In an earlier article we looked at things we could do to prepare for or counteract the threats to our benefits that have been proposed in the White House’s draft 2018 budget.
This article goes further and looks at a decision that at least some of you will be considering if the changes to our retirement and benefits are enacted. That is, should you remain with the federal government or should you look elsewhere.
It’s not unusual to look elsewhere when bad things happen to us. We might end a relationship, move to a new neighborhood, or get a new job when things go badly. However, we want to make sure we are not jumping from the frying pan into the fire and ending up in a situation that is no better than where we were and might possibly be worse. We need to focus as much, perhaps more, on where we are going toward as we do on where we are coming from. This is especially true if we are not yet eligible to retire from federal service.
This article will not look at the retirement options that are available to current federal employees; that will be covered in a future article.
What we will do is look at the pros and cons of deciding to leave – or to stay – in federal service. Much of what is contained in this article was adapted from Chapter 2 of my book Career Transition: A Guide for Federal Employees, which is published by the Federal Management Institute and can be ordered at firstname.lastname@example.org or by emailing Tammie Owens at email@example.com.
Federal Employment Benefits
Here are some things to consider if you’re thinking of leaving federal employment.
First, there is generally more job security in federal employment.
While federal jobs are less secure than they used to be, private sector jobs are way less secure than they were in the past. With a federal job, there are rules designed to protect employees, such as Reduction In Force (RIF) procedures. In the private sector, if there are any such provisions they are the result of a union contract.
Many private sector employees can be let go for any reason, or for no reason at all. This probably dates me, but I remember the (largely unsolicited) advice I got as I was entering the workforce. I was told to look for a secure job like one with the phone company, the gas company, the electric company, or the government. The government has fared better than these other former bastions of job security.
Second, as a federal employee you are earning retirement benefits through an old-fashioned defined benefit pension, be it FERS or CSRS. Yes, some of the proposed changes, if enacted, would dilute the benefits of these pensions, or make us contribute more, but look at it this way – we have a pension; the vast majority of private sector employees do not. Only 14% of private sector employers offer defined benefit pensions to new hires and less than a third of current private sector workers are covered by one.
Third, and related to our retirement benefits, is the fact that we can participate in the Thrift Savings Plan (TSP), a defined contribution plan. Government matching contributions for FERS employees are more generous that the average private sector 401(k) match; in fact, 20% of private sector defined contribution plans have no match at all.
Fourth, the Federal Employee Health Benefits Program (FEHBP) provides excellent coverage and, unlike many private sector plans, can be carried into retirement.
Fifth, the federal leave programs are generous. Not too many private sector employers give one day of annual leave per pay period, which is what an employee with 15 or more years of federal service earns. Regarding sick leave, very few private sector employers offer their employees the ability to accumulate sick leave without limit. It’s not uncommon among those private sector employers who do provide sick time, to have caps on what can be carried over or to have an annual use-or-lose rule.
Private Sector Benefits
So what does the private sector have to offer? We cannot generalize about all private sector employers since benefits can vary widely, but here are some things to consider.
First, there is the possibility of being rewarded with greater pay. You won’t be constrained by the General Schedule or by salary caps. The flip side of reward is risk; the greater the risk, the greater the possibility of reward.
Second, we may be longing for a change. We might want to try our hand at a completely different occupation. If you’re not happy with what you’re doing now, but don’t know what it is you want to do, consider reading Richard Bolles classic book, What Color is Your Parachute?.
Third, many private sector employers have benefits that federal employees don’t have. Some of these benefits are limited to management or executive employees, but many are available to all. And, yes, some private sector employers may offer fewer benefits than we are entitled to as a federal employee.
A private sector employer might offer:
- Subsidized child care;
- On-site fitness facilities;
- Discounts on company products;
- Company cars;
- Contests and prizes; or
- Club memberships.
Fourth, if you are eligible to retire, you could collect both your federal pension and a salary from a private sector employer. There is no earnings test on CSRS or FERS like there is on Social Security.
Leaving federal employment is not a decision to be made lightly. Take your time and look at the above items in light of your own situation. What might be a positive for one employee could be viewed as a negative by another.