Feds with phobias

Thursday - 7/5/2012, 2:00am EDT

(Editor's Note: While Mike Causey is on vacation, we revisit one of Mike's recent columns, originally published on May 11, 2012.)

I once saw a TV documentary about phobias and fears. One was a guy who couldn't sleep. He feared that if he nodded off, insects (specifically spiders) would crawl up his nose. I think, by the way, he's a 46-year old bachelor. Wonder why?

I personally know a young woman who is fearful of being eaten by an Orca (those cute, black and white killer whales who do come ashore for seal dinners) even though she lives in Richmond, Va., far from the ocean. And a guy in D.C. who worries about a crocodile attack, even in Georgetown.

By the same token, lots of otherwise unflappable, feet-on-the ground feds are worried about threats to their benefits that, while possible, aren't imminent. At all.

In the case of federal and postal workers, it is the fear that their retirement benefits will be reduced. That the current formula, which bases annuities on the employees highest three-year average salary, will be changed to a high-five system. The reduction would depend on the employees' length of service and salary.

The National Active and Retired Federal Employees Association estimates that the average worker (under the old CSRS system) would have his/her annuity reduced about $1,400 per year, while the typical FERS worker's retirement benefit would be reduced $462 annually. Of course it would be higher for higher income employees.

The high-three to high-five is definitely something to worry about. But losing sleep? Not yet. There are other things that are much more likely to happen first. In fact, at present, the high-five proposal is just one of many ideas. There is no legislation pending that would eliminate the high-three. Yet people worry.

Here's the deal:

Last year Congress and the administration set up a variety of boards, panels and commissions to look for ways to reduce the deficit. All of them worked hard, issued reports which included various cutbacks in federal-worker benefits which included things like: Reduced COLAs for retirees, higher health-premium payments for feds and retirees, a three-year extension of the federal pay freeze, reducing the workforce via attrition, laying off one in 10 feds, changing the high-three retirement formula, etc. The laundry list of things that would impact you was long, impressive and, for active and retired workers, scary.

Bottom line:

Nothing happened. No action was taken. The suits put their recommendations back in their briefcases and went home. Congress remains deadlocked about nearly everything which, in some cases and for some groups, can be a blessing.

While Congress remains divided on what, if any, cuts to make in federal-worker benefits, the administration is committed to two things:

  1. A 0.5 percent white collar federal pay raise in January 2013. While that isn't much, it's a lot better than continuing the freeze. Congress would have to approve it, and the question is how hard (if at all) the White House would fight for any federal pay freeze with an election coming up and millions of Americans looking for paid employment.

  2. Increasing employee contributions to the CSRS (CSRS offset) and FERS retirement funds by 1.2 percent. The higher contributions would be phased in over three years. This is much less than the 5 percent increase proposed by the House GOP budget plan. Senate Democrats have threatened to block most anti-fed legislation that makes it out of the House. But the fact that the White House has proposed a 1.2 percent rise in employee contributions indicates it is willing to negotiate.
What next? Hard to say. Because of the election coming up, two things are possible: That there will be lots of budget-cutting from Congress and the administration or, Plan B, that there won't be any action until after the election.

Either way — for now — the sum-of-all-your-federal fears isn't an inland Orca attack. Or losing the high-three. For now, the real threats are an extended pay freeze and a take-home pay cut that would be caused if you are required to contribute more (any amount) to your CSRS or FERS retirement.


NEARLY USELESS FACTOID

By Jack Moore

Three former presidents have died on July 4. Thomas Jefferson and John Adams both died on Independence Day in 1826 within hours of each other. James Monroe, the fifth president died on July 4 1831. However, only one president has ever been born on the Fourth of July: Calvin Coolidge, the 30th president was born July 4, 1872.