Today President Trump released his proposed 2018 budget for the federal government. His proposal includes a harsh attack on the retirement security of federal employees. Unfortunately, this proposal follows a pattern of attacks on the retirement security of working families by Trump and Congressional Republicans.
Federal employees hired after 1987 participate in the “three-legged stool” of retirement: Social Security; the Federal Employee Retirement System (FERS), their defined benefit pension; and the Thrift Savings Plan, which is like a 401(k). Trump’s 2018 budget would make federal employees pay more for their pensions, while simultaneously cutting their retirement benefits. His proposal:
- Increases employee contributions to FERS by 1 percent per year for 5 or 6 years
- Calculates pension benefits based on the highest five years of salary rather than the highest three years
- Eliminates cost of living adjustments (COLA) for current and future FERS employees
According to Randy Erwin, president of the National Federation of Federal Employees, federal employees would lose roughly $5,000 per year in take home pay under the President’s proposal. That’s on top of a greatly diminished benefit in retirement.
Some Congressional Republicans are ready to embrace the president’s proposed cuts to pension benefits. In a hearing of the Subcommittee on Government Operations last week, Rep. Mark Meadows (R-NC) echoed Trump’s call for major changes to the retirement system for federal employees. In recent years, Congressional Republicans have repeatedly called for increasing employee contributions to FERS.
Sadly, this is not the first attack on the retirement security of working families that we’ve seen since Trump took office. Republicans in Congress used the Congressional Review Act to repeal Obama-era Labor Department regulations on “Secure Choice” retirement plans in the states. Trump signed both of the measures repealing these regulations. Additionally, the Trump administration has delayed the implementation of the fiduciary rule that requires financial advisors give advice that is in the best interest of their clients.
The federal government employs people in every state. In fact, 79% of the federal workforce lives outside of the Washington, DC-region. These changes will impact communities across the country. Trump’s plan is misguided and will unnecessarily harm the retirement prospects of federal employees. Join us in urging Trump to cease these attacks on the retirement security of our federal workers.
