11:09 pm, April 25, 2015

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  • high-3 vs high-5
    m
    A change from high-3 to high-5 would be a significant hit to those still in the workforce. What I haven't seen said, however, it that how significant it would be would depend on whether salaries were rising at a fast clip (imaginable?), or even a reasonable rate, or whether they were stagnant, perhaps not rising at all, as will be the case for the next couple of years. If the former proves to be the case, that would be best for those still in the workforce at the time and probably for the future too, but it would accentuate the effect of a high-3 to high-5 change; and conversely were salaries to stagnate for a long time, which would not be so good for those still working, but mitigate the impact of that change to the retirement computation. And the real effect of changes in salaries (presumably always upward, never in the deflationary downward direction) is a matter of how much they happen in or out of sync with the rate of inflation. Sometimes Congress seems to take more account of inflation in determining year-to-year changes in salaries, other times less.
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  • effects on retirees
    m
    Most of these discussions focus on the effects changes would have on those still in the federal workforce, and either nothing is said about the effects changes would have on federal retirees or it is assumed that the effects for them will be little different from those on feds who are still working. But clearly there will be differences, e.g., it is unimaginable that the annuities retirees are receiving would ever be recalculated if there was a switch from a high-3 to a high-5, if it was even legally allowable. Prospectively, though, could Congress change COLA provisions for retirees, resulting in lesser COLA provisions in future years, or would that amount to something like an impermissible "breach of contract"? No reason Congress can't change how much current and retired feds must pay for their insurance, though, and relatively speaking bumps in insurance premiums affect retirees more than current feds, sometimes a lot more. (Note, retirees don't have the money saving option of paying their premiums with pre-tax dollars, as current feds do.)
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  • Retire?
    Moderate
    However, I would and would get another job which would more than cover the difference between my salary after deductions not common to both retired pay and salary (such as my retirement contribution and state and local income taxes) and my pension. It would also cover any tax advantages by being salaried such as the paying the medical contributions with pre tax dollars. Also, in lieu of my next employer paying for a health insurance policy, I am sure that employer would pay my federal health insurance premium.
    worker
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  • pay raise?!
    m
    "Starting with the bipartisan 2-year federal pay raise..." Gee, I thought it was to be a 2-year federal pay freeze.
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  • To stay or go, that is the question (but what's the management answer?)
    Jeremiah
    In our agency, the last time buyouts (technically, Voluntary Separation Incentive Payments - VSIPs) were offered was back in the '90s. One of the problems with the way that was handled then was that senior management let the rumor mill run wild for well over half a year while they dithered about whether to request permission from OPM to offer buyouts as well as allowing Voluntary Early Retirement Authority (VERA, also known as "early out") separations. As we middle managers pointed out, if you want to maximize the budgetary and organizational benefits of using VSIP and VERA authority, you want to do so as early as possible in a given fiscal year (to save on lapsed salaries), but as usual the ditherers ... dithered. As a result, many 55 and older workers who could and would otherwise have gone ahead ad left on optional retirements in the interim chose to stick around to see if they'd sweeten the deal by offering buyouts of up to $25,000. That proved to be a wise bet, and the agency wound up paying a lot more as a result, and being late in fiscal year, the positive impact was minimal form an agency perspective. I well remember management staff meetings where the top feeders would moan and groan about the impact on the budget, but we middle feeders tactfully refrained from reminding them that we'd recommended coming to a quick decision on whether to solicit VSIP as well as VERA authorizations from OPM rather than leaving the tantalizing possibility of VSIP offering dangling. That scenario may well play out again.
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  • Higher Pension Costs--Un-funded Pension Liabilities--> Employee Contributions
    Tom McKinney
    Thank you--both CSRS and FERS employees--for your service to our great country.----- I agree that Pension costs are increasing. Pension costs to OPM were $68 Billion in FY2010 ($63 Billion for CSRS retirees and $5 Billion for FERS retirees). In FY 2009 Pension costs were $67 Billion.---------------- The $780 Billion Civil Service Retirement and Disability Fund, (Trust Fund) needs to earn more money. On 15 September 2010, the U.S. OPM reported the following: The CSRS retirement system had an unfunded liability of $356.45 Billion as of September 30, 2009, increased from $328.4 Billion as of September 30, 2008. Per the U.S. OPM "The unfunded liability increased because the present value of future benefits conntinues to grow while the value of the Fund has decreased, due to annual CSRS outlays exceeding CSRS funding income and interest earnings. The increase in unfunded liability results in an increase in the payment of 5 percent interest ($17.8 Billion) on this unfunded liability". -------------Congress is looking at increasing the FERS employees pension contribution from .8 to 6 percent. My question is: Will the employers contribution of 11.2 percent be reduced?-----Tom McKinney Dunwoody, Georgia
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  • unfunded pension liabilities
    m
    Can you provide links so we may see for ourselves the reports you refer to which look at CSRS and FERS pension fund liabilities, proposed increases to employee contributions, etc.? That would be appreciated.
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  • Response to "m" question
    Tom McKinney
    Good questions and excellent thinking.----Here is the web site to go to: www.opm.gov/gpra Click on the FY 2010 Agency Financial Report. (i) Go to page 15 (right hand column, half way down the page) The total subsidy was $33.2 Billion. However, only $17.8 Billion of the $33.2 Billion was applicable to the unfunded liability. (ii) The reason for the unfunded liability is shown on page 52 para Program Funding--look at write up under sub-para CSRS. (iii) The amount of the Pension Liability (both CSRS and FERS totals $1.5 Trillion) is shown on Page 63, para Pension Liability.-------Congress is looking at the Bowles Simpson "National Commission on Fiscal Responsibility and Reform" report. Look at Chart No. 38 where it states "Ask Federal workers to contribute 1/2 the cost (6 percent) not 1/14th (.8) " Appreciate the questions. If additional questions--please ask.---Tom McKinney, Dunwoody, Georgia
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