We once thought your federal job benefits were relatively set in stone. You knew exactly how much you were obligated to contribute to your pension. You got a raise every year. And you figured if you put in just the right number of years, you could walk away from your career fulfilled, and most importantly, financially secure.
Sadly, that’s not the era we live in anymore — furloughs, pay freezes and proposals to drastically alter your federal benefits are now the language of the land in Congress these days.
Recently, U.S. Sen. Marco Rubio unveiled a plan to allow non-federal government workers to participate in the Thrift Savings Plan. What that means for you, to say it even passes through Congress and the White House, has yet to be determined.4
However, it is just one example of many that have been proposed by Congress and the Obama Administration that could modify your federal benefits, and thus alter your financial outlook.
Even today, sometimes proposals get just enough political support to pass through Congress and the White House, like the Bipartisan Budget Act of 2013. The act requires federal government employees hired after Dec. 31, 2013 to contribute 4.4 percent of their salaries to the Federal Employees Retirement System (FERS). Most federal employees now make a pension contribution of 0.8 percent of their salaries.
Let’s take a look at a few other pieces of legislation that could have impacted your federal benefits and financial outlook. Albeit in such a relatively turbulent political climate, we can never be sure when a proposal becomes law.
• Sequester Replacement and Spending Reduction Act of 2013 would have increased current federal workers’ pension contributions by 2.3 percent over three years beginning in 2014.
• Public-Private Employee Retirement Parity Act proposed eliminating pensions for new federal workers hired six months after the bill’s enactment.
• Provide for the Common Defense Act of 2013 would have made several changes to your pension, including increasing your contribution by 1.2 percent over three years and the use of a different consumer price index to calculate cost-of-living adjustments (COLA) for federal retirees.
Fortunately, there is little chance these proposals will be enshrined in law anytime soon, or at all for that matter.
Recently, the Obama Administration released its FY2015 budget proposal, which does not recommend any major changes to federal workers’ job benefits. However, it appears to do little to help you either.
But the point is, your federal benefits are clearly under the microscope in Washington. It would be prudent of you to pay attention to any big changes, which we will track on this blog, and begin planning ahead before you get caught off guard.