Changes in federal retirement policies included in President Trump’s budget proposal would impose substantial new costs to active employees to fund their future benefits while reducing the value of benefits for both current and future retirees.
However, the proposal released Tuesday is only the White House’s opening bid in what often is a long and contentious process, and federal employee organizations and some members of Congress already are decrying the proposals. Similar ideas have been raised numerous times in the past only to die in the process of setting a budget for the next fiscal year.
As earlier indicated, the budget would seek to increase required contributions by FERS employees to retirement by 1 percentage point in 2018 and by an additional 1 point each year over five to six years, until the employee and employer contributions are equal. Since the government contribution would go down proportionately, the budget shows a saving to the government—and thus a cost to employees—of $1.7 billion in the first year, $24.1 billion over five years and $72.1 billion over ten years.
More than nine-tenths of current federal employees are under FERS. For those under CSRS, required contributions would remain the same, apparently on the theory—and in a departure from similar prior proposals—that CSRS employer and employee contributions already are equal.
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