Beseiged Feds: Shelter-in-Place or Take Off?

Tuesday - 5/17/2011, 4:00am EDT

When faced with a serious, life or career threatening situation, there are generally only two options.

Fight or flight.

Do something or do nothing.

Shelter-in-place or head for the hills!

For under-the-gun federal workers it is a tough call. Consider:

  • White collar federal workers are already under a pay freeze. No raise this year, no raise next year. That was by order of the White House and Congress. A study group appointed by the White House actually proposed a 3-year pay freeze. Salaries have been frozen for two years, and that freeze may be extended another one, two or three years.

  • Congress, as reported here last Friday, is seriously considering requiring feds to pay more for their retirement benefits. If it happens, and this is not a drill, it would reduce the take home pay of workers under both the CSRS and FERS programs by 5 to 6 percent. Which is just about everybody.

  • Congress and the administration are also considering a formula change that would reduce benefits for workers retiring in the future - presumably after the bill was (if it is) enacted into law.

If the benefits formula is changed, or if federal and postal workers were required to pay more for their annuities, retirement eligible employees might choose to leave now. The question is how many. Would it produce the dreaded brain drain (which has been imminent since 1999)? Or would feds, given the state of the economy, hang tough?

  • "I retired 4 years ago and with these proposals I would be out the door." Michael D.

  • "So, if Congress decides to make federal workers pay more into our retirements... who's to say that we have to contribute at all? Why don't they forfeit their salaries, retirements, health insurance, etc. since most are wealthy?" IRS

  • "There is no joy in Mudville this morning. We have struck out. I believe the situation is even more grim than you explained. By increasing our retirement contribution rather than giving us an honest pay cut, we will continue to pay the same amount in federal and state taxes. With a pay cut, we would pay less in taxes too. Congress has its cake and is eating us too." Just trying to get by, Laura in D.C.

  • "If Congress does reduce future retirement benefits by basing employees' annuity payments on their highest 5 years of service, how fast would that happen? Would those of us in CSRS be able to retire quickly before it happens?" Virginia M.

  • "Is there a provision for grandfathering current employees? Depending on when these changes are implemented, Congress may just make my retirement decision for me!!!" William W.

The effective date of the change, if there is one, is yet to be determined. Typically the implementation would be at some future date, meaning people would have time to get out. But there is no guarantee. Stay tuned.

Want to know how your fellow feds feel on the subject? If so, check out the comments section in Friday's column. Want to let Congress know how you feel? Will you retire or hunker down for another few years? Sound off at:

Paul Says It All

Here's my favorite e-mail reaction to Friday's column about charging you more for your retirement benefit: "Just out of curiosity...did someone inform you so you could time this column with my colonoscopy this afternoon?" Paul (so close to retirement) Miller

Late Breaker - Debt Ceiling

You've probably heard/seen it coming: the government has officially reached its $14.3 trillion borrowing limit. As the AP reported, "Treasury Secretary Timothy Geithner said Monday that he will immediately halt investments in two big government pension plans so the government can continue to borrow money."

As the Federal Times reported in April, Treasury will borrow money from the Civil Service Retirement and Disability Fund, and the Thrift Savings Plan's Government Securities Investment Fund, or G Fund. By law, both funds have to be repaid with interest, according to the GAO, and Dan Adcock, legislative director for the National Active and Retired Federal Employees Association said he would anticipate "no impact," in the long term.

Federal Retirement Thrift Investment Board's Director of External Affairs, Tom Trabucco, told Federal News Radio "all of the G Fund monies would still be on account with the Treasury, and the interest which would accrue if the G Fund were fully invested would still be credited to the G Fund." Not only will G-fund investors not lose anything, Trabucco added, "disbursements of TSP loans and withdrawals would not be delayed, nor would the amounts of those payments be reduced."