FULLY INFORMED DECISIONS

Transcription

1 FULLY INFORMED DECISIONS

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3 Major Retirement Legislation

4 Major Retirement Legislation 1920 CSRS 1935 Social Security 1984 CSRS>Soc Sec 1987 FERS retro to 1984 hire

5 Social Security Trust Fund Old-Age and Survivors Insurance (OASI) Disability Insurance (DI)

6 Wall Street Journal June 7, 2018 The Social Security Trust Fund Goes Bust The downward spirals have begun. The combined Social Security trust funds one for disability, one for retirement as well as Medicare s hospitalinsurance trust fund, will begin eating into their reserves this year, according to reports released this week by the programs trustees.

7 Civil Service Retirement and Disability Fund (CSRDF)

8 Civil Service Retirement and Disability Fund (CSRDF)

9 The President s 2019 Budget

10 The President s 2019 Budget The CSRDF covers two Federal civilian retirement systems: The Civil Service Retirement System (CSRS) established on May 22, 1920, and the Federal Employees Retirement System (FERS) established on June 6, The Retirement Fund is a single plan even though there are two different benefit tiers and funding methods. (page1104)

11 The President s 2019 Budget: CSRDF Financing Balance start of year $879,824,000,000 $897,661,000,000 $915,956,000,000 Balance end of year $897,661,000,000 $915,956,000,000 $929,832,000,000

12 The President s 2019 Budget: CSRDF Financing Money into CSRDF $101,724,000,000 $103,371,000,000 $102,364,000,000 Money paid out of CSRDF $ 83,887,000,000 $ 85,076,000,000 $ 88,488,000,000

13 Projected Income and Expenses of the Civil Service Retirement Fund (Combined CSRS and FERS Systems - $Billions) Fiscal Year Income Expenses Assets end-of-year , , , , , , , , , (2015 CRS report)

14 May 4, 2018 OPM to Paul Ryan Proposed Legislation

15 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Eliminate FERS Special Annuity Supplement Increase CSRS and FERS Average Pay to Five Years Increase FERS Employees Contribution Rate Reduce CSRS Retiree Cost of Living Adjustments Eliminate FERS Retiree Cost of Living Adjustments

16 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation OPM estimates that the interactive savings of enacting these proposals together to be $143,509,000,000 over ten years.

17 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation They call the $143,509,000,000 savings. Is it savings to Letter Carriers and other federal employees?

18 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation WHY? Why reduce retirement benefits of Federal and Postal employees?

19 Projected Income and Expenses of the Civil Service Retirement Fund (Combined CSRS and FERS Systems - $$$Billions) Fiscal Year Income Expenses Assets end-of-year , , , , , , , , , (2015 CRS report)

20 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation WHY? Do we know why they want to reduce our retirement income?

21 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Yes

22 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Consistent with the goal of bringing Federal retirement benefits more in line with the private sector, adjustments to reduce the long term costs associated with these benefits are included in these legislative proposals.

23 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation the goal of bringing Federal retirement benefits more in line with the private sector... Will these legislative proposals accomplish that goal?

24 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Yes

25 Wall Street Journal June 22, 2018 A Generation of Americans is Entering Old Age the Least Prepared in Decades Americans are reaching retirement age in worse financial shape than the prior generation, for the first time since Harry Truman was president. This cohort should be on the cusp of their golden years. Instead, their median incomes including Social Security and retirement-fund receipts haven t risen in years, after having increased steadily from the 1950s.

26 Wall Street Journal June 22, 2018 A Generation of Americans is Entering Old Age the Least Prepared in Decades Americans are reaching retirement age in worse financial shape than the prior generation, for the first time since Harry Truman was president. This cohort should be on the cusp of their golden years. Instead, their median incomes including Social Security and retirement-fund receipts haven t risen in years, after having increased steadily from the 1950s.

27 An estimate of your share of the annual $143,509,000,000 savings

28 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Increase FERS Employees Contribution Rate (assume retiree worked 15 years under higher rate) Current 8/10 of 1% x $60,000 Proposed 7.25% x $60,000 = $480 annually = $4,350 annually $4,350 - $480 x 15 years = $58,500 increase in dollars paid into CSRDF by employee

29 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Increase CSRS and FERS Average Pay to Five Years (assume retiree has 30 years service, and lives 30 years in retirement) Hi-3 = 61,000, 60,000, 59,000 average 60,000 Hi-5 = 61,000, 60,000, 59,000, 58,000, 57,000 average 59,000 Difference is $1,000 x 30% = $300 x 30 years= $9,000 reduction in pension income

30 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Eliminate FERS Special Annuity Supplement (assume retirement at age 57) $15,000 x 5 years = $75,000 reduction in pension income

31 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Eliminate FERS Retiree Cost of Living Adjustments (assume retiree lives 30 years in retirement and 2% annual inflation) Annual Pension = $18,000 x 2% = $360 2 nd year = $18,360 x 2% = $367 Compounded for 30 years =$204,829 reduction in pension income

32 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Eliminate FERS Retiree Cost of Living Adjustments (assume retiree lives 30 years in retirement and 8% annual inflation) Annual Pension = $18,000 x 7% = $1,260 2 nd year = $18,360 x 2% = $ 1,348 Compounded for 30 years =$1,279,314 reduction in pension income

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34 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation Eliminate FERS Special Annuity Supplement - $75,000 Increase CSRS and FERS Average Pay to Five Years - $ 9,000 Increase FERS Employees Contribution Rate - $58,500 Eliminate FERS Retiree Cost of Living Adjustments - $204,829

35 Total Loss of Income: May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation $347,329

36 May 4, 2018 OPM to Paul Ryan CSRS/FERS Proposed Legislation The Office of Management and Budget (OMB) has advised there is no objection to the transmittal of these legislative proposals to the Congress and that their enactment would be in accord with the program of the President.

37 Questions?

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