President Trump’s Budget Proposes Major Cuts to Federal Retirement System
Released today, President Donald Trump’s fiscal 2018 budget proposes a series of cuts to the federal retirement system that would significantly impact current retirees and employees, plus future federal employees, according to federal financial experts.
The complete budget proposal details $3.6 trillion in cost reductions over the next 10 years. This includes changes to the federal retirement system that would save the government more than $4.1 billion in 2018 and at least $149 billion over the next 10 years, reports Federal News Radio.
Office of Management and Budget Director Mick Mulvaney briefed reporters on the budget Monday and stated that proposed cuts to federal employee retirement benefits were one of the top four areas the country could save money.
The proposed cuts include a reduction in cost of living adjustments for retirees, and an increase in employee contributions to the Federal Employees Retirement System.
Specifically, the budget calls for:
- An increase in employee contributions by 1 percent each year for the next six years
- An elimination of the cost-of-living adjustment (COLA) for current and future Federal Employee Retirement System (FERS) participants,
- Cutting the COLA by 0.5 percent for Civil Service Retirement System (CSRS) participants of what the typical formula currently allows.
Yet, Mulvaney insists these budget proposals fulfill the President’s campaign promise to not harm retirement programs.
“[Trump] said, ‘I promised people on the campaign I would not touch their retirement and we would not touch their Medicare,’ and we don’t do it,” Mulvaney said.
Bill Valdez, president of the Senior Executives Association, voiced concern for the cuts and disagreed with Mulvaney’s comments in a statement Monday afternoon.
“The administration cannot balance the federal budget on broken promises to federal workers,” Valdez said. “In fact, these proposals will only damage employee morale and productivity and also have the unintended consequence of discouraging young talent from considering public service, because they will view Uncle Sam as an unreliable employer. I encourage the administration to reconsider these shortsighted proposals and focus their attention to true drivers of the nation’s debt.”
While the president’s budget proposal is merely a suggestion, and congressional appropriations committees still have to review and offer their own suggestions, several federal employee groups fear what a Republican White House and Congress could do to the federal retirement system.
Posted in From the Hill
Tags: budget, retirement, CSRS, SEA, OMB, Office of Management and Budget, Senior Executives Association (SEA), Federal Employees Retirement Systems, COLA