OPM Director Jeff Pon justified four proposals his office recently sent to Congress that would cut or increase employee contributions to retirement benefits, saying at a May 16, 2018, House Oversight and Government Reform Committee hearing that he wanted to create a more flexible retirement system in line with the private sector.
“These proposals are to make sure that we’re making decisions around how we can operate the government in the 21st century. I do believe that we need to take a look at other proposals, not just pensions, but defined contributions plans so that they become much more portable for people to leave government and come back,” said Pon.
He explained that modern workers are far more likely to change jobs every few years than their previous counterparts, and employees would need a way to move in and out of federal service without their number of consecutive years served impacting their service.
Yet Rep. Elijah Cummings, D-Md., called the retirement proposals, which include increased employee contributions to their annuity and the elimination of supplemental annuities and retirement cost of living adjustments, “draconian” measures to cut $143 billion in costs.
“I don’t care how you look at it, this is a wage cut,” said Cummings. “I could kind of understand if you were taking that $143 billion and said, ‘OK, we know things are kind of not working here, but we’re going to make sure we put the money into training and things of that nature to get that effectiveness and efficiency.’”
Although the FY19 budget proposal out of the White House calls for a workforce fund of $1 billion to be housed at the General Services Administration and used to upskill and retrain federal employees for the modern needs of the government, Cummings questioned where the remaining $142 billion in retirement cuts would go to help federal employees.
“It’s not a one-for-one moving from one place to another. It’s looking in the entirety of government and our delivery model of service,” Margaret Wiechert, deputy director for management at the Office of Management and Budget, said. “In a fiscally challenging time, the president’s budget included a number of proposals, including the proposals that related to the workforce.”
The retirement benefit proposals coincide with another proposal out of the president’s FY19 budget, which would freeze federal employee pay to re-evaluate whether certain employees were being paid too much or too little.
The assessment derives itself from a 2017 Congressional Budget Office study that found that feds with below a bachelor’s education make more than their private sector counterparts while those with a master’s degree or higher make less. However, an April 2018 Federal Salary Council study found, somewhat contradictorily, that federal employees make nearly 32 percent less than their private sector counterparts.
According to Weichert, the 2017 Federal Employee Viewpoint Survey found that 61 percent of employees were satisfied with their pay, though the coinciding of a pay freeze and retirement benefit cuts could negatively impact the 2018 numbers.