Draft FY2018 Budget Resolution - House Version

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ksmoly04
Posts: 66
Joined: Thu Oct 06, 2016 2:08 pm

Draft FY2018 Budget Resolution - House Version

Post by ksmoly04 »

Came across this article this morning.

https://federalnewsradio.com/retirement ... ment-cuts/

After reviewing the Committee Report; here are the applicable excerpts to civil service employees:

Align the G-Fund Investment Return with an Appropriate Risk Profile. The resolution assumes savings by correctly aligning the rate of return on U.S. Treasury securities within the Federal Employee Retirement System’s Thrift Savings Plan with its investment risk profile. Securities within the G-Fund are not subject to risk of default. Payment of principal and interest is guaranteed by the U.S. Government. Yet the interest rate paid is equivalent to a long-term security. As a result, those who participate in the G Fund are rewarded with a long-term rate on what is essentially a short-term security. (Pg 87)

CIVIL SERVICE
Reform Civil Service Pensions. This budget adopts a policy proposed by former President Obama’s National Commission on Fiscal Responsibility. The policy calls for Federal employees, including members of Congress and staff, to make greater contributions toward
their own defined benefit retirement plans. It would also end the ‘‘special retirement supplement,’’ which pays Federal employees the equivalent of their Social Security benefit at an earlier age. This would achieve significant savings while recognizing the need for new Federal employees to transition to a defined contribution retirement system. The vast majority of private sector employees participate in defined contribution retirement plans. These plans put the ownership, flexibility, and portfolio risk on the employee as opposed to the employer. Similarly, Federal employees would have more control over their own retirement security under this option. President Trump’s fiscal year 2018 budget calls for a phased-in increase to contributions federal employees pay into the Federal Employee
Retirement System so that both employees and the government are contributing an equal amount. (pg 179/180)

Before we collectively go off the deep-end; this is only a budget resolution that is merely a guideline for the authorizing and appropriation committees. We will have to wait to see which proposals actually make it into legislation, and which survive the initial rounds of committee mark-up.

Also keep in mind that this is the House version; it will need to be reconciled with the Senate version which historically is more measured since they have to get 60 votes to overcome any potential fillibuster during a cloture vote.
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evilanne
Posts: 2067
Joined: Thu May 14, 2015 6:52 pm

Re: Draft FY2018 Budget Resolution - House Version

Post by evilanne »

The article is a bit vague on the impact or when anything would take effect. It is only a resolution but it does include eliminating the FERS supplement for those thinking about retirement. I still believe they can apply some of the measure to new employees.

A couple of things folks need to pay attention to:

"Instead of the current formula, which caps the government contribution at the average weighted rate of change in FEHB programs, the House resolution suggests tying government increases to the rate of inflation."

"The latest version of the House resolution also includes a proposal that would reduce the G fund’s rate of return in the Thrift Savings Plan."

summer
Posts: 10
Joined: Thu Jun 08, 2017 7:24 pm

Re: Draft FY2018 Budget Resolution - House Version

Post by summer »

Agree. This will surely get front page news as it starts to take final shape.

searight
Posts: 85
Joined: Wed Jan 16, 2013 8:56 am

Re: Draft FY2018 Budget Resolution - House Version

Post by searight »

If we have to contribute an additional percentage to FERS it will hit very hard since our contribution to FERS is taxed. So if you have to pay an additional 1-6% into FERS this will hurt more than a 1-6% paycut since a paycut you are not taxed on.

Like many, this will probably cause me to leave the government for a higher paying job.

JoeMurphy
Posts: 10
Joined: Sat Apr 01, 2017 8:42 am

Re: Draft FY2018 Budget Resolution - House Version

Post by JoeMurphy »

Well said.

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