(for the week of July 8th – July 14th)

Too busy during the week to keep up on all the news around your employee benefits and pay? My weekly summary of some of the most interesting and relevant news stories could help, and includes some of my insights. You might just refer to it as “What’s George reading this week?”

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

George Ray
Federal Benefits Online

$22 Million Dollar Retired Federal Employee

From FedSmith.com

Ralph Smith mixes in some lessons for investors with a story of a former IRS auditor who died at age 101 (in 1995) with $22 million dollars in her estate. I’ve just got to read this. Must be something fishy going on, right? Nope. Apparently, she read company annual reports with the same tenacity that she audited tax returns. And, Anne Scheiber lived frugally throughout her life investing in stocks.

But, is this an unbelievable story of a tenacious Federal employee who retired back in 1944 (before the TSP even existed) and managed to amass a fortune in stocks, or is it really a story about the magic of compound growth? In Anne’s Wikipedia entry, her “executor Benjamin Clark said that the claims about Scheiber's investing skill have been exaggerated. Her 1936 tax return showed dividend income of $900, which would indicate she had a substantial portfolio several years before her retirement. If her stocks earned an average dividend yield for 1936, her portfolio would have been about $21,000. Compounding $21,000 for almost 60 years and winding up with $22 million indicates a return slightly higher than the S&P 500.” Oh, gee thanks for deflating the whole uplifting story, Ben. (Or was it me who did that?)

Beyond Buyouts and RIFs: A More Effective Approach to Workforce Management

From Govexec.com

Because of all the talk on downsizing agency workforces and budget cuts, there have been numerous articles on the use of Voluntary Retirement Authority (VERA) and Voluntary Separation Incentive Payments (VSIPs). (I even produced a video recently for Feds on the topic.) But this article, written by Bill Valdez of the Senior Executives Association provides a different take. He suggests that two neglected tools in the workforce reduction toolkit include data analytics and mobility programs.

Bill oversaw reducing his office’s headcount back in 2013 at the Energy Department. He’s correct when he states that “Blunt instruments like RIFs and VERA/VSIP do not allow agencies to retain their highest performers or manage critical skill gaps. Instead, the rules of a RIF or VERA/VSIP typically favor tenure at the expense of workforce composition requirements.” To retain valued employees, Mr. Valdez recommends using managed relocation programs, and offers six factors that should be considered when combining mobility programs and data analytics.

Trump Administration Wants to Boost Value of Federal Employee Buyouts

From the Washington Post

More news on buyouts, and this is actually good news! You may know that the Department of Defense had received authorization to increase the maximum amount of the Voluntary Separation Incentive Payment (VSIP) or buyout from $25,000 to $40,000, but that’s available only for DOD employees through September 2018. The current buyout maximum was determined during the Clinton administration (1993) and after years of inflation and wage increases no longer provides much incentive for Feds to leave service. A new proposal sent to Congress by the administration and by the Pentagon requests that the increase be made permanent, offered government-wide (oooh!), and include an inflation adjustment to the cap (aahh!). It’s only a proposal, so don’t get too excited just yet. (Oops, OK.)

Weighing Your Life Insurance Options

From Govexec.com

Here’s part two of Tammy Flanagan’s article from last week, and continues the primer on your Federal Employees’ Group Life Insurance (FEGLI). She discusses the differences between permanent life coverage and term coverage (FEGLI is term coverage, although for a long term), and also suggests some alternatives. Her reasons to ‘shop around’ include lowering cost, needing additional coverage, and desiring level premiums.

Will Your Grandkids Know What a Retirement Plan is?

From Federal News Radio

Lately, it seems like Mike Causey at Federal News Radio has been on a binge about TSP millionaires. This week though, he’s on vacation, so they re-ran an interesting article that he wrote back on June 18th. (Since I read it this week, I’m including it.) Mike’s article promotes his radio show interview with Greg Stanford of the Federal Managers Association.

It’s important to realize that most private sector employers have eliminated their pension plans, or at least decreased the benefits that they pay because these plans are expensive to fund and maintain. The current administration has proposed eliminating Cost of Living Adjustments (COLAs) on the FERS pension, increasing the amounts employees would contribute to the pension trust, and even eliminating the FERS Special Retirement Supplement. Will pensions become a distant memory that we tell our grandkids about? Is the threat to your pension real? If you want to know more, click through from the article to the radio show recording to listen to their discussion.

See you next week. Thanks.

P.S. - You really should check out Understanding Your Federal Benefits, my comprehensive e-learning course for FERS-covered employees. And then enroll to become a student.

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Issue 071417

Published by Federal Benefits Online. Copyright © 2017
Author: George Ray

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