In its fiscal 2020 budget released Monday, the Trump administration proposed a laundry list of cuts to federal employees’ pay and retirement benefits similar to previous years. Any of the proposals would require legislation by Congress to become enacted.
2020 Pay Freeze
The White House proposed freezing civilian federal employees’ pay in 2020. It proposed a freeze for 2019, but Congress eventually overrode the recommendation and passed a 1.9 percent pay increase in a spending bill.
2020 Federal Retirement Benefit Cuts
Also similar to last year, the Trump administration issued a series of proposed cuts to retirement benefits in its 2020 budget. These proposals in 2019 did not gain traction in Congress.
The National Active and Retired Federal Employees Association (NARFE) objected to the 2020 budget proposals, citing they amount to more than $177.1 billion in cuts to earned federal benefits.
In a statement Monday, NARFE outlined the proposals this way:
- Eliminating cost-of-living adjustments (COLAs) for current and future Federal Employees Retirement System (FERS) retirees. Over a 30-year retirement, a typical FERS retiree – with a median annuity of roughly $1,000 per month – could lose nearly $250,000 due to this proposal.
- Reducing COLAs for Civil Service Retirement System (CSRS) retirees by 0.5 percent each year from what the COLA would have been otherwise. When combined with the elimination of the FERS COLA, this would cost federal retirees $56 billion over 10 years, and much more thereafter. Over a 30-year retirement, a typical CSRS retiree – with a median annuity slightly above $3,000 per month – could lose nearly $170,000 due to the proposal.
- Federal employees covered under FERS would see employee contributions to their annuities increased by 1 percent each year for the next six years, without any corresponding benefit increase. This will cost FERS employees $78.8 billion over the next 10 years, and more thereafter.
- The earned and fully funded FERS Annuity Supplement would be eliminated for new retirees. This benefit, provided to FERS employees who retire before they are eligible to collect Social Security, would hit those with a mandatory retirement age – such as federal law enforcement officers and air traffic controllers – the hardest, costing federal retirees $18.6 billion over the next 10 years.
- Reducing the rate of return on the Thrift Savings Plan’s Government Securities Investment (G) Fund. This would cost federal employees and retirees, as well as military personnel and veterans, $16.5 billion over the next 10 years.
- Federal pensions for new retirees would be based on the average of the highest five years of salary instead of the highest three. This would cost federal retirees $7 billion over the next 10 years.
- Reducing working and retirement-age benefits for federal workers disabled through their service, costing them $220 million over 10 years.
“President Trump’s budget breaks promises to both current and future retirees, reneges on commitments made to our nation’s public servants, and sends a very powerful message about the value this administration places on civil service,” said NARFE’s National President Ken Thomas.
TSP Opposes G Fund Interest Rate Change
“We would oppose a change to the G Fund interest rate,” TSP spokeswoman Kim Weaver told Government Executive Monday. “Such a change from the existing statutory formula would make the G Fund inadequate and ineffective from an investment standpoint for TSP participants who are saving for retirement.”
Push Back from Other Federal Employee Groups
Other federal employee groups expressed objections to the White House’s 2020 budget proposals.
“For anyone still looking for proof that this administration is hostile to its frontline federal workforce, look no further than the FY 2020 budget proposal,” said NTEU National President Tony Reardon. “It would deprive federal employees of the resources they need to do their jobs, slash their retirement benefits, reduce their take-home pay and generally make their lives – and the lives of the taxpayers they serve – more difficult.”
“This budget is a kick in the teeth to the federal employees who have suffered through years of pay freezes, cuts to their benefits, and attacks on their rights at work,” said American Federation of Government Employees (AFGE) National President J. David Cox Sr. “Federal workers have lost more than $200 billion from cuts to their pay and benefits since 2011, and today, the average federal employee makes 7 percent less – when adjusted for inflation – than they did at the beginning of the decade.”
‘Dead On Arrival’ in Congress?
“Thankfully for federal employees and the American people, this budget is dead on arrival in the House of Representatives,” Rep. Gerald E. Connolly (D-VA) said, as reported in the Washington Post Monday. “Instead of recycling these tired and radical attacks on federal workers, the president should move expeditiously to implement the 1.9 percent pay increase Congress sent to his desk almost a month ago.”
The Post reports that some congressional Democrats already have proposed opposing plans, for example to increase the value of retiree inflation adjustments and end restrictions on payouts to those retired under the FERS system. They also have proposed a 2020 federal pay raise of 3.6 percent.