Latest news with #FERS
Yahoo
25-05-2025
- Business
- Yahoo
Trump's 'Big, Beautiful' Bill Strips Key Retirement Benefits From Federal Workers In Razor-Thin House Vote
In a 215-214 vote, the House of Representatives passed President Donald Trump's "big, beautiful" budget reconciliation bill, including major proposed cuts to federal retirement benefits within the Federal Employees Retirement System (FERS). What Happened: The House's budget package, determined mainly along party lines, initially included multiple cost-saving reforms impacting federal employees. These measures were outlined to aid fund tax cuts and increased immigration enforcement. Notably, a proposal to move annuity calculations from a "high-3" to a "high-5" salary average was scratched on account of bipartisan pressure. Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — this is your last chance to become an investor for $0.80 per share. Nancy Pelosi Invested $5 Million In An AI Company Last Year — Here's How You Can Invest In Multiple Pre-IPO AI Startups With Just $1,000. However, the bill still seeks to remove the FERS supplement for most federal workers retiring before age 62. As per the Government Executive, this benefit is typically worth around a third of post-retirement income. Other provisions, such as a requirement for new recruits to either contribute nearly 10% of their basic pay toward retirement or work without civil service protections, remain in the bill. A few exemptions were included for law enforcement officers and others, subject to mandatory retirement ages. Why It Matters: If enacted in its current form after moving through the Senate, the bill would dissolve a crucial bridge benefit that supports early retirees until Social Security eligibility, which rises to 67 in 2025. The FERS supplement elimination is scheduled to begin January 1, 2028, but includes a safeguard for those already eligible by that date. The American Federation of Government Employees President Everett Kelley labelled the cuts "toxic," and said they could "drive out experienced and dedicated federal workers" while having only a nominal effect on overall spending. Bill Shackelford of the National Active and Retired Federal Employees Association highlighted that even retirees who accepted early separation packages were likely to be impacted retroactively. Read Next: Hasbro, MGM, and Skechers trust this AI marketing firm — Invest before it's too late. Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Many are rushing to grab 4,000 of its pre-IPO shares for just $0.30/share! Photo courtesy: Shutterstock Send To MSN: Send to MSN UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? This article Trump's 'Big, Beautiful' Bill Strips Key Retirement Benefits From Federal Workers In Razor-Thin House Vote originally appeared on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
A Sneaky Policy Buried In The GOP Tax Bill Could Blow Up The Civil Service
President Donald Trump's long-running dream to protect loyalists in the federal bureaucracy and fire any perceived enemy got even closer to reality Thursday, when House Republicans passed a massive tax and spending bill. The One Big Beautiful Bill Act, which passed 215-214, cuts $1 trillion in federal health and food programs while adding nearly $4 trillion in tax cuts steered primarily to the wealthy. But it also includes a little-noticed provision that would force new federal employees to either give up traditional job protections or take a significant cut to their compensation. If the measure survives in whatever package the GOP-controlled Senate passes, unions warn it could turn the federal workforce into an old-school spoils system. 'It's a huge policy change masquerading as a small budget provision,' said Daniel Horowitz, legislative director at the American Federation of Government Employees, a union representing more than 800,000 workers. 'It torches the civil service.' And it does so in a sneaky way. Federal workers receive retirement benefits through what's known as the Federal Employees Retirement System, or FERS. Retirees are paid an annuity based upon their length of service, funded through contributions from both employees and their agencies. Current workers chip in a certain percentage of their paycheck into FERS — either 0.8% or 4.4%, depending on when they were hired — and the government covers the rest. The GOP measure would force new federal employees to pay a whopping 5% surcharge — bringing their FERS contribution to 9.4% of their pay — unless they agree to become an 'at-will' employee. That means they would waive their right to appeal their termination except in particular cases like racial discrimination. The average salary of a new federal worker entering the FERS system is around $71,000, according to the Congressional Budget Office, the agency inside Congress that analyzed the GOP bill. So the typical worker would have to give up $3,500 a year just to have job protections that have long been standard. Steve Lenkart, executive director of the National Federation of Federal Employees, a union representing 100,000 workers, said the policy amounts to a 'bribe.' 'Another way to look at it is criminal extortion,' he said. 'They're saying, 'We will charge you more … if you choose to access the laws that are on the books.'' He suspects most workers would choose to have more money in their paychecks, even though 'you'd lose all your protections to report waste, fraud and abuse.' Indeed, the budget office estimates that only one-quarter of new hires would sacrifice 5% of their pay in order to keep their civil service rights. And therefore the budget savings from the measure — that is, the whole reason it's supposedly in a tax bill — would end up being quite small. CBO figures the policy would increase revenue by just $4.7 billion over 10 years. By comparison, the Republican bill cuts nearly $700 billion from Medicaid, the health care program for the poor, over the same period. Horowitz said the meager savings betray the policy's real intent: to turn the federal government into an at-will workforce in which employees can be fired for any reason at all. 'With a small provision here they're basically undoing all of Title 5,' he said, referring to the part of U.S. code that outlines federal job protections. 'It's 150 years of civil service rules that are being thrown out here and nullified.'While it may be tucked into a tax package, the policy fits neatly into the Trump administration's broader attacks on federal workers and labor groups. The White House has tried to unilaterally shut down federal agencies, terminate tens of thousands of probationary employees, carry out mass layoffs through 'reductions in force' and strip collective-bargaining rights from up to a million workers. It is also hoping to reclassify thousands of civil servants as 'at-will' political appointees through its Schedule F scheme. Federal unions are an obstacle to all those goals, and the GOP tax measure could be one way to weaken them for good. Unions in the federal sector cannot bargain directly over pay and benefits, but they can provide good job security by enabling workers to appeal what they believe are unfair terminations. If workers waive their right to such due process, there would be less reason for them to join a union in the first place. The at-will policy could therefore help with the long-sought GOP goal of shrinking the membership of federal unions. Matt Biggs, president of the International Federation of Professional and Technical Engineers, said the Trump administration seems determined to 'turn the federal sector into Walmart.' 'This idea of forcing federal workers to pay or be 'at will' is illegal and outrageous,' said Biggs, whose union represents workers at NASA and other agencies. But it's not clear the measure will make it through the Senate, where some Republicans have voiced concern about certain pieces of the House bill. Republicans hold 53 seats and have a narrow path to approving the tax overhaul. Winning over the more moderate members will be essential to getting the legislation to Trump's desk. Lenkart hopes the provision will die in the Senate, which tends to be 'a little calmer in the skull' than the House, he said. But he was reluctant to make any predictions. Sen. Lisa Murkowski is one of the few Republicans who've openly pushed back against Trump's attacks on federal employees. Her home state of Alaska is especially vulnerable to cuts to the federal workforce. Asked for her take on the at-will provision in the GOP bill, Murkowski said only that she'd been keeping an eye on it. 'I haven't looked to see how it actually landed,' she told HuffPost on Thursday, alluding to the last-minute changes House Republicans made to their bill. 'It is something that we were paying attention to. So I'm going to take a look at that one.' Arthur Delaney contributed reporting to this story.
Yahoo
22-05-2025
- Business
- Yahoo
House GOP Retreats On Retirement Cuts After Backlash: Protections Restored, FERS Changes Pushed To 2028 In Latest Version Of Reconciliation Bill
House Republicans have revised key parts of their proposed spending cuts targeting federal employee retirement benefits, softening some of the most controversial measures in response to internal opposition and growing criticism from federal workers and advocacy groups. What Happened: Originally, the House GOP's reconciliation bill sought to force pre-2014 federal hires to pay significantly more toward their pensions, eliminate the FERS supplement before age 62, switch annuity calculations to a less favorable model, and present new hires with an ultimatum: give up civil service protections or forfeit a portion of their salary. Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — this is your last chance to become an investor for $0.80 per share. Nancy Pelosi Invested $5 Million In An AI Company Last Year — Here's How You Can Invest In Multiple Pre-IPO AI Startups With Just $1,000. But, according to Government Executive, after pushback from lawmakers like Rep. Mike Turner (R-Ohio) and outcry from federal employee organizations, the latest draft backs off on several fronts. Pre-2014 hires will no longer lose their grandfathered status. Changes to the FERS supplement now include broader exemptions for early retirees and delay implementation until 2028. The shift from a high-3 to high-5 annuity calculation has also been pushed back by a year. Why It Matters: The proposed changes were met with alarm from federal employees and law enforcement officers, especially those enrolled in early retirement or deferred resignation programs. Critics argued that the bill retroactively stripped workers of benefits they had already earned and paid into for years. According to John Hatton of the National Active and Retired Federal Employees Association, the amendments are a step in the right direction, but still fall short. "From our view it's definitely an improvement, and a significant improvement," Hatton said. "But the FERS supplement elimination and the High-5 proposal still breaks promises that were made to federal retirees." While the latest revisions reduce the immediate impact on federal workers, unresolved concerns remain about fairness and the precedent of altering earned benefits. As the bill, which Sen. Bernie Sanders (I-Vt) labelled as a "death sentence" for millions of Americans, heads toward a floor vote, Republican leaders may still face resistance unless further adjustments are made. Read Next: Hasbro, MGM, and Skechers trust this AI marketing firm — Invest before it's too late. Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Many are rushing to grab 4,000 of its pre-IPO shares for just $0.30/share! Photo courtesy: Shutterstock Send To MSN: Send to MSN Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article House GOP Retreats On Retirement Cuts After Backlash: Protections Restored, FERS Changes Pushed To 2028 In Latest Version Of Reconciliation Bill originally appeared on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
16-05-2025
- Business
- Forbes
How Proposed Federal Benefits Changes Could Impact You
Man holds Federal Employees Retirement System FERS. Federal government workers have faced a lot of pressure, including mass layoffs, buyout offers that haven't yet been approved or funded by Congress, and uncertainty about agency downsizes or even eliminations. Proposed changes to the Federal Employees' Retirement System (FERS) have added to the worry and anger among federal workers. People entering government service know they are trading lower salaries than in the private sector for stronger benefits. FERS is an important example that is difficult to duplicate. There are three parts to FERS, according to the U.S. Office of Personnel Management. One is Social Security, a system that virtually anyone working pays into and eventually receives payments from during retirement. The second part is the Basic Benefit Plan, a defined benefit plan, an increasingly rare promise in U.S. employment that provides salary-like payments in retirement. Both this and Social Security can move with someone who changes jobs, even outside of government work, and maintains the necessary payments. The third part is the Thrift Savings Plan, something like a 401(k). At least 1% of someone's salary comes out and goes into an account where it accumulates. The government matches the contribution and, according to the plan, after 35 years of compound interest, each dollar turns into $10. Those who can and do participate are allowed to contribute up to 5% of their income. The government matches the first 3% dollar-for-dollar and then 50 cents on the dollar. The proposed changes to FERS would have a significant impact on saving for retirement. Both the Congressional Research Service and Congressional Budget Office have summaries of the changes to FERS that are part of the current House of Representatives proposed budget. They include the following: The last two points are important because they significantly change the amount federal employees must contribute to FERS. The changes in contribution amounts are complicated and depend on how long someone has been a federal employee. Under the still-current law, those hired before 2018 contribute 0.8% of their annual pay. Employees either first hired in 2013 or rehired with less than five years of service contributed 3.1% of their annual pay. Those hired in 2014 or later contribute 4.4% of their annual pay. For employees who qualify for enhanced retirement benefits and are subject to mandatory retirement — federal law enforcement officers and firefighters, Customs and Border Protection officers, members of the U.S. Capitol Police and the Supreme Court Police, air traffic controllers, and nuclear materials couriers — there is no change. They will continue to pay 1.3%. Those hired before 2013 pay 1.3%; if hired in 2013, they pay 3.6%; and if hired in 2014 or later, they pay 4.9%. Members of Congress and congressional staff currently contribute 1.3%. That would increase to 3.1% in 2026 and 4.9% in 2027. Regular federal employees would have to contribute 4.4% of their annual salary, no matter when they were hired, phased in between 2026 and 2027. Those hired before 2013 would contribute 2.6% in 2026 and 4.4% in 2027. Employees in 2014 or later continue to pay the 4.4% they have been contributing. The one other employee category is the newly hired, who will have to decide between being at-will employees or not. Normally, federal employees have job security based on merit and cannot be fired for other than legally specified reasons, which makes these government jobs far safer than in the private sector. New employees who want the traditional non-at-will status will have to contribute an additional 5% of their salary to FERS. It seems to be a way to encourage or pressure future federal workers out of the protected status they have enjoyed. These changes will affect the retirement planning for virtually all federal employees. Even those who look to enter retirement in the immediate future could feel the effects, depending on the passage of a final bill and the timing of when the changes would go into effect. Although the benefits don't necessarily change in theory, they do depend on the calculated average pay. The inclusion of those two extra years could lower a person's average annual pay, depending on their pay history, meaning a drop in retirement benefits. The additional costs of premiums also mean employees have less money available for other uses, including putting into TSP for more matching funds. Employees have a number of paths to explore, including cutting expenses, working longer than they might have planned to if possible, or making additional money on the side, either through a second job or starting a business that won't interfere with their main job. The longer the time before retirement, the more opportunity you have to make the necessary adjustments. Speaking with a financial advisor to plan what you need to do would be wise. Other than the greater scrutiny into family additions to the Federal Employees Health Benefits program, it doesn't seem that existing retirees will face any changes in their situations.
