Pay & Benefits Watch

Erich Wagner | March 7, 2018 | 0 Comments

Retirement Backlog Continues to Grow, Compensation Fund in Budget Won’t Be for Raises, and More

The annual flood of federal employee retirement claims spilled into February this year, as the Office of Personnel Management’s retirement backlog topped the 24,000 mark.

There were 13,290 new retirement claims filed last month, which marks a slight decrease from the 14,590 requests made in January, when the number of people leaving the federal civil service reaches its peak most years. But that figure is well above the total for the same time period in 2017, when only 9,114 people filed for retirement.

Although OPM increased the number of claims it processed last month, completing 9,532 requests over January’s 8,638, it barely made a dent in the backlog, which increased by nearly 4,000 to a total of 24,225. The agency’s monthly average processing time decreased from 63 days in January to 46 days. 

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The higher-than-usual February figures come after a month filled with gloomy policy proposals affecting federal employees. President Trump’s fiscal 2019 budget request included a pay freeze for all civilian feds, as well as a number of significant cuts to retirement programs.

Among other proposals, the budget also would increase employees’ contribution to their defined benefit pension through the Federal Employees Retirement System by 6 percent, phased in over six years; reduce cost of living adjustments for Civil Service Retirement System employees and retirees by 0.5 percent, and eliminate COLAs altogether for FERS beneficiaries; and eliminate a supplement for FERS employees who retire before Social Security kicks in at age 62.

On Tuesday, a senior administration official shed some light on one pay proposal in Trump’s fiscal 2019 budget proposal. At a GovExec Live event, Sara Ratcliff, executive director of the Chief Human Capital Officers Council, said that, contrary to language in budget documentation, a proposed $1 billion fund to implement pay for performance at federal agencies would primarily go toward developing programs to improve performance, not raises and bonuses for high performers.

“[The fund is] a recognition that there is a different way to manage performance from the traditional automatic step increase,” Ratcliff said. “It gives the agencies and the chief human capital officers in particular a great opportunity to come forward with very forward-leaning ideas.”

The fund puzzled federal employee groups and observers of workforce issues, who said the chances of it becoming a reality were slim. The pay freeze on the other hand, is more likely, the groups said. 

Officials at the Thrift Savings Plan, the federal government’s 401(k)-style retirement savings program, said last week that they were able to confirm some additional details for another proposal in the White House’s budget plan: changing the rate of return for the G Fund.

The portfolio, which is made up of government securities, is currently statutorily set to provide a 2.75 percent annual return on investment. But Trump’s budget slashes that rate to track the interest rate of an unspecified short-term Treasury bill.  On Feb. 26, TSP spokeswoman Kim Weaver said the Office of Management and Budget confirmed to agency officials that the proposal would use the four-week T-Bill, which currently sports a 1.43 percent rate of return.

The TSP, which is independent from the White House, strongly opposes this plan, arguing it would make the fund “virtually worthless.” But Weaver said at this point, officials are in a holding pattern, waiting to see if lawmakers choose to take up the measure.

“OMB says it’s based on the four-week rate, and at this point we just have to wait and see if it appears in a bill somewhere,” Weaver said. “We just have to monitor it with vigilance.” 

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