What Impact Will the Proposed Cuts to Our Benefits Have on Me?

I am concerned about proposed cuts to my benefits. What will this mean for my salary and what can I do in the meantime?

I am reading about the proposed cuts to federal retirement benefits and it’s making me very nervous. If and when Congress is able to do away with the FERS supplement (among others), would someone like myself who is close to retirement be grandfathered? If such laws are passed in the current year that reduce or eliminate parts of our retirement could they be made retroactive to past years?

~ A Concerned Federal Employee

We have received many questions similar to the one above from our users since the 2018 budget proposals from both the White House and House Budget Committee were released. At issue is the fact that the proposal contained a variety of suggested cuts to federal employees’ retirement programs.

What’s at Stake


The White House budget proposal suggested eliminating Cost of Living Adjustments (COLAs) for current and future federal retirees under the Federal Employees Retirement System (FERS). For retired federal employees under the Civil Service Retirement System (CSRS), COLAs would be reduced by 0.5%.


The amount FERS employees contribute to their annuities would increase by 1% each year for six years at which point the government and employee contributions would be equal. The method for computing retirement benefits would go to a high-3 to a high-5 system. The supplement for FERS employees who retire before they reach Social Security eligibility at 62 would also be eliminated.

Although less specific, the House Budget Committee’s budget proposal said that federal employees and Members of Congress should contribute a greater portion of their salaries to their pension programs.

For additional details about these proposals, see 2018 Budget Proposes Eliminating COLAs, Increasing Retirement Contributions and House Budget Committee Targets Federal Employee Pensions.

What Will These Cuts Mean for Me?

The question I posted at the start of the article is just one example of many we have received.

Here’s the bottom line for right now: Nobody knows what is going to happen with these proposed cuts. If or until any specific legislation is passed into law by Congress, it is impossible to know how cuts or changes to retirement programs (assuming any are even enacted at all) will impact any individual employee’s personal situation, whether or not they would be retroactive, only affect future employees, etc.

What Can I Do?

So if there are no definitive answers to specific questions right now, is there anything you can do in the meantime?

FedSmith.com authors Randy Silvey, Kelly Monroe, and John Grobe have addressed this question in some of their recent articles.

Silvey provided two general suggestions: joining an advocacy group for federal employees and/or take control of the parts of your retirement that you can.

Grobe suggested that federal employees take action in various areas of their retirement planning, such as maxing out your TSP, opening an IRA, and cutting expenses in retirement budget planning. He also looked at the pros and cons of federal vs. private sector employment along with benefits when leaving federal service for federal employees who may be thinking of leaving federal service.

He has also advised federal employees in the past to not panic since variations of some of the proposed cuts have been discussed for years, perhaps even decades (ultimately to no avail).

And Monroe used a real world example to show what changing the annuity calculation under FERS from high-3 to high-5 would look like in more practical terms and what it might mean for a retiree’s pension.

About the Author

Ian Smith is one of the co-founders of FedSmith.com. He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.