White House calls for federal employees to increase contributions to retirement plans

[Freddie Stubbs]

Source: The Hill

The White House is asking federal employees to increase their contributions to worker retirement plans, saving $21 billion over 10 years and helping to pay for the proposed $447 billion jobs package.

Senior administration officials outlined the plan Monday that would increase contributions to 1.2 percent over three years beginning in 2013, up from the 0.8 percent of salaries most employees contribute to their pensions.

"Federal employees both current and future will receive the same defined benefit," a senior administration official. "What we are asking for is a slightly larger contribution."

The American Federation of Government Employees panned the plan calling it a $21 billion tax hike and a pay cut for federal employees, whoare already under a two-year pay freeze.

Read more: http://thehill.com/blogs/on-the-money/budget/182395-white-house-calls-for-federal-employees-to-increase-contributions-to-retirement-plans

[benld74]

1. Yup. More from us less from the Agencies,

For as we ALL KNOW. Public employees make too much!

[Inuca]

3. You really think that

that a 1.2% contribution means they are getting a bad deal?

[Bandit]

7. On top of the .08% which makes it 2% and yes I do..

I think it is a pay cut and a tax increase at the same time. I am sure Republicans will go along with this proposal in a heartbeat though...

[Inuca]

16. Read more carefully

from the OP "would increase contributions to 1.2 percent over three years beginning in 2013, up from the 0.8 percent". Total of 1.2%, not 2%

[me b zola]

2. Because working people aren't hurting enough

They gotta eat their peas...or cake.

[ProSense]

4. This

The administration also is proposing eliminating the Federal Employees Retirement System annuity supplement for new employees, which goes to retirees before they are eligible for Social Security benefits.

...is the program that enables Congress to collect retirement benefits at 50.

Shared Retirement Sacrifice Act of 2011

All these inequities need to be addressed.

[LiberalFighter]

6. I wonder what group of federal employees receive the supplement?

I know my dad did not as he retired when he was 65.

What group of federal employees would retire early?

I don't have a problem with federal employees receiving a supplement to their pension. But if my dad's pension is any indication then they possibly don't need the supplement. Possibly they should consider having the supplement that is graduated and increases the closer to 65 that they retire.

It is my understanding that federal employees do not receive Social Security unless they were employed outside the government.

There are too many facts about this that we don't know and are needed to really be fair about this.

[BTennyson]

8. The Supplement

The supplement is for FERS federal employees hired after 1984. CSERS (civil service) employees get no social security supplement (thank you Ronnie Reagan.) At age 56 if a FERS employee retires they get 70% of their social security and their FERS annuity. Once they reach age 62 the supplement goes up to 100%.

[Estel]

10. Not exactly

SS supplement goes away at age 62. Social Security kicks in. If you have another job and do not claim SS at 62, you get nothing.

[Estel]

9. Federal Employee Retirement

Your Dad was apparently in the old retirement system, Civil Service Retirement System . They did not pay social security, nor do they get social security when they retire unless they had another job.

The proposals address the new retirement system, Federal Employees Retirement System . They DO pay social security and put money into FERS -- right now it is only 0.08 % of earnings. Obama is proposing to gradually increase that to 2 %. The social security supplement is for those that retire before age 62 and goes away when the person turns 62. Some choose to retire before 62 because they can with 20 years at 60, calculated Minimum Retirement Age with 30 years, etc. Of course your benefit is calculated based on average of high three-year salary and years worked.

By the way, Congress can retire at age 50 with 20 years service or at any age with 25 years service. They get 1.7% high-three average pay times years of Congressional service plus a social security supplement until age 62. Much better benefits than other feds.

Obama is proposing getting rid of social security supplement, which dings Congress more than the average fed.

[24601]

13. The information you were given is not correct. Under the

pre-1984 retirement system, CSRS, employees were not under social security. Retirement was calculated at approx 2% per year based on the average of your high-three earning years. It topped out at 80% at about 42 years service.

For civil servants hired after 1984 the system is FERS. Instead of 2% per year, it was reduced to approx 1.1% per year. FERS employees must participate in Social Security. The remainder is supposed to be made up by what you contribute to the Thrift Savings Plan (TSP). The government automatically provides 1% of your salary to TSP and will match up to the next 4% for a maximum match of 5%. There is no limit so after working 100 years, you can retire at 100% of your high three.

Workers hired before 1984 are grandfathered and did not have to convert to FERS and did not have to go into Social Security. Members of Congress elected before 1984 were allowed to remain in CSRS; however they still were also forced to contribute to Social Security - so no member of congress is exempt from Social Security.

Lots of civil servants - primary in law enforcement - are forced to retire at 55 whether they want to or not. As a result, retirement accruals are a little more for law enforcement positions.

[Wilms]

5. Verrry 3-dimensional. n/t

[quakerboy]

11. Not a fan

Although, I tend to disagree with the whole system. The employer should provide a salary. And the employee should pay for whatever benefits they need out of that salary. This benefits paid for by the company thing is for the dogs, because it ties employees down. I think it makes the real costs of these things at once not a real expense to be valued, and yet the idea of not having them even more scary because the amount of cash needed to buy them is an unknown.

[benld74]

12. And what are ou a fan of?

HAving employee carry around their retirement from one job to the next, making sure ALL of their past employers have done due dilegence on their ends? BUT if there has been ANY wrong doings, the employee is the one OUT of luck NOT the employer.

[quakerboy]

14. Thats what happens anyway

Pensions are secure, companies and municipalities been fully funding those, have they? 401k's working out well for everyone that invested?

Not mine. The IRA is worth half of what it was. The 401k was repo'ed by the company (yeah, I got my 3% back, but their matching amount went back to them, so whats my supposed benefit worth?).

Better that they pay all the money to the employee and he gets to decide what sort of health care, what sort of retirement they want to invest in. And they get to take it with them when they go.

[joeglow3]

17. How did your company take money out of a trust for your benefit?

What is the legal basis for this?

[quakerboy]

18. Somehow

They contributed matching, but I guess it didn't vest until like 5 years? It was actually my wife's, at that point my girlfriends, so I wasn't paying as much attention to the particulars. I believe it was 401k, but I could be mistaken about the type of retirement account it was.

The end result was that when the Boss decided to lay her off so he could hire a buddy for that position, a few weeks later she got a note that there wasn't enough in the account to keep it open, now that the employers matching portion was gone, and how did she want her money, or should they just hold it and take out holding fees?

[joeglow3]

19. That makes sense.

So, she had a 5 year cliff vest and her boss screwed her and fired her right before her 5 year period. Pretty shitty of him.

[quakerboy]

20. Yup.

Although Ive never heard of a cliff vest, and the firing had nothing to do with the money, it was completely motivated by his desire to hire a buddy in her place. He wasnt one to care about saving the company money, that was just an unintended bonus.

They also provided health insurance. We have since learned that we actually pay LESS to find an independant dr and pay cash for everything than she did while on the plan.

I look at these personal experiences, and a few others, and I look at how many companies have underfunded their pensions, or mismanaged them, the way people get tied down to a job just for health care. I look at the fact companies are cutting benefits, and how large corps have such a massive advantage in supplying benefits to employees. And from there is born my general belief that people should work and be paid, and be able to chose exactly what to do with that pay (outside of taxes, universal costs). Then maybe people would value their health care, and be motivated to seek the creation of affordable health insurance options, for instance. And it would remove the disadvantage of working for a small company.

[joeglow3]

21. I get the idea behind a cliff vest

In theory, they want to do exactly what you mentioned: provide an incentive to keeping employees around. Sadly, this is subject to abuse, as you can terminate someone right before their cliff vest date and pay nothing.

[yurbud]

15. which do you think will actually happen, taxing the rich or screwing federal employees?