Trump Administration Proposes $143.5 Billion in Federal Employee Retirement Cuts

Trump Administration Proposes $143.5 Billion in Federal Employee Retirement Cuts

REUTERS/Larry Downing

Just in time for Public Service Recognition Week, the Trump administration has proposed $143.5 billion in compensation cuts for federal employees, The Washington Post’s Joe Davidson reports:

“In a letter to House Speaker Paul D. Ryan (R-Wis.) on Friday, Office of Personnel Management Director Jeff T.H. Pon pushed four proposals that, over 10 years, would significantly cut retirement benefits for 2.6 million federal retirees and survivors.”

Pon’s proposals, which he wrote are aimed at bringing federal employee benefits “more in line with the private sector,” include:

  • Eliminating annuity supplements for Federal Employees Retirement System beneficiaries and their survivors who retire before being eligible for Social Security.
  • Changing federal pensions to be based on a five-year pay average instead of three years.
  • Sharply raising employee retirement contributions (without an increase in benefits). “Currently, most employees pay 0.8 percent of basic pay. … Some groups (Members of Congress, congressional staff, law enforcement officers, firefighters, and others) pay an additional one half of one percent (1.3%) of basic pay. Employees hired after 2012 pay a higher employee deduction rate, 3.1 or 4.4 percent depending on when first hired. Under this proposal, FERS employee deduction rates will increase by 1 percent per year until they reach 7.25 percent of basic pay.”
  • Reducing or eliminating retirement cost-of-living adjustments.

“In addition to these retirement cuts, the administration also has proposed freezing federal pay next year,” Davidson notes. “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.”