Fed Employee Possible Retirement Change

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mjones6788
Posts: 6
Joined: Thu Sep 10, 2015 12:37 pm

Re: Fed Employee Possible Retirement Change

Post by mjones6788 »

I don't know if anyone else had noticed that the article referenced in this thread (http://www.govexec.com/pay-benefits/2017/08/cbo-outlines-potential-changes-federal-retirement-benefits/140618/?oref=river) states that options 4 and 5 reduce the government's net costs.

The CBO report the article references (https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53003-federalretirement.pdf) states options 4 and 5 increase the government's net cost.

I am sure they wouldn't be looking at options that increase costs.

Edit: Increase costs in the near term but over a long enough time the costs decrease. I am guessing the way the current costs are going down as there are fewer CSRS retirees in the system.

hittenit
Posts: 34
Joined: Thu Feb 02, 2012 11:24 pm

Re: Fed Employee Possible Retirement Change

Post by hittenit »

For the Federal workers I doubt anything good will be forced upon us in the next 3 plus years, except a limp in your walk :lol:
Last edited by hittenit on Thu Aug 31, 2017 3:54 pm, edited 1 time in total.

plang926
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Re: Fed Employee Possible Retirement Change

Post by plang926 »

evilanne wrote:Any major changes will require a new retirement system similar to what they did when they changed from CSRS to FERS. I don't see that happening any time in the near future as congress doesn't appear to be able to agree on much of anything and any changes will also apply to them. There are legal issues with changing benefits to existing employees and it is easier to apply any new system to new employees but then you have problem of recruiting people to into civil service to fill the positions. No need to worry about all of this until something actually happens...most is just talk at this point.



Any change must apply to them??? HAH!! They'll just write in that they're exempt ... just like every other horrible plan they like to force on the American public that they know full well is a horrible plan but they do it anyway because ... reasons.

Dow100k
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Re: Fed Employee Possible Retirement Change

Post by Dow100k »

Any change will be grand fathered.

phalanx
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Re: Fed Employee Possible Retirement Change

Post by phalanx »

Getting rid of the pension will HAVE to happen sooner or later, it's already bankrupting many major cities. That said, I will be furious if they try to switch people mid career. Also, the gov has a hard time attracting talent, the job security and pension are some of the ONLY things drawing people to gov service in a lot of cases. I know they won't admit or realize it, but they will also have to raise wages significantly if they get rid of the pension...the gov will have to truly compete for talent on a more leveled playing field.

PoorFed
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Re: Fed Employee Possible Retirement Change

Post by PoorFed »

cswift01 wrote:
Jock14 wrote:
cswift01 wrote:I worry I would lose FERS. That annuity is why I joined in the first place. I could lose my entire TSP but still be able to eat with FERS.


So many big businesses are moving to a non-annuity solution because employees are living longer than expected. Generations like the "baby boomers" have created major financial impacts to companies still even though many of them have retired. This is due to the fact that they lived longer than expected and therefore got more money than businesses expected.

Common private business practice (for larger business like Boeing) now is to give extra default/matching funds, but have no annuity. However, they typically can't change this for existing employees, but do it starting with new hires.

Typically, this benefits both the employer and employee (if they are smart) because the employee has full control and starts investing more earlier. The employee obviously has a fixed cost and therefore less long term risk. Downside is if the employee doesn't do well investing their own money.


Right, but we shouldn't forget that FERS isn't free. We still pay for it, even if we don't pay the full share.

I'm for changing the discussion. I don't see why federal employees have to always give. I'm for looking into other areas.

Best

Me


Federal employees have to give because we are federal employees. There are too many of us that aren't worth the cost to the taxpayers. If you don't know know what this means then don't don't worry about it and ride the wave.

I'm just sick and tired of the "blanket" policies to save money. We can lose half the people in my office and still get the job done. Yet they furlough everyone during sequestration.

Sorry...just wanted to vent....

Master
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Joined: Wed Jun 14, 2017 3:01 pm

Re: Fed Employee Possible Retirement Change

Post by Master »

phalanx wrote:Getting rid of the pension will HAVE to happen sooner or later, it's already bankrupting many major cities. That said, I will be furious if they try to switch people mid career. Also, the gov has a hard time attracting talent, the job security and pension are some of the ONLY things drawing people to gov service in a lot of cases. I know they won't admit or realize it, but they will also have to raise wages significantly if they get rid of the pension...the gov will have to truly compete for talent on a more leveled playing field.


Very well stated!

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cswift01
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Re: Fed Employee Possible Retirement Change

Post by cswift01 »

plang926 wrote:
evilanne wrote:Any major changes will require a new retirement system similar to what they did when they changed from CSRS to FERS. I don't see that happening any time in the near future as congress doesn't appear to be able to agree on much of anything and any changes will also apply to them. There are legal issues with changing benefits to existing employees and it is easier to apply any new system to new employees but then you have problem of recruiting people to into civil service to fill the positions. No need to worry about all of this until something actually happens...most is just talk at this point.



Any change must apply to them??? HAH!! They'll just write in that they're exempt ... just like every other horrible plan they like to force on the American public that they know full well is a horrible plan but they do it anyway because ... reasons.


Funny thing. I was just reading this article (https://federalnewsradio.com/federal-re ... sion-plan/) in response to your comment.
Master wrote:
phalanx wrote:Getting rid of the pension will HAVE to happen sooner or later, it's already bankrupting many major cities. That said, I will be furious if they try to switch people mid career. Also, the gov has a hard time attracting talent, the job security and pension are some of the ONLY things drawing people to gov service in a lot of cases. I know they won't admit or realize it, but they will also have to raise wages significantly if they get rid of the pension...the gov will have to truly compete for talent on a more leveled playing field.


Very well stated!


I'm not sure if I agree. I don't think that the cities are becoming bankrupt from the pensions, I just think that cities decide not to fund them (http://www.oecd.org/finance/private-pen ... 802785.pdf) as they have other (maybe more immediate) costs. I think its easier to cut pensions of a small group of people than to raise local taxes or offer less services to a larger group of people. With the first option, many less are affected even if its contrary to what they were promised. One could even refer to it as political expediency.

PoorFed wrote:Federal employees have to give because we are federal employees. There are too many of us that aren't worth the cost to the taxpayers. If you don't know know what this means then don't don't worry about it and ride the wave.

I'm just sick and tired of the "blanket" policies to save money. We can lose half the people in my office and still get the job done. Yet they furlough everyone during sequestration.

Sorry...just wanted to vent....


I think this entirely depends on where you are and what you do. In my organization there are people that do nothing and people that do the job of 2 people. I would not want to shrink the federal workforce because the federal workforce is already small (per capita). We actually have less federal employees in service than during the time of Nixon. Sure you could make the point that technology doesn't require the workforce to increase or could maybe decrease the size, however, the size is already smaller. See chart https://forum.federalsoup.com/default.a ... post341782. In any case, I'm not arguing about efficiency. If less of you are needed, then so be it.

I think it would be a severe case of myopic thinking if we thought inefficiency only pertained to the government. Sure, companies like to save money, but does the CEO really need to make $40 million per year? I know that income inequality is a separate discussion, but I think the connection with "worth of labor" is not that far away from the same thing.

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Me

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evilanne
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Re: Fed Employee Possible Retirement Change

Post by evilanne »

Interesting links cswift01. Although their may be fewer federal employees per capita

Feds.jpg


FERS is currently fully funded, see https://fas.org/sgp/crs/misc/RL30023.pdf It is the CSRS that has an unfunded liability. In effect, they are shifting the burden of the CSRS unfunded liability to new FERS employees, which is why all this talk of eliminating the pensions doesn't make sense IMO.

Figure 1 in https://www.cbo.gov/system/files/115th- ... rement.pdf
Outflows.jpg


There is still a major problem with many local and state pension funding across the nation for many reasons, whether it is fiscal irresponsibility, unrealistic growth rates, low interest rates or kicking the can down the road does not matter. What matters is the impact on those covered by these plans and to what extent the federal government will be called upon to bail these plans out at some point in the future.
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JustMe
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Re: Fed Employee Possible Retirement Change

Post by JustMe »

I'm still early in my career so all these proposals really make me nervous.

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cswift01
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Re: Fed Employee Possible Retirement Change

Post by cswift01 »

evilanne wrote:Interesting links cswift01. Although their may be fewer federal employees per capita

Feds.jpg


FERS is currently fully funded, see https://fas.org/sgp/crs/misc/RL30023.pdf It is the CSRS that has an unfunded liability. In effect, they are shifting the burden of the CSRS unfunded liability to new FERS employees, which is why all this talk of eliminating the pensions doesn't make sense IMO.

Figure 1 in https://www.cbo.gov/system/files/115th- ... rement.pdf
Outflows.jpg


There is still a major problem with many local and state pension funding across the nation for many reasons, whether it is fiscal irresponsibility, unrealistic growth rates, low interest rates or kicking the can down the road does not matter. What matters is the impact on those covered by these plans and to what extent the federal government will be called upon to bail these plans out at some point in the future.


Thanks Evilanne. I hadn't found that info on FERS. I think the crisis made the pension problem more acute due to shifting spending priorities. Hopefully people will get what they were promised.

WhyMe
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Re: Fed Employee Possible Retirement Change

Post by WhyMe »

Good information everyone, thanks a lot.

mindofmush
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Re: Fed Employee Possible Retirement Change

Post by mindofmush »

Do these numbers look right?

From that linked article in the "Government Executive":

The five options include:

1) Increase the pension contributions to 4.4 percent of salary for all employees. Currently, the rate is 0.8 percent for those hired before 2013; 3.1 percent for those hired in 2013; and 4.4 percent for those hired after 2013. This option would reduce the government’s net costs by 14 percent on a cash basis over the next 10 years.

2) Decrease the pension contribution rate to 0.8 percent of salary for all employees. While this option would likely help recruiting and retention efforts, it would increase government’s net retirement costs by 10 percent on a cash basis over the next 10 years.

3) Change the pension formula. Instead of basing retirement benefits on an employee’s three years of highest salary, benefits would be based on an employee’s five years of highest salary. This would reduce the government’s net costs by 1 percent on a cash basis over the next 10 years.

4) Eliminate the pension, but increase the government’s TSP contribution to 15 percent. This would reduce the government’s net costs by 24 percent on a cash basis over the next 10 years.

5) Eliminate the pension, but increase the government’s TSP contribution to 10 percent. This would reduce the government’s net costs by 17 percent on a cash basis over the next 10 years.

I don't understand how (in comparing options 4 & 5) the GOV can put more money into your TSP and yet net a greater savings over the next 10 years.

Maybe the CBO is using New Math.
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Aitrus
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Re: Fed Employee Possible Retirement Change

Post by Aitrus »

mindofmush wrote:4) Eliminate the pension, but increase the government’s TSP contribution to 15 percent. This would reduce the government’s net costs by 24 percent on a cash basis over the next 10 years.

5) Eliminate the pension, but increase the government’s TSP contribution to 10 percent. This would reduce the government’s net costs by 17 percent on a cash basis over the next 10 years.

I don't understand how (in comparing options 4 & 5) the GOV can put more money into your TSP and yet net a greater savings over the next 10 years.

Maybe the CBO is using New Math.


No, it's right. It's because the government puts $ into your pension alongside you. Regardless of whether you put in 0.8% or 4.4%, the government is also putting some in too. Check your LES. The amount they put in is more than they would put in if they were to just match 10 or 15% into TSP. In short, right now you get 5% matching into TSP, and then more money into your pension. In effect, getting rid of pension payments but upping the matching into TSP reduces the government's overall spending per person, even if the cash coming to your TSP is two or three times what it was.

There's something else that's not covered in the CBO reports, but getting rid of FERS and upping TSP is even more significant savings down the road than the 17 or 14% they quote. In 70 or 80 years, FERS would be phased out just like CSRS is due to phase out sometime in the next few decades. Once the last few people entitled to CSRS / FERS payments depart this earthly coil, that line item can come off the government's books. This results in the government not having to pay pensions at all, except to Presidents and members of Congress. Huge savings there.

I'm not sure what % the government puts into FERS, but maybe somebody can answer that for you.
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mindofmush
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Re: Fed Employee Possible Retirement Change

Post by mindofmush »

I'm not denying that if the GOV stops paying pensions the GOV saves money.

My quibble is specifically with option 4 saving the GOV 24% by giving out 15% to TSP but option 5 only saves the GOV 17% by giving less (10%) to your TSP.

There probably is a typo somewhere in either the CBO report or the govexec.com article; but that doesn't help their credibility in recommending reductions to our pay.
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