Rush hour or sleep late? Your call!

Tuesday - 4/1/2014, 2:00am EDT

Thanks to the three-year pay freeze and low inflation rates, some feds are wondering whether they would be better off retired than working.

Does it make sense to slog through rush hour every day to get to a job that politicians (and much of the media) denounce as overpaid, poorly performed or unnecessary?

For whatever reason, lots of workers are doing the math trying to decide if they want to hang on (for the prospect of another 1 percent raise in 2015) or retire soon to qualify for a cost-of-living adjustment likely to be much higher.

Politicians and the media — sometime in error, sometimes by design — confuse federal pay raises (for workers) with cost-of-living adjusments (COLAs) for retirees.

Raises are based on political and fiscal considerations. The concept of equal-pay-with industry isn't taken seriously by the powers-that-be whether Republican or Democratic. According to official government data, feds are paid 30 percent less, on average, than their counterparts in the private sector. By contrast some conservative think tanks believe feds are overcompensated — especially when benefits are figured in — by nearly that amount. The ruler used, and the mindset of the person using it, plays a large part in determining the so-called pay gap.

COLAs for retirees are determined by the rise in inflation — from the third quarter of the current year over the third quarter of the previous year — as measured by the Bureau of Labor Statistics. There are several versions of the Consumer Price Index. Nobody seriously argues with the BLS numbers. But many think the wrong CPI is being used.

Pro-retiree groups say that the index that tracks things retirees need and buy should be used to give a fairer (and larger) COLA.

Fiscal hawks (including the White House) endorse the so-called "Chained CPI" which, over time, would produce COLAs that would be slightly smaller. The National Active and Retired Federal Employees Association (NARFE) says the typical federal retiree would be denied tens of thousands in COLAs during their lifetime. Backers of the chained CPI say that's true! One of the few things both sides agree on.

Given what's happened in recent years, a lot of long-time feds are doing the math to figure whether it is better to stay or go. So, when, if they want to get the 2015 COLA, should they retire?

The January COLA is pro-rated based on what month the individual retires.

A number of readers and listeners have asked Federal News Radio for a little help with their retire-or-work math. The last person I helped with math is currently making license plates in a federal facility, so I passed it on to David Snell of NARFE.

As you know, any COLA announced for 2015 applies to those CSRS workers who retire between Dec. 1, 2013, and Nov. 30, 2014. FERS covered workers are not entitled to a COLA until they reach age 62. In both cases, the COLA will be pro-rated when applied, and the proration factor depends on the month in 2014 they retired or in the case of FERS retirees, the month they turned age 62. COLAs are usually effective Dec. 1 of each year and show up in the Jan. 1 annuity payment.

If the listener is under CSRS, he can choose to retire on the first, second or third of the month, and his annuity will begin to accrue the following day. However, he may want to wait until the end of the first pay period in January to retire to accrue additional annual leave that if not used, will be paid to him in a lump sum by his agency. Plus if there is a raise granted employees in 2015, he should see a bump in his salary used to compute the high-three average. The tradeoff is his annuity will not begin to accrue until the first of February and he will not be entitled to his first full month of annuity until March 1, 2015.

A 3.3 percent raise in 2015 for federal employees that some in Congress are proposing is modest considering these workers were flat-lined for three years. Even if passage of the full amount doesn't seem likely, starting the negotiations on a high percentage may result in a final raise that is higher than the pittance workers were granted this year.


NEARLY USELESS FACTOID

Compiled by Jack Moore

Strawberries are not actually berries. But bananas, watermelon and avocadoes are. The botanical definition of a berry is a "fleshy fruit produced from a single ovary," which also includes oranges, kumquats and tomatoes. Strawberries are "accessory fruits."

(Source: Foodbeast)


MORE FROM FEDERAL NEWS RADIO

Ask the CHCO - Jeri Buchholz, NASA
NASA Chief Human Capital Officer Jeri Buchholz joins Federal News Radio on Tuesday, April 1, 2014, at 4:30 p.m. for a free online chat. The chat will take place immediately after Buchholz's appearance on our In-Depth radio program hosted by Francis Rose. Listen to her interview with Francis and Executive Editor Jason Miller on 1500AM (in the Washington, D.C. metro area) and online everywhere starting at 4 p.m.

Former acting IRS chief says agency now on right track
The former acting chief of the Internal Revenue Service, who led the agency in the aftermath of the political-targeting scandal and who stepped down in December, says he believes the agency is on the right track. In an interview on on the Federal Drive with Tom Temin and Emily Kopp, Danny Werfel, who recently joined the Boston Consulting Group, cited strong leadership at the agency.

Is low employee morale 'compromising' the government?
In the wake of across-the-board budget cuts, furloughs and slim -- or no -- annual pay raises, the top Democrat on the House Oversight and Government Reform Committee says he's concerned about a nose-dive in federal-employee morale. Rep. Elijah Cummings (D-Md.) is now asking the Government Accountability Office to look into recent trends in feds' job satisfaction. The lawmakers are concerned declining satisfaction "may be compromising the federal government's ability to serve the American people."