Weekend Reading on Your Federal Benefits 32-18.jpg

(for the week of August 4th – August 10th)

You’re too busy during the week to keep up on all the news around your employee benefits and pay. My weekly summary of the most interesting and relevant news stories could help you and includes my comments and insights.

By the way, if you’ve read something about your employee benefits that you think is important or interesting, share it. And, let me know about news sources that you follow. Have a great weekend.

George Ray
Federal Benefits Online

In this week’s benefits news for Feds, prospects for a raise improve (but don’t make plans to spend it yet), very little is happening on the many proposed changes to your retirement benefits, and we really need to eliminate the cliché about Social Security and the 3rd rail. Let’s get started.

Prospects for Raise Improve but Don’t make Plans to Spend It Yet

From Fedweek.com

Of course, we still have a way to go before the end of the government’s fiscal year, and the start of a new one, but budget planning in Congress seems to go on continuously. The latest news indicates that both the Senate and the House have passed their versions of an appropriations bill, but now they will need to get together to resolve the differences. The Senate’s version includes a 1.9% pay increase for 2019, but the House’s version is currently silent on the issue of a pay increase.

The President had previously said that he wanted to freeze your pay next year, but he would need to send a letter (a Tweet won’t be acceptable) to Congress to formally state his position. Then it’s up to Congress to agree or override the President’s request. Without that formal request, and some action on the pay increase or freeze by Congress, present language in the law would automatically provide a much larger raise based upon a formula that was put in place many years ago. The odds of that happening are slim to none—which are not great odds when rolling the dice at the casino, or when betting on a higher pay raise.

Very Little Movement on Changes to Retirement Benefits

From Fedweek.com

Throughout the year we’ve been following the drama on proposed changes to your employee benefits. Budget proposals beginning back in February have asked for an increased contribution from your paycheck into the FERS pension trust and suggested changing the calculation to use a ‘High-5’ average pay instead of the ‘High-3’ average pay. There’s been talk of eliminating the Special Retirement Supplement (SRS) for FERS retirees who aren’t yet eligible for a Social Security retirement benefit, and eliminating the Cost of Living Adjustment (COLA) for FERS retirees while changing how the formula calculates the COLA for CSRS retirees. There’s even been talk about changing how the interest rate in the G Fund inside your Thrift Savings Plan is determined. (I talked about the reasons why in a previous post titled ‘What if They Change the G Fund?’).

I suppose anything could still happen, but at this point, it does appear that none of these proposals will be enacted. The House drew up some plans, but the Senate did not come back with any of their own. And, as we move closer to the election cycle, it seems even less likely that any major benefit changes will be made. This may be good news for now, but I’ve been suggesting for a while that changes are very likely as Congress, the White House, and even the American public would like to see your benefits package look a bit more like those offered to private sector employees. I’m not passing judgment on whether this should take place or why. I’m just saying that it seems inevitable. Just sayin’.

Social Security and the Myth About the 3rd Rail

From Fedsmith.com

I’ve included stories from Fedsmith.com author Brenton Smith before, and I must admit that I haven’t always agreed with his take on things. In this case, however, I find him bringing some very unpleasant and relevant information to our attention, which needs to be brought.

There’s a cliché that’s been around for many years about Social Security being the ‘3rd Rail’ --- the electrified one (on subway tracks) that a politician doesn’t want to touch for fear of facing certain political death. No one wants to hear (although they need to know) about how Social Security is currently headed for insolvency not too long from now, or discuss the hard choices that will need to be made in order to fix it.

Mr. Smith explains how we bandaged the program back in 1983 by putting the burden to delay benefits (from 65 to 66 to age 67) on those who were only age 17 at the time--- and not able to vote. He says that was easy back then, but the delay only postponed the needed repairs and have made them much more difficult to fix today. So, while the 3rd Rail cliché has made sense for many years, the public’s tolerance for holding the program hostage does not. Politicians may no longer be able to avoid the 3rd rail because there’s a national conversation that needs to be brewing on this. Let’s hope it starts soon.

See you next week. Thanks!

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