Saying he wants “to bring Federal benefits more in line with the private sector,” Pon proposed:
- Eliminating supplements for Federal Employees Retirement System (FERS) annuitants who retire before being eligible for Social Security benefits.
- Reducing federal pensions by basing them on workers’ basic pay five-year averages instead of three years.
- Increasing employee retirement contributions with no increase in benefits. The plan would sharply boost the 0.8 percent of basic pay most FERS employees contribute. The letter makes the impact on federal retirees clear. “Under this proposal, FERS employee deduction rates will increase by 1 percent per year until they reach 7.25 percent of basic pay. … This proposal would require FERS employees to fund a greater portion of their retirement benefit.”
- Reducing or eliminating retirement cost-of-living adjustments. The administration plans “to reduce the cost-of-living adjustments (COLAs) under the Civil Service Retirement System (CSRS) by one half of one percent and to eliminate COLAs under the Federal Employees’ Retirement System (PERS) for current and future retirees.”
In addition to these retirement cuts, the administration also has proposed freezing federal pay next year. Employees suffered a three-year freeze on basic pay rates under the Obama administration. With next year’s planned freeze, federal employees would have been hit with $246 billion in cuts to wages and benefits, complained J. David Cox Sr., president of the American Federation of Government Employees, which released Pon’s letter after getting it from a congressional source.
“President Trump’s war on working people knows no limits,” Cox said. “As Wall Street shareholders are reporting record profits and the wealthiest 1 percent are basking in their massive tax cuts, President Trump believes the career employees who keep the government running deserve another cut, this time to their retirement.”
Pon signed the letter to Ryan, but it certainly has Office of Management and Budget Director Mick Mulvaney’s fingerprints all over it. The proposals were part of the administration’s budget proposal released in February, before Pon took office.
Ryan did not respond to a query about the letter, but Rep. Elijah E. Cummings (Md.), the ranking Democrat on the House Oversight and Government Reform Committee, was upset. Calling the Trump administration’s proposal “draconian,” he said, it “would betray the promises the nation has made to middle-class federal workers who dedicate their lives to public service — as well as their families — and it would severely degrade recruitment and retention.”
Pon’s signature on the letter raises additional questions.
In a conference call with reporters last week, Pon talked about the need to have “data required for having an intelligent conversation” with federal unions about compensation and having “that dialogue with the same data.” So why he is pushing major compensation cuts before there is any dialogue or agreement on the data?
The data differ.
In April, a Federal Salary Council report said federal pay lags behind the private sector by about 32 percent. Last year, the Congressional Budget Office said that feds are paid 3 percent more overall than private-sector workers, but that varies widely with educational level. Those with no more than a high school education are paid about a third more than their private-sector counterparts, while those with a professional degree or more are paid about a quarter less.
Furthermore, Pon has called for “wholesale change” to the civil service system, which would have to include compensation. He promised to have a civil service overhaul; plan by the midterm elections and criticized previous proposals as “nibbling around the edges.”
If that’s the case, why is he pushing the retirement cuts before his larger plan is ready? I asked OPM these questions. Its response did not address them but largely copied language from the letter.
Perhaps Pon will explain when he appears at a Public Service Recognition Week forum on civil service changes Wednesday morning at the Partnership for Public Service. During the call with journalists, he answered only questions submitted in advance. We were allowed no live questions or follow-ups.
I’m sure federal retirees would like to ask him about keeping commitments.
“In exchange for years of hard work over long careers, our government made a commitment to middle class federal and postal workers that they would receive federal pensions in retirement,” said National Active and Retired Federal Employees Association (NARFE) President Richard G. Thissen. “Those pensions are not gifts. Diminishing their value in any way for those who have already earned them — including by eliminating or reducing COLAs, altering how they are calculated, or eliminating an entire element of the pension — fails to honor the basic commitments made to our public servants.”
In his Public Service Recognition Week proclamation, Trump praised the workforce for its commitment, saying: “Every day, our Nation’s civil servants help make America better, safer, and stronger. This week, we honor their efforts and extend our gratitude for their exceptionalism and steadfast commitment to serving the American people.”
They can take that to the bank.