Federal employees would pay more toward their retirement benefits from salaries that generally would be frozen, under the Trump administration’s budget proposal released Monday.
The budget plan repeats numerous ideas from President Trump’s prior two budget proposals that failed to gain enactment even with Congress fully under Republican control. With Democrats now in charge of the House, Majority Leader Steny H. Hoyer (D-Md.) called it a “nonstarter” that “once again attacks our hard-working federal workforce by freezing their pay and threatening their retirement savings.”
Trump last year also proposed a freeze on salary rates starting in January 2019 (raises for longevity and performance would have been permitted). That freeze took effect only to be overridden by a law enacted last month providing for an average 1.9 percent raise.
The new proposal seeks to require employees to increase their contributions toward retirement until the employee and government share are equal. For most employees that would mean an increase of about six percentage points, which would be phased in as one percentage point more per year. The government share would decrease on the same schedule.
Also under the proposal, for employees retiring after an unspecified date, annuity benefits would be based on the highest five consecutive salary years rather than the currently used “high-3.” Further, it would end a supplemental benefit paid to many employees who retire before age 62, when they become eligible for Social Security.
The budget, for the 12 months starting Oct. 1, also repeats a proposal to end inflation adjustments to federal annuities for those who retire under the Federal Employees Retirement System (FERS), although full adjustments to their Social Security benefits would continue. For those under the older Civil Service Retirement System, inflation adjustments would be cut by a half percentage point; Social Security is not part of that system.
Also repeated is a proposal to reduce the rate of return paid by the Government Securities G Fund in the 401(k)-style Thrift Savings Plan for federal employees and retirees. As of the end of February, that fund held $231 billion of the $572 billion total on investment in the program, which is run by an independent agency.
The budget also calls for “modifying” the government contribution toward Federal Employees Health Benefits Program premiums in a way that would save $1.9 billion over 10 years. The document does not specify how that would be done, although last year’s proposal would have restricted the government contribution for plans ranked in the lowest third of the program’s quality ratings.
Many of the benefits proposals — some of which have been raised time and again over many years — made partial progress in the House during the Trump administration’s first two years only to stall when they reached the Senate.
“Thankfully for federal employees and the American people, this budget is dead on arrival in the House of Representatives,” Rep. Gerald E. Connolly (D-Va.) said. “Instead of recycling these tired and radical attacks on federal workers, the president should move expeditiously to implement the 1.9 percent pay increase Congress sent to his desk almost a month ago.”
That pay increase was in the February budget deal funding many federal agencies through Sept. 30. However, the administration still has not started paying employees at the higher rate, nor has it distributed back pay retroactive to the effective date of Jan. 6.
Sen. Mark R. Warner (D-Va.) said the new budget proposal “takes direct aim at the federal workers who bore its brunt by pushing for yet more cuts: retirement cuts. Benefit cuts. Another pay freeze.” Sen. Chris Van Hollen (D-Md.) said it “takes another swing at federal employees, adding insult to injury following the 35-day government shutdown.”
Some congressional Democrats already have proposed opposing plans, for example to increase the value of retiree inflation adjustments and end restrictions on payouts to those retired under the FERS system. They also have proposed a January 2020 raise of 3.6 percent.