Budget Proposal for Federal Retirees

[gerntz]

The GS-15 is position that is highly skilled and has substantial responsibility. Not really comparable with the average worker across the US. This is also not really relevant to the thread topic.

I didn't bring the subject of GS-15 salary up. I responded to it. I mean what's a 15's salary got to do with how government salaries/total compensation compare to the private sector without comparing responsibilities, including financial accountability & job security, if a decision is poor?

 

[Fedup]

The GS-15 is position that is highly skilled and has substantial responsibility. Not really comparable with the average worker across the US. This is also not really relevant to the thread topic.

Not really. One of my coworker at an aerospace company was at a lower level than me, I was level 5 and he was level 4, max was at level 6. After 2 years of being unemployed, he was hired in as GS-15, but he said the money is just enough for him to rent one bed room apartment near D.C. while he has a 4-5 bedroom house in Houston. I don't know if he sold that house or not.
I don't think he is in the highly skilled either. Because both he and I were not at a highly skilled at our previous company. He got laid off first and I got laid off next. About a year apart.

 

[gerntz]

I seem to recall a CBO study a few years ago that found base pay for federal employees was about the same as private sector... higher in some cases, lower in others. But total compensation for federal employees was considerably higher than their private sector counterparts when factoring in benefits including retirement.

OTOH, I can personally attest that 3 members of my immediate family have held professional positions in the private sector and same position at the state/local level here in Texas. In every case, the base pay was considerably lower in the public sector position. Whether the pension and retiree health care balanced that out... I don't know. But the CBO study makes me think it probably did.

Thanks. But I don't know how you begin to compare a private job to a private job. In one case you're trying to make money & in the other you're trying to spend it.

 

[Fedup]

No doubt the average worker across the USA would be way more than happy with that & it raises even DC Metro wealth average. And the benefits associated being so great make that salary more more discretionary than for average folks.

I really can't stand when somebody brings the average worker or retiree across USA. There is a cost of living attached to the salary. Average anything just dilutes the conversation. My kid is a brand new graduate and she will bring in near that or more money in Silicon Valley, not because she's special in anyway, that's the salary they pay to live in HCOL area. Across USA, new graduates from her field should be getting $60k.

 

[MichaelB]

How public sector compensation compares with the private sector is not relevant to the thread topic. The discussion here is about proposed changes to the COLA adjustments.

 

[gerntz]

I really can't stand when somebody brings the average worker or retiree across USA. There is a cost of living attached to the salary. Average anything just dilutes the conversation. My kid is a brand new graduate and she will bring in near that or more money in Silicon Valley, not because she's special in anyway, that's the salary they pay to live in HCOL area. Across USA, new graduates from her field should be getting $60k.

We each own our own feelings. Deal with them. I do.

Average across USA? Meh.

 

[Proteus126]

Somehow I don't think the $250k FERs contribution is a correct number. Right now, as the current employee, it should only be 1%, especially since the FERS stated before 2010, it should be $1550 for a GS-15 per year times 15 years. So maybe around $30k contribution at best. Are you mix it up with TSP?

$250k is the correct approximate number for the sum of employee & employer plan contributions. You are correct that the employee contribution is a small fraction of that - less than 1/10th of the total.

Ok - my "Cumulative Retirement" field shows $13,700. That's what I contributed, at 0.8% of my salary. The employer contribution at ~13.5% would therefore be $234600. Total is $248,300.

 

[David1961]

I'm curious if any previous president's budgets ever proposed eliminating COLAS for federal retirees. I don't remember any but could be wrong.

 

[zinger1457]

I'm curious if any previous president's budgets ever proposed eliminating COLAS for federal retirees. I don't remember any but could be wrong.

I don't recall any previous budget proposal to eliminate COLA's. There was a proposal to use a different method to calculate the COLA that would have resulted in a reduced COLA but that didn't make it through. They have increased the FERS employee contribution amount a couple times in the last few years but that only affected new employees.

 

[evilanne]

I don't think they can do what is outlined in Trump's plan. All major changes to government employee compensation has applied to new employees, FERS, FERS-RAE (2013) & FERS-FRAE (2014). CSRS Offset employees had special rules for those that had a certain number of years under CSRS.

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.

The articles I have read on the plan and the current administration's comments reflect a total lack of understanding of the federal retirement systems as they seem to think that FERS is better than CSRS. Most CSRS employees paid 7% into their system; FERS employees paid in Social Security 6.2% + .8% = 7%. FERS pension of 1% per year is ~ half of the equivalent CSRS Pension. FERS gets no COLA until Social Security eligible at 62, the Supplement equals about 1/2 of the difference between FERS & CSRS Pensions. FERS Pension + Supplement = approximately 75% of equivalent CSRS Pension and not all employees qualify for supplement or retire later beyond the eligibility point. FERS COLA is decremented up to 1% if rate is over 2% for SSA & CSRS.

The long-term costs of paying the FERS retirement benefit are about half as much as future CSRS retirement benefits due to the less generous computation of the retirement benefit. Here’s Some Good News About Your Retirement Benefit - Retirement Planning - Pay & Benefits - GovExec.com

 

[ERD50]

Yeah, it is awful what has happened with private pensions despite the protections of the taxpayer funded PBGC. I'd probably be furious and want to join a class action lawsuit.

What do you mean "despite the protections of the taxpayer funded PBGC"?

First - PBGC is not funded by taxes. Companies pay an insurance premium to the PBGC each year. Effectively, this is the employees money - in a free market that money would go to salaries (just one form of total compensation to another form).

And what has happened 'despite the protections'? Has the PBGC failed to provide the insurance guarantee that was contracted? Not that I'm aware. What are you saying?

-ERD50

 

[Amethyst]

Your facts are correct. Also, while not relevant to the Administration's plan, when FERS first came out, many CSRS people switched plans because at that time (1980's/early 90's) the idea of getting Social Security was appealing, as was the idea of contributing to TSP and getting Government matching. My husband and I debated whether we should switch (especially me, as I am younger). At last, on the advice of a friend who we considered very canny about money, we decided to stay in CSRS. During the stock market boom of the 1990's, we questioned if we'd made the right decision.

During the last 20 years or so, CSRS was finally allowed to contribute 5% (with no matching), and eventually to the full IRS limit for 401K contributions (but still no matching). Now that was a really good deal, which made those of us who stayed with CSRS happy. But we still won't get Social Security.

I don't think they can do what is outlined in Trump's plan. All major changes to government employee compensation has applied to new employees, FERS, FERS-RAE (2013) & FERS-FRAE (2014). CSRS Offset employees had special rules for those that had a certain number of years under CSRS.

The articles I have read on the plan and the current administration's comments reflect a total lack of understanding of the federal retirement systems as they seem to think that FERS is better than CSRS. Most CSRS employees paid 7% into their system; FERS employees paid in Social Security 6.2% + .8% = 7%. FERS pension of 1% per year is ~ half of the equivalent CSRS Pension. FERS gets no COLA until Social Security eligible at 62, the Supplement equals about 1/2 of the difference between FERS & CSRS Pensions. FERS Pension + Supplement = approximately 75% of equivalent CSRS Pension and not all employees qualify for supplement or retire later beyond the eligibility point. FERS COLA is decremented up to 1% if rate is over 2% for SSA & CSRS.

 

[Amethyst]

I thought W2R meant that PBGC, as a Federal agency, is taxpayer-funded. Terminology can get confusing.

What do you mean "despite the protections of the taxpayer funded PBGC"?

-ERD50

 

[ERD50]

I thought W2R meant that PBGC, as a Federal agency, is taxpayer-funded. Terminology can get confusing.

It's not confusing in this case:

https://www.pbgc.gov/about/how-pbgc-operates

PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.

-ERD50

 

[H2ODude]

State system here had long history of COLA's but they're not a given. Retired 6 years ago and there has been no significant change other than a .1% increase...woohoo. I really don't care because I never counted on this income in retirement planning (good advice, Dad). However, I feel for the many labor class employees who have experienced inflation last 6 years and had no adjustments other than SS. FWIW I think NC has one of best funded retirement funds. For my money I'd rather have it solid with no COLA but that's little comfort to someone trying to live on far less.

I know there have been admonitions about this thread NOT being about private vs public, but when I got out a private firm VP said our gov engineers were now making competitive salaries to theirs. Tend to agree (DS in private engineering so I know what's going on there) but after salary, it's a matter of do you want fairly certain DB pension or bonuses and a competitive DC pension? Looking back, in reality over my career I believe the portability of DC would have done me better but no regrets.

 

[kimcdougc]

DH has a small non cola pension. No government pensions here. With our government being over $19 trillion in debt....something has to give somewhere.

Should our government do what they promised their employees they would do? Absolutely, but when companies (including our government) spend more than they take in they have to do something to get back in the black.

You can't pay if the money isn't there (even if they - the government- spent your money when they shouldn't have). Just do the math.

Doesn't make any of it right or wrong. Just math.

I just feel for all the employees that did everything right and then get screwed.

 

[copyright1997reloaded]

DH has a small non cola pension. No government pensions here. With our government being over $19 trillion in debt....something has to give somewhere.

Should our government do what they promised their employees they would do? Absolutely, but when companies (including our government) spend more than they take in they have to do something to get back in the black.

You can't pay if the money isn't there (even if they - the government- spent your money when they shouldn't have). Just do the math.

Doesn't make any of it right or wrong. Just math.

I just feel for all the employees that did everything right and then get screwed.

I think there is a lot of emotion on this subject (even by the moderators) as it hits close to home for some on the board. But you are correct, we have a national debt that is out of control. The $19 trillion now exceeds the GDP of the country, and is $65,000+ per person and $165,000+ per taxpayer. And that doesn't include off-book obligations of the US government, which now totals close to $69 trillion.

The simple fact is that at some point in time, the system will collapse under the weight of an ever escalating debt load. Today, the interest payments on US debt are almost the same amount of money (give or take a couple tens of billions) as US government pensions, and that is with a low interest rate environment.

Look, I don't know if the budget proposal is "fair". I myself have had to deal with frozen pension plan. All I know that every proposal to somehow even begin to bring the growth in government spending under control is met with screams of cutting programs, killing children, and so on. Eventually it won't matter because the country will essentially be bankrupt (and those who think just because we are sovereign and may not declare bankruptcy that it wouldn't have the same effective result are fooling themselves). The question is whether we can cut enough now (somehow) or whether the problem continues to be ignored until our children are faced with it and a dramatically lowered standard of living.

I will say one more thing, and hopefully those who have government employment will take this in a constructive, positive manner. I have worked in one of those high paid private industry jobs, and now am working full time in a publish position (teaching). There is no question that my private industry job was FAR more demanding. In the high tech field, there is no such thing as a 40 hour work week, and for many of those 30+ years I worked an average of 60-65 hours per week non-stop.

 

[Amethyst]

When you can say you worked those hours on rotating shifts, you can come back and tell me I didn't work as hard as you did in "private industry"

Seriously, the button-pushing happens because every time we Federal employees/retirees are mentioned on this site, we get dissed as if we all had sinecures. I'm quite aware that some do. So do some private industry people (or else Dilbert wouldn't be funny - Wally lives, right? LOL) It would be nice if people at least qualified their statements, instead of the blanket disrespect.

In the high tech field, there is no such thing as a 40 hour work week, and for many of those 30+ years I worked an average of 60-65 hours per week non-stop.

 

[Alan]

Thanks for the interesting discussion.