• Share this Blog

    Facebook Twitter More...
  • AFGE’s Twitter

  • Archives

  • Flickr Photos

Money Out of Our Pockets!

IMPACT OF PROPOSED PENSION CUTS

What Federal Employees Currently Pay:

 Civil Service Retirement System(CSRS) employees pay 7% of salary for retirement benefits. CSRS employees are not affected by the current pension cut proposals:

  • Contribute 7% of salary to their defined benefit pension plan.
  • Do not contribute to social security and are not covered by social security.
  • May participate in the Thrift Savings Plan (TSP) but there is no government match.

Federal Employees Retirement System (FERS) employees pay approximately 12% of salary for retirement benefits:

  • Pay 6.2% of salary to social security.
  • Pay .8% of salary to their defined benefit pension plan.
  • Must contribute 5% or more to a TSP account in order to get the total government match (government matches dollar-for-dollar for first 3% of contributions, then 50 cents on the dollar for the 4th and 5th percent of contributions).

 What Federal Employees Would Pay Under Proposed Cuts

 Pension Cut Proposals Under Consideration would require FERS employees to contribute up to 7% of salary to their defined benefit pension (instead of the .8% contributed now).  As a result, employees would have to contribute up to  18% of their salary for retirement benefits:

  • 6.2% of salary to social security
  • 7% of salary to their defined benefit pension
  • 5% to the TSP

                Total Increase:  18.2%

For most federal employees, 18.2% is too much to spend on retirement.  Their current living expenses, i.e. housing, transportation, food, child care, clothing, etc. would make that amount impossible.  So they would be forced to withdraw their contributions to the TSP, in order to have enough to contribute 7% to their defined benefit pension.  By removing their contributions to the TSP, they would lose out on future earnings of their own savings, as well as the 5% government match.  The increased contribution to the defined benefit pension coupled with the loss of the government match to the TSP would effectively be a 10-12% pay cut

First Year Impact of Proposed Pension Cuts For Middle Income Federal Workers

                                                                                        FERS        Proposed Cuts     Increase

Current Percentages Paid

Social Security                                                             6.2%                6.2%   

FERS Annuity                                                               0.8%                7.0%   

Thrift Savings Plan*                                                   5.0%                5.0%   

Total Employee Cost for Retirement                  12.0%              18.2%                   6.2%

Example for GS-05 Step 1 (RUS**)

Salary                                                                            31,315             31,315            

Social Security                                                           1,942               1,942  

FERS Annuity                                                             251                  2,192  

Thrift Savings Plan*                                                  1,566               1,566  

Total Employee Cost for Retirement                 $3,758          $5,699                     $1,942

Example for GS-07 Step 1 (RUS**)

Salary                                                                        38,790             38,790            

Social Security                                                         2,405                2,405  

FERS Annuity                                                           310                     2,715  

Thrift Savings Plan*                                                1,940               1,940  

Total Employee Cost for Retirement                 $4,655          $7,060                       $2,405

Example for GS-09 Step 1 (RUS**)

Salary                                                                        47,448             47,448            

Social Security                                                         2,942               2,942  

FERS Annuity                                                            380                  3,321  

Thrift Savings Plan*                                                 2,372               2,372  

Total Employee Cost for Retirement               $5,694          $8,636                        $2,942

* The government matches employee contributions dollar-for-dollar of the first 3% of salary and $.50 on the dollar for the next 2%.  The employee must contribute 5% of salary to receive the full  government contribution.

** RUS means Rest of U.S. General Schedule locality.

2 Responses

  1. Let’s not forget that Federal employees who have paid into Social Security as well as CSRS receive reduced Social Security benefits if they draw a retirement from CSRS.

  2. Those who propose this are unconscionable in their application of justice, ethics and morality. It is unethical and wrong to change the rules, during the game.

    Federal employees are expected to unfairly shoulder a reduction in pay, plus a pay freeze for two years or more, while majority in congress, continue to protect the wealthy from paying a fair and equitable share of taxes.
    Large corporations, banking and wall street, continue to realize record profits and their top management give themselves large bonuses.

    I don’t see congress proposing a pay cut for themselves! I do see them giving an up to 8% salary raise for their staffers, who by the way are exempt from the current two year salary freeze, the rest of federal employees have been shouldered with.

    If this abuse of the middle working class continues, this nation will see an upheaval to those who continue the type of corruption we have been witnessing from our congress.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

<span>%d</span> bloggers like this: