shutterstock workforce hands

Deep cuts to federal benefits in latest WH budget

With the release of the fiscal year 2020 budget request, the administration renewed its pushes to cut federal retirement benefits and pay, move away from the general schedule and transfer workforce functions away from the government's central personnel agency.

The White House's latest budget proposed similar cuts to the FY 2019 version, targeting retirement benefits and freezing federal pay.

Proposed retirement cuts include eliminating cost-of-living adjustments for Federal Employee Retirement System retirees, eliminating the special retirement supplement, recalculating the pension formula from the average of an employee's three highest salary years to the five highest, increasing employee retirement contributions by one percent per year and reducing the G Fund interest rate.

The administration expects these changes to reduce spending by about $5.4 billion in fiscal year 2020 and -- combined with cuts to the Federal Employee Health Benefits Program -- almost $179 billion over 10 years.

Bill Valdez, president of the Senior Executives Association, said the proposed cuts and pay freeze would make it harder for government to recruit and retain employees and limit agencies' abilities to carry out their mission.

"On the heels of the longest government shutdown in history, which deeply damaged the government's brand as an employer, this budget sends all the wrong signals to Americans considering jobs serving their country in federal public service," he said.

Tony Reardon, president of the National Treasury Employees Union, called the budget "essentially a blueprint for how to ruin the civil service."

"Clearly the administration learned nothing from the disastrous 35-day shutdown," he said.

As part of its reorganization proposal, the budget lists this series of benefits cuts under the General Services Administration, rather than the Office of Personnel Management.

In the budget, the White House again proposes an OPM overhaul that includes moving OPM's background investigation work to the Department of Defense, policy and strategic function to the White House and transferring "all remaining functions" to the General Services Administration.

Those functions include human resources solutions, retirement services, healthcare and insurance, Office of Inspector General, and merit system accountability and compliance organizations. The Trump administration is looking to push on planning and initial implementation of the OPM-GSA merger in 2019.

Many of the White House's workforce and structural proposals were shot down on the Hill last year, and some of the proposals, particularly those that cut the workforce and benefits, will be more difficult to pass a divided Congress.

The proposed civilian pay freeze for fiscal year 2019 was overturned, and Congress passed a 1.9 percent raise. However, President Donald Trump has yet to issue an executive order to implement the increase. The White House also proposed a $1 billion workforce fund for managers to award workers outside of the typical pay structure, but it was not included in Congress's fiscal year 2019 appropriations.

The proposed merger of OPM and GSA didn't gain much traction in the legislative branch, but that could change.

Robert Shea, a former Office of Management and Budget executive who is now a principal with Grant Thornton, said he was "feeling optimistic that they will get congressional approval" for the merger. "There doesn't appear to be the backlash that I might have expected," he said.

Reader comments

Wed, Mar 20, 2019

My advice (best decision) is to retire and start other interests you did not have time for when working. Yes there is an adjustment period after one retires but that falls in place fast. Remember if you had a great work experience over the years that is fantastic. A number of us started out with long-term goals and most worked out, however we had great bosses who wanted to see us do well and be acknowledged for our expertise and work ethics. Then the new age management minions took over (some political appointees, others just down right egocentric back stabbing minions) and civil service work started to slide downhill fast. This has continued through the policies of both democratic and republican administrations where salaries were frozen, government shutdowns, sequestration, changes in retirement benefits were implemented by the minions in congress and senate along with a collection of inept managers running the show currently. One can be stressed out at work causing serious health consequences or one decides that enough has resulted and time for a change which should bring more contentment in the long run. RETIRE the best medicine possible.

Mon, Mar 18, 2019

A radical idea to save money: 1) term limits for congress and senate; 2) reduce their salaries by 80% and put them in subsidized government housing in south east DC; 3) make them work a 40 hr week; 4) no more fact finding Junkets do you hear this Pelosi and others; 5) no free lunch, gym memberships, hair cuts and dining rooms; 6) reduce their salaries by 15% ever day the government is shutdown.

Fri, Mar 15, 2019

Dont fret, the same cuts have been proposed for years and years just to fizzle out for lack of support.

Wed, Mar 13, 2019

The one billion dollar fund for high performing workers will be diverted to the lazy self-serving management minions who do absolutely nothing for their level of compensation. These funds will be diverted to pay bonuses to managers who demoralize rank and file employees.

Wed, Mar 13, 2019

Why don't the government officials who retire give up their benefits? Why don't we stop giving aid to other countries and take care of our own people? Why make the divide wider, almost out of sight, between 1st and lower class? There is no middle class anymore.

Show All Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above


Edward A. Zurndorfer Certified Financial Planner
Mike Causey Columnist
Tom Fox VP for Leadership and Innovation, Partnership for Public Service
Mathew B. Tully Legal Analyst

Free E-Newsletter


I agree to this site's Privacy Policy.

Stay Connected

Latest Forum Posts

Ask the Expert

Have a question regarding your federal employee benefits or retirement?

Submit a question