Retirement System plan and eliminating them altogether for those under FERS. Most current retirees are under the old CSRS program. Most current workers will retire under FERS rules.

In addition, and of special interest to the LEO community is the proposal to eliminate the cash gap payment — which can be worth thousands of dollars a year — they now receive because they are forced to retire — usually at age 57 — before they are eligible for Social Security. And, adding insult to injury, slap a huge financial penalty on LEOs, firefighters and air traffic controllers who retire “early” in future because they are forced to retire early due to their sometimes dangerous and stressful jobs. Under current law they are given a “gap” payment, called the FERS Gap Annuity Payment, which can be thousands of dollars a year.

A whack-the-feds proposal is bad strategy for a number of reasons. Federal and postal union leaders have, with one exception, exclusively backed Democratic presidential candidates, and mostly helped Democratic incumbents and candidates at the House and Senate levels. But most feds don’t belong to unions and many if not most vote more like friends and neighbors in their communities. Although the national leadership of a major federal union supported former Secretary of State Hillary Clinton in the last election, its influential and large Border Patrol Council backed Trump. Whenever the president has a federal event, in Florida, Texas or California he is usually surrounded by cheering LEOs. But maybe not this time?

Last year’s whack-the-feds budget prompted Ken Thomas, president of the National Active and Retired Federal Employees Association, to say that “breaks promises to both current and future retirees, reneges on commitment made to our nation’s public servants and sends a very powerful message about the value this administration places on civil service…” So will history repeat itself as boilerplate in next weeks budget? What would a worst-case (repeat) scenario look like?

Looking back at the 2020 budget request, NARFE crunched the numbers to see what would happen if any of the proposals become law and this, according to them, is what each proposal would cost you:

  • Eliminating COLAs for current and future FERS retirees: Over a 30-year retirement, a typical FERS retiree with a median annuity of roughly $1,000 per month could lose nearly $250,000 due to this proposal.
  • Reducing COLAs for CSRS retirees by 0.5% each year from what the COLA would have been otherwise: When combined with the elimination of the FERS COLA, this would cost federal retirees $56 billion over 10 years, and much more thereafter. Over a 30-year retirement, a typical CSRS retiree with a median annuity slightly above $3,000 per month could lose nearly $170,000 due to the proposal.
  • Federal employees covered under FERS would see employee contributions to their annuities increased by 1% each year for the next six years, without any corresponding benefit increase: This will cost FERS employees $78.8 billion over the next 10 years, and more thereafter.
  • The earned and fully funded FERS Annuity Supplement would be eliminated for new retirees: This benefit, provided to FERS employees who retire before they are eligible to collect Social Security, would hit those with a mandatory retirement age, such as federal law enforcement officers and air traffic controllers, the hardest, costing federal retirees $18.6 billion over the next 10 years.
  • Reducing the rate of return on the Thrift Savings Plan’s government securities investment G fund: This would cost federal employees and retirees, as well as military personnel and veterans, $16.5 billion over the next 10 years.
  • Federal pensions for new retirees would be based on the average of the highest five years of salary instead of the highest three: This would cost federal retirees $7 billion over the next 10 years.
  • Reducing working and retirement-age benefits for federal workers disabled through their service, costing them $220 million over 10 years.

Nearly Useless Factoid

By Alazar Moges

Did you have football fever over the last weekend? During an NFL season, the league goes through more balls than you could count. And what is the cost for making all those balls? About 3,000 cows. That’s how many it takes to supply the NFL with enough leather for a season.

Source: Bleacher Report

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