Fed Employee Possible Retirement Change

[denise73]

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.

Exactly why I am 100% against changing the structure of FERS, or them getting rid of it altogether.

[LittleKing]

Thank you for all the information everybody! Lots to consider and ponder for sure.

[Doqtorn0]

Can you provide the source?

[Jock14]

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.

[cswift01]

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

[LittleKing]

Doqtorn0

http://www.govexec.com/pay-benefits/201 ... oref=river

Edit: I could not find the exact article I read, but this one has almost exact information regarding the 4 or 5 options being considered.

[dakota79]

Things hardly ever end up, from either side, the way they are proposed....especially contentious legislation. While that may be good, it's also a bit scary. Things are extremely polarized in Congress between the parties right now, and in some cases within parties. What I'm concerned about are amendments being introduced as bargaining chips or agreements to get votes....maybe even at the last minute. That's scary because we would literally wake up and poof....find out Congress passed it last night as part of bigger legislation. Involvement of conference committees can change things even more.

I don't know the likelihood of a larger reform bill passing. The small nicks here and there though, its like boiling a frog in water.....

[evilanne]

Interesting article from earlier this year https://chiefhro.com/2017/01/10/6-civil ... -congress/

There have been multiple proposals in recent years to eliminate the defined benefit portion of FERS and move new hires (not existing employees) to a plan based entirely on Social Security and the Thrift Savings Plan. <SNIP>
The first year of a party change in Washington puts a lot of issues on the table and it is unlikely everything would happen at once. A comprehensive civil service reform bill would take time and energy that the Congress may not want to devote to federal workforce issues. That means the most likely outcome is piecemeal legislation stretched out over both years of the 115th Congress.

[evilanne]

http://www.govexec.com/pay-benefits/2017/08/cbo-outlines-potential-changes-federal-retirement-benefits/140618/?oref=river

Edit: I could not find the exact article I read, but this one has almost exact information regarding the 4 or 5 options being considered.

Looks like they dropped any changes to the COLA for CSRS & FERS and nothing addressing the FERS annuity supplement. Most likely change in my opinion is the change from 3 to 5 years for retirement calculation. The other stuff will be a long drawn out battle that will take time.

[mmmmmbeer]

The dropping of the early retirement supplement is the one that will be a bigtime suck for us leo's. $204k from 50-62.

[wdd09]

So let me ask everyone this. Given the prospective new changes. What age federal employees are in the best shape for future changes to our retirement? I'm a new hire after 2013, but increased FERS contributions by everyone have no effect on me (we're already at the max 4.4%). If we can leave FERS, we have the possibility of increased TSP contributions and matching (think 4.4% increase in contributions plus a potential 5 - 10% increase in government contributions). Being an active participant in my TSP (and no plans to take an annuity once I retire), I would think I'm in pretty good shape regardless of what changes. #Discuss

[12ozCurls]

The dropping of the early retirement supplement is the one that will be a bigtime suck for us leo's. $204k from 50-62.

You got that right.

[Dow100k]

Yea that one will really suck big time.

[cswift01]

With the discussion going in the direction of things like eliminating the Estate Tax (www.investopedia.com/terms/e/estatetax.asp), I have a hard time even listening to how "generous" I am paid.

Best,

Me

[dougellen1]

Evilanne is correct. Congress will NEVER pass a comprehensive change to the retirement system without overwhelming consensus. That is not in the cards folks. FERS isn't going anywhere. Keep saving and planning for the future.
Signed...SENIOR govt employee