President Donald Trump’s third federal budget proposal is again calling for changes to federal retirement benefits.Hazel Bradford
President Donald Trump’s third federal budget proposal is again calling for changes to federal retirement benefits that would increase employee contributions and reduce or eliminate increases to cost-of-living adjustments among other changes.
The proposal released Monday also repeats a call to reduce the interest rate for the $554 billion Thrift Savings Plan’s G Fund, Washington, and to switch newer federal employees to a defined contribution plan.
The White House estimated that between retirement and health-care benefit changes, the government would save $5 billion in 2020 and $102 billion over the next 10 years.
TSP spokeswoman Kim Weaver said in a statement that officials there would oppose changes to the G Fund interest rate.
The proposal seeks to increase employee contributions to the Federal Employees Retirement System 1 percentage point each year for six years, without any corresponding benefit increase, to reach a 50/50 split with the employer. Participants in the Civil Service Retirement System would have their COLAs reduced by 0.5 percentage points each year. A supplemental annuity for workers retiring early before they can draw Social Security would be eliminated.
The National Active and Retired Federal Employees Association said in a statement that the proposed changes would equal $177.1 billion in cuts to retirement benefits already earned, and that COLA adjustments for participants in FERS would cost a typical retiree nearly $250,000.
“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,” NARFE National President Ken Thomas said in the same statement.
Congress has declined to act on the proposals in previous years.