Weekend Reading on Your Federal Benefits 42-18.jpg

(for the week of October 12th – October 19th)

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, OPM assumes you won’t be getting a raise next year, there could be big changes at OPM soon, the average retirement age has been creeping up, and deciding when to claim your Social Security check is not easy. Let’s get started.

OPM Assumes No Pay Raise in 2019

From Fedsmith.com

We’ve been keeping an eye on the pay raise saga for a while now and this week we get news that OPM issued its 2018 Annual Review of Special Rates memo. This memo is issued because OPM authorizes higher rates for specific occupations, grades, and locations due to issues with existing or likely significant recruitment or retention problems’. The memo assumed no pay raise would be forthcoming for Feds next year and also indicates no higher rates of pay will be available for special hiring or retention needs.

Is OPM assuming that Congress won’t ask for a pay raise after all, or the President won’t sign off on an increase? Last we heard, it looked likely that there would be a 1.9% pay raise for 2019. And with Congress in recess until the midterms are over, we didn’t expect to see much change or hear much news. So, what’s the deal?

Well, we do have new Acting Director Margaret Weichert heading up OPM (after Dr. Pon was removed last week). She also serves as the Deputy Director for the Office of Management and Budget (OMB). And this is OMB’s current position:

“The Administration is concerned that the bill provides an across-the-board pay increase for Federal employees in calendar year 2019. Across-the-board pay increases have long-term fixed costs, yet fail to address existing pay disparities, or target mission-critical recruitment and retention goals. As proposed in the Administration’s request for a Workforce Fund, the Administration continues to support performance-based pay that is strategically aligned toward recruiting, retaining, and retaining high performers and those in mission-critical areas.

As we know, your pay raise comes down to a political decision each year. Although there’s a formula that is supposed to be used to determine what pay increases will be, it’s not typically used. There’s been a big push for pay-for-performance-- and across-the-board raises for everyone just doesn’t jibe with that. The President also asked all cabinet-level agencies to reduce their departmental spending by 5% this week. So, the question of a pay raise, or the amount if there is one, remains unanswered.

OPM Reports Average Retirement Age is Creeping Up

From Federalnewsnetwork.com

Here’s some news that I bet doesn’t surprise you. You could probably just look around your office and figure this out. Federal employees are delaying their retirement—a trend that has been pushing up the average retirement age to 61.8 years old.

In the article, Federal News Network includes a nifty interactive graphic that lets you mouse over the graphs to see the stats. For example, did you know that Feds of Asian ethnicity retire at a much older age than any other ethnicity? You’ll find more interesting statistics related to retirement by state, gender, occupation, location and agency in the article.

One interesting statistic that caught my eye indicated that there’s a 24% increase in retirements so far this year (as of September) versus last year. I’ll let you speculate on why that might be happening. Although the Federal News Network grabbed this data and turned into information (an infographic), it’s up to you to take the next step and convert the information into knowledge. Developing knowledge can help you make better decisions. Is the information in this article by itself going to change your decision on when to retire? I think not, but adding this information to your to knowledgebase may help with your decision when the time comes.

What Happens Next with OPM?

From ChiefHRO.com

Last week we learned that OPM Director Jeff Pon had been forced out after only 7 months at his job because he was not moving more quickly on the White House’s plans to make changes to the Office of Personnel Management.

OPM was created by the Civil Service Reform Act of 1978. The President wants to move some functions to the General Service Administration (GSA) and move other functions into the Executive Office of the President, which would give the President greater control over policy decisions. The moves would effectively eliminate OPM as we know it, but that’s not easy to do because many of the changes can only happen through an act of Congress. For example, the Civil Service Reform Act established OPM’s responsibility for your insurance and retirement programs, but there is lots of work that OPM performs where ‘there is considerable leeway in how and where the work is done’ according to Jeff Neal.

Moving the creation of policy regarding Federal employment inside the White House would seem to cause it to become more politicized. Could ripping away the facade of nonpartisanship in civil service policy cause a deterioration of the civil service? Mr. Neal argues that the Federal workers are already being used as political footballs. I agree. We discuss each week how Congress is attempting to get rid of your retirement plans, make changes to the TSP’s G Fund, and limit your pay raise.

Whatever happens, it’s very possible that OPM will look different a year from now. That may not be a bad thing necessarily. And as Jeff summarizes in his blog post, let them give it a try. It probably won’t create any problems that can’t be fixed.

Social Security Claiming Rules Invite Calamity

From Fedsmith.com

Brenton Smith over at Fedsmith.com gives us a very interesting article, and lots to think about when it comes to claiming your Social Security retirement benefit. You do have a wide time frame, from age 62 to age 70, to begin taking your benefit. The amount is actuarily adjusted so that you’ll get less each month (over a longer time) if you take it early, or more each month (for likely a short time) if you wait to take it later.

Social Security was never designed to be a lifetime pension benefit, like your FERS pension. It is social insurance—put in place to help lower-paid workers, who weren’t able to put much savings aside throughout their work careers, from not being able to have enough money to live in retirement. It just barely fulfills that promise, and it seems to be getting harder to meet that goal every year.

Financial advisers often recommend delaying your payment for as long as possible so that your check will be larger when you begin taking it, but it doesn’t make sense to delay it if you will be struggling to pay the bills. Charging credit cards or placing a reverse mortgage on your home shouldn’t be a solution if your retirement expenses exceed your retirement income. Mr. Smith also is concerned about the Social Security programs potential insolvency. Congress has been talking about a fix for years, but there is no easy solution. Read his article. He makes some good points, but then make up your own mind.

See you next week. Thanks!

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