The Cost of the Proposed Benefits Cuts

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By on May 14, 2018 in Pay & Benefits with 0 Comments

Scissors cutting a stack of $100 bills

What if you heard that all of the money in three of the Thrift Savings Plan’s funds was going to be taken from the funds by the government over the next ten years and would not be replaced? You would be shocked and outraged that your employer, the United States Government was going to so brazenly pick your pocket.

Well, the administration has proposed a theft of your earned benefits that is actually greater than the combined balances of the S, I and F Funds as of December 31, 2017.

According to the Thrift Savings Plan, the December 31, 2017 balance of the F Fund was $28.3 billion; the balance of the I Fund was $47.2 billion; and the balance of the S Fund was $67.6 billion; for a grand total of $143.1 billion. Federal employees like you have been putting their hard earned dollars into the F Fund for thirty years (since 1988) and into the S and I Funds for 17 years (since 2001).

In just ten years, the cuts to federal benefits proposed by the administration in February and recently echoed by the Director of the Office of Personnel Management will “save” the government $143.5 billion according to the administration’s figures. 

And, what if an amount of money greater than the December 31, 2017 balances of the S and I Funds combined had already been taken from you over the last decade? According to figures announced by the National Active and Retired Federal Employees Association (NARFE), federal employees and retirees gave back $120 billion in benefits over the last decade. The S and I Fund balances add up to $114.8 billion.

The total amount of money taken from the earned benefits of federal employees over 20 years will be $263.5 billion; that’s more than the balance of any TSP fund, including the “big dog” G Fund, which has a balance of $205 billion. It’s frightening that an amount that is close to the amount saved by federal employees in their TSP accounts is being stripped from them by their employer.

Many of these cuts are proposed in the name of “bringing federal benefits into line with those in the private sector”.

I, for one, remember when federal benefits were in line with private sector benefits – and it’s not the federal benefits that have changed.

When I was in High School, the advice freely given to us youngsters by our parents and relatives was to get a secure job with a pension; the gas company, the electric company, the phone company (there was only one!) and the government. With fewer and fewer employers offering good benefits today, we feds are becoming the victims of a race to the bottom as it relates to our earned benefits.

Though the Hatch Act prohibits us from engaging in partisan politics, there’s nothing that stops us from contacting our elected representatives and making our views known. Let’s do it!

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

© 2018 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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