Federal Employees to Receive Lesser Payouts Under Trump Budget
President Donald Trump’s first budget for fiscal-year 2018 proposes pension cuts for federal employees.
Although the budget proposes a 1.9% salary increase for civilians and a 2.1% raise for military employees, the pay raise for federal employees is actually less than that, when all the proposed changes to their retirement benefits are accounted for.
The retirement benefits would fall in real terms under Trump’s proposed budget. Federal employees will also be required to contribute more money towards their pension plans, to gradually match the government contributions.
In addition, future retirement benefits will be based on an average of the top five years of earnings instead of the current policy of the top three years. This is expected to decrease the payments that federal retirees will receive.
The proposed Trump budget also eliminates the cost of living adjustment (COLA) factor from benefit calculations for federal employees, and cuts that same factor by 0.5% for Civil Service Retirement System employees.
The budget will also be taking away supplement payments made to federal employees who receive the approximated value of their benefits if they choose to retire before the age of 62. This will be in effect for employees who are retiring in the beginning of 2018 and beyond.
Randy Erwin, president of the National Federation of Federal Employees, says that increasing the employee contribution to the pension plans would force workers to lose $5,000 in annual take-home income. “If this change is made, federal employees will no longer have a secure retirement,” said Erwin. (Source: Ibid.)
Likewise, Richard Thissen, president of the National Active and Retired Federal Employees Association, called Trump’s proposed budget cuts “beyond insulting.” Thissen said that the Trump administration’s move to increase pay, while at the same time cut retirement benefits, is the “height of hypocrisy”. (Source: Ibid.)
In addition to these cuts, the Trump budget proposes cuts to federal spending on programs such as Medicaid, food stamps, disability benefits, and medical research.
The budget will soon be moved to Congress. It is expected that part of these proposed budget cuts may not be approved by Congress.