Weekend Reading on Your Federal Benefits

February 9, 2018 George Ray

(for the week of February 3rd – February 9th)

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 Federal benefits news, we shut down an overnight shutdown, follow up on the retirement surge, hear more about promising TSP changes, and it’s time to check your paycheck. Grab your calculator and let’s get started.

Congress Passes Bill in Vote to End Brief Overnight Shutdown

From Fedsmith.com

I agree with you. This is getting old, and a bit crazy. Now we even have some new terms for the shutdown which happened overnight while you (most of you anyway) were sleeping. I’ve seen it being called a ‘technical shutdown’ or a ‘soft shutdown’. Really? A soft shutdown? Shutdown seems like a pretty hard thing to me. You already know it’s hard because your agency must provide instructions and develop plans for what takes place when it shuts down. And that’s hard work.

The vote went through in the pre-dawn hours and the President signed the bill this morning. This will be the fifth Continuing Resolution (CR), which is expected to fund the government through March 23rd. The bill also increased the debt ceiling and budget caps, which Senator Rand Paul (R-KY) was not happy about. It provides increases for defense and also for civilian programs.

Because of the ‘soft shutdown’, Congressman Don Beyer (D-VA) introduced his signature bill of late that would guarantee pay for federal employees who are furloughed during a government shutdown. More on that here: Legislation Introduced to Guarantee Back Pay to Federal Employees in Event of a Shutdown.

The Office of Personnel Management (OPM) updated its homepage early this morning to indicate that the current Operating Status is “OPEN”. I’m not sure how you feel about that, but I know that I wouldn’t be too happy if I had to check my company website in the morning to see if we were going to be open today. If it’s because of snow, well okay. But otherwise, no.

OPM Runs into Annual Retirement Surge

From Govexec.com

A few weeks ago, we were talking about the annual retirement surge (in this issue) where each January OPM’s Retirement Processing Center is flooded with applications from Feds who are ready to retire. The story for January 2018 was to be that we would see lots of Feds who were fed up with the current administration’s Continuing Resolutions, shutdowns (including the ‘soft’ ones), and attacks on benefits.

Although we did see 13,000 Federal workers leave service throughout 2017, the expected January 2018 retirement surge was not as large as some predicted. In fact, the number of applications received by OPM was lower (14,590 claims) than last January (15,317 claims) or even January 2016 (15,423 claims).

The Retirement Processing Center typically sees a backlog that peaks early in the year as large numbers of January and February retirement applications are received, and then is reduced throughout the year before peaking again. As a result of the ‘soft’ surge (I’m hoping to coin a new term here), average processing time has increased slightly from 60 to 63 days.

Although things appear to be normal so far, we could still see an unusual increase later in 2018 if the rumored 2019 pay freeze is confirmed, or if agency reorganization plans renew efforts to shrink the size of government. My Mom taught me to avoid shrinkage by washing things in cold water. Maybe we need to figure out how to throw some cold water on this.

TSP: Big Changes are on the Way

From Federalnewsradio.com

For those Federal employees located throughout the US (outside of ‘the Beltway’), you may not have opportunities to listen to something like this. Mike Causey of Federal News Radio talks during his regular radio show with Kim Weaver, Director of External Affairs for the Thrift Savings Investment Board. This audio recording will be an investment of your time as its about 43 minutes long (download it to your iPhone and listen while driving), but there is a lot of good information provided about the TSP. Mike and Kim start with a discussion of the stock market plunge this week and proceed to cover a wide variety of topics.

We learn that there is no date yet on the liberalized withdrawal options that were approved by Congress last year as a result of the TSP Modernization Act. Everyone is anxious to have more flexibility with withdrawals and Kim tells us that they are working diligently to get everything ready before a date is announced. Currently, about 42% of Feds leaving service or retiring take out their funds and move them somewhere else. Of course, by doing so, they lose the opportunity to have extremely low expenses (slightly more than $0.03 per $1,000 invested in 2017).

Ms. Weaver also discusses changes to the International Fund which will include the addition of developing markets and Canada. The lack of investment opportunities in these areas had always been a criticism of the existing index that’s used. One of the challenges that we don’t often consider is the amount of liquidity that’s needed before a fund or index can be used by the TSP. Because there is so much money being invested (and potentially moved), any fund that is considered must have adequate liquidity. Overseas markets have expanded adequately to now provide the liquidity needed.

If you’re interested in knowing where Feds have their money invested, Kim first tells us that 5.1 million plan participants have $542.4 billion in the TSP. As of the end of December 2017, 30% is in the G Fund, only 4% in the F Fund, 30% is in the C Fund, 11% is in the S Fund, and 5% is in the I fund. The L Funds have about 20% of the total (and are not ‘double counted’).

Because of its size and the number of people who depend on it, you can also sleep soundly knowing that in 2018 she expects that they will be audited 23 times by outside boards and organizations who are responsible for making sure your money is where it’s supposed to be. And that’s a good thing.

Time to Check for Benefits Impacts of Raise

From Fedweek.com

It’s time to check your paycheck. Or maybe you’ve already noticed.

An average 1.9% pay raise for Federal employees was declared for 2018. It actually varies between 1.67% and 2.29% (up to a pay cap of $164,200) depending on your locality. General Schedule employees receive their raise for the first full pay period of the year (which ended on January 20th). And you should have received your paycheck by now. Is it correct?

Any changes that you made during the last Open Season to your Federal Employees Health Benefits (FEHB) or Federal Employees Dental and Vision Insurance Program (FEDVIP) should also be showing up. Even if you didn’t make any changes, premium amounts that increased would now be reflected in your pay. Any increases or decreases in amounts saved to your Flexible Spending Account (FSA) may have shown up in the previous check as the plan year for the FSA coincides with the calendar year.

Your pay increase may also have triggered higher coverage under your Federal Employees Group Life Insurance (FEGLI) coverage. You may have noticed your Basic and Option B coverage (if you have it) increase. Basic coverage gets rounded to the nearest $1,000 of your pay and adds $2,000 on top of that. Option B coverage multiples your salary by one to five times depending on the coverage you’ve elected. Of course, premiums to reflect the higher amount of coverage would also have increased as well.

There could be other changes depending on other withdrawals you’ve requested. If you notice anything unusual or have questions, now is a good time to talk with someone in your Human Resources or Payroll Department. Check your check, then you can rest easier for the rest of the year.

See you next week. Thanks.

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