Trump's budget takes aim at federal retirement

Shutterstock image: workforce organization chart. 

President Donald Trump's budget proposal identifies almost $150 billion in savings over 10 years by slashing federal employee benefits, but feds and their unions are crying foul.

In fiscal year 2018, the proposal reduces federal retirement benefits by more than $3.3 billion, leaving employees to pick up the tab with an additional $3.2 billion in retirement contributions.

The administration claims the cuts will lead to $76 billion in savings from federal retirement benefits and outlines another $72 billion from increases in required employee contributions.

The administration budget also changes the pension calculation, by averaging an employee's five highest salary years, as opposed the current practice of averaging the three highest.  This would have the effect of reducing pension benefits. Additionally, the budget eliminates annual cost-of-living adjustments under the Federal Employees Retirement System for current employees and for the older Civil Service Retirement System, which covers many current retirees.

The cuts follow a three-month hiring freeze as part of Trump's early actions to fulfill campaign promises to reform the federal workforce.

Mick Mulvaney, director of the Office of Management and Budget, defended the cuts in a May 23 press conference.

"Simply put, we try and make federal retirement closer -- closer to the private sector.  So we've increased the contributions that they make to their 401(k) programs," Mulvaney said. "It's the right thing to do on behalf of the taxpayers," he said.

Mulvaney pointed out that federal retirees will continue to enjoy cost-of-living adjustments in their Social Security benefits.

Rep. Gerry Connolly (D-Va.), who represents a large number of federal workers and contractors and has been a critic of Trump's early workforce actions, called the budget a "dystopian vision" and "yet another attack on federal employees and retirees by cutting their retirement benefits and pay."

Connolly added that cutting benefits and pay will make attracting a young, qualified workforce more difficult. "Cuts of this magnitude will make it impossible to recruit and retain the qualified workforce we need to meet our nation's challenges," he said.

Bill Valdez, president of Senior Executives Association said he wants workforce reform, but he disagreed with administration’s plans, saying that the cuts will make government less effective.

"Rather than reducing pay and benefits, the correct policy should be to understand how the federal government could restructure pay and benefits to better compete with the private sector," he said in a statement. "We may save a little money in the near term, but the American public will ultimately bear the steep costs of a federal workforce without the support and resources necessary to deliver upon missions assigned to them by Congress and the president."

The retirement contribution cuts amount to a 6 percent pay cut, argued J. David Cox Sr., president of the American Federation of Government Employees.

"President Trump's budget continues this race to the bottom by penalizing the working-class people who serve and protect their fellow Americans," Cox said.

Tony Reardon, president of the National Treasury Employees Union, added that "federal employees and retirees cannot continue to be the source of spending solutions for Congress."

About the Author

Chase Gunter is a staff writer covering civilian agencies, workforce issues, health IT, open data and innovation.

Prior to joining FCW, Gunter reported for the C-Ville Weekly in Charlottesville, Va., and served as a college sports beat writer for the South Boston (Va.) News and Record. He started at FCW as an editorial fellow before joining the team full-time as a reporter.

Gunter is a graduate of the University of Virginia, where his emphases were English, history and media studies.

Click here for previous articles by Gunter, or connect with him on Twitter: @WChaseGunter

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Reader comments

Sun, Jun 25, 2017 Rebecca

There are a lot of us Federal Law Enforcement working in the Fed Prisons who MUST retire at age 57. No ifs, ands or buts. Losing that supplement until SS kicks in is a disaster waiting to happen. We'll have a mass exodus of workers in our already strained short-staffed prisons, which makes for increased chances we'll see more officers/staff being murdered by inmates due to short-staffing. Horrible!

Fri, May 26, 2017

"Mulvaney pointed out that federal retirees will continue to enjoy cost-of-living adjustments in their Social Security benefits." He's apparently unaware that CSRS retirees do NOT get Social Security benefits unless they qualified for them in some other employment. Consequently, CSRS retirees will see their annuity decline in real value as costs continue to rise.

Thu, May 25, 2017

Yes, teach us all to save for retirement so that the wealthy can take it away just before we retire and make us the poor as well. Then they can cut more of our benefits so they can tell us its for our benefit, since we are now the poor as well, but then they slash all programs that help the poor. They get richer and we (middle America) just keep getting poorer. Trump is right on his way to privatizing the entire government. I can't wait to see the TRUMP sign go up above the Whitehouse where he becomes our less than benevolent dictator.

Thu, May 25, 2017 Manfred S NC

I think that best why to cut the budget is the force Congress and the president to use the same Trump Care that they are forcing on us. When they leave office, you have the option of paying the COBRA rates or losing healthcare coverage. No more lifetime coverage for the free loaders. Also, when the President , vice-President and Congress leave office, they get NO retirement. No more of this nonsense of serving 4 or 6 years, and then having retirement or healthcare for life. There, the budget is now balanced, and we'll even have a surplus!

Wed, May 24, 2017

It is a well known fact that government employees salaries are do not compare or compete with private industry. Engineers, computer science professionals and nurses are examples and they make far less than those in private industry. I was an engineer for industry and was making double what I am now making as a government employee. I retired for my previous job but these salaries will not attract a young qualified workforce!

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