OPM Proposes Legislation to Cut Retirement Benefits for Current and Former Feds

OPM Proposes Legislation to Cut Retirement Benefits for Current and Former Feds  Posted on May 8, 2018 by postal
Office of Personnel Management Director Jeff Pon wrote a letter to House Speaker Paul Ryan late last week requesting a number of legislative changes that would cut retirement benefits for federal workers.
The request, which Pon said would save taxpayers $143.5 billion over the next decade, comes on the eve of the White House’s planned introduction of $15 billion in spending cuts as part of a rescission package. Pon said his plans, which are a laundry list of previously proposed cuts to federal employee retirement programs, would “bring federal benefits more in line with the private sector.”
Pon wrote that the proposed changes reflect the move by private sector businesses away from defined-benefit pensions in recent years.
source:  Largest Federal Union Assails Trump Administration’s Latest Attack on Working People
Hiding wage and retirement cuts in defense bill is politics at its worst
WASHINGTON – American Federation of Government Employees National President J. David Cox Sr. issued the following statement in response to new legislative proposals that the Office of Personnel Management has submitted to Congress:
“President Trump’s war on working people knows no limits. As Wall Street shareholders are reporting record profits and the wealthiest 1 percent are basking in their massive tax cuts, President Trump believes the career employees who keep the government running deserve another cut, this time to their retirement.
“Federal offices across the country are struggling to recruit and retain workers because federal wages and benefits are falling further behind the private sector. Yet the Trump administration wants to freeze employees’ wages next year and now is proposing to take away the retirement benefits they’ve worked a lifetime to earn.  “Legislative proposals submitted to Congress by Office of Personnel Management Director Jeff Pon would cut $143.5 billion in wages and benefits from current and retired workers over the next 10 years. That’s on top of the $246 billion in cuts to wages and benefits that have been made this decade, including next year’s proposed pay freeze.
“These proposed cuts come at a time when federal employees lag further and further behind their private-sector counterparts in comparative compensation. Federal employees today bring home 5 percent less than they did at the start of the decade, when adjusted for inflation, and they earn roughly one-third less than they would make doing comparable work in the private sector.
“The Trump administration wants to force current federal workers to pay substantially more into their retirement accounts while cutting the size of those benefits for current and future retirees. Plus, the administration would eliminate retirement payments that go to law enforcement officers and other workers who retire before Social Security kicks in.
“While the proposals themselves are bad enough, so is the way the administration is trying to ram them through Congress. The administration wants these proposals attached to the Department of Defense’s fiscal 2019 authorization bill, even though these changes would affect all current and retired federal employees. This is an insidious attempt to trick the American public and polarize members of Congress who support federal workers.
“These shameful proposals must be rejected outright. The women and men who keep our government running every day should be able to earn a decent living while they’re working and be able to retire with the benefits they earned and were promised.”
From OPM:
I have enclosed legislative proposals for consideration of the Congress. OPM is responsible for administering the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) under chapters 83 and 84 of title 5, United States Code, respectively. These programs serve nearly 2.6 million Federal retirees and survivors who receive monthly annuity payments. These legislative proposals would amend chapters 83 and 84 oftitle 5, United States Code, to bring Federal benefits more in line with the private sector  Feds
Posted on May 8, 2018 by postal
Office of Personnel Management Director Jeff Pon wrote a letter to House Speaker Paul Ryan late last week requesting a number of legislative changes that would cut retirement benefits for federal workers.
The request, which Pon said would save taxpayers $143.5 billion over the next decade, comes on the eve of the White House’s planned introduction of $15 billion in spending cuts as part of a rescission package. Pon said his plans, which are a laundry list of previously proposed cuts to federal employee retirement programs, would “bring federal benefits more in line with the private sector.”
Pon wrote that the proposed changes reflect the move by private sector businesses away from defined-benefit pensions in recent years.
source:  Largest Federal Union Assails Trump Administration’s Latest Attack on Working People
Hiding wage and retirement cuts in defense bill is politics at its worst
WASHINGTON – American Federation of Government Employees National President J. David Cox Sr. issued the following statement in response to new legislative proposals that the Office of Personnel Management has submitted to Congress:
“President Trump’s war on working people knows no limits. As Wall Street shareholders are reporting record profits and the wealthiest 1 percent are basking in their massive tax cuts, President Trump believes the career employees who keep the government running deserve another cut, this time to their retirement.
“Federal offices across the country are struggling to recruit and retain workers because federal wages and benefits are falling further behind the private sector. Yet the Trump administration wants to freeze employees’ wages next year and now is proposing to take away the retirement benefits they’ve worked a lifetime to earn.  “Legislative proposals submitted to Congress by Office of Personnel Management Director Jeff Pon would cut $143.5 billion in wages and benefits from current and retired workers over the next 10 years. That’s on top of the $246 billion in cuts to wages and benefits that have been made this decade, including next year’s proposed pay freeze.
“These proposed cuts come at a time when federal employees lag further and further behind their private-sector counterparts in comparative compensation. Federal employees today bring home 5 percent less than they did at the start of the decade, when adjusted for inflation, and they earn roughly one-third less than they would make doing comparable work in the private sector.
“The Trump administration wants to force current federal workers to pay substantially more into their retirement accounts while cutting the size of those benefits for current and future retirees. Plus, the administration would eliminate retirement payments that go to law enforcement officers and other workers who retire before Social Security kicks in.
“While the proposals themselves are bad enough, so is the way the administration is trying to ram them through Congress. The administration wants these proposals attached to the Department of Defense’s fiscal 2019 authorization bill, even though these changes would affect all current and retired federal employees. This is an insidious attempt to trick the American public and polarize members of Congress who support federal workers.
“These shameful proposals must be rejected outright. The women and men who keep our government running every day should be able to earn a decent living while they’re working and be able to retire with the benefits they earned and were promised.”
From OPM:
I have enclosed legislative proposals for consideration of the Congress. OPM is responsible for administering the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) under chapters 83 and 84 of title 5, United States Code, respectively. These programs serve nearly 2.6 million Federal retirees and survivors who receive monthly annuity payments. These legislative proposals would amend chapters 83 and 84 oftitle 5, United States Code, to bring Federal benefits more in line with the private sector

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OPM announces new regulations for weather-related leave

By Amelia Brust   April 10, 2018 11:17 am 2 min read
New weather and safety leave regulations from the Office of Personnel Management are cutting off teleworkers in most instances.
The regulations, announced announced Tuesday, said that employees who participate in a telework program will usually not be granted weather and safety leave.
“Because employees who are participating in a telework program under applicable agency policies are typically able to safely perform work at their approved locations (e.g., their homes), such an employee will generally not be granted weather and safety leave,” the announcement said.
Under the Administrative Leave Act of 2016, agencies may grant weather and safety leave due to an “act of God”, a terrorist attack or other emergency condition which prevents employees from safely traveling to or performing work at the office or other work site. In an attempt to restrict leave permissions — which Congress determined to be too broad and overused — the legislation broke OPM’s leave permissions into three primary categories: Administrative, investigative and notice, and weather and safety.
The new regulations take effect May 10 — 30 days from the time of publication — according to the Federal Register. An exception is if the agency determines a teleworking employee could not “reasonably have anticipated” the disruptive conditions and could not prepare to telework productively.
OPM also said it expected a delay in the enforcement of agencies reporting weather and safety leave separately from other administrative leave until 270 days after the regulations were published.
Interagency working group to reconvene
OPM also announced its interagency working group for dismissal and closing procedures would reconvene to update the agency’s “Washington, DC, Area Dismissal and Closure Procedures.”
OPM made no changes to these guidelines so far this year. But Tuesday’s announcement said the working group will help incorporate the new weather and safety leave regulations into the closure procedures for D.C. area employees.
Currently the procedures promote incorporating telework into agencies’ emergency plans and likewise recommend taking steps to ensure those employees can access IT systems and networks without posing cybersecurity risks.

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New OPM Director Echoes Calls for Civil Service Reform

Published: April 4, 2018
More in: Fedweek
“Piecemeal” changes won’t cut it: Newly installed OPM director Jeff Pon has reiterated the administration’s call for fundamental changes to civil service policies, saying that “We’d like to do a lot of different changes, not at the piecemeal level but as a whole.”

In an introductory video message to federal employees, Pon said, “We will come up with different types of personnel systems for occupations. There are a lot of occupations out there that desperately need a whole entire system. It’s not just about time to hire, it’s not just about how much they get paid, it’s the entire thing.”

He did not provide further details, but the overall message reflects language in the White House’s budget proposal and in the more recently published President’s Management Agenda calling for an overhaul of the Civil Service Reform Act, the basic set of federal personnel laws, now 40 years old.

Numerous exceptions and work-arounds have been carved out of that law over the years in response to special needs for certain occupations or agencies. Pon did not specify which occupations he considers in need of separate systems, but IT-related positions in particular have been cited as an area where the government has particular trouble recruiting and retaining employees. That’s in part because salaries are not competitive with the private sector’s and in part because of inferior career development and advancement opportunities.

Pon and Michael Rigas, the new deputy director, also mentioned revising policies to better fit a more mobile workforce in which employees may move in and out of government many times over a career, in comparison with the traditional model of spending many years, if not an entire career, with the government. That also was not detailed. They further did not mention White House proposals to strengthen management’s hand in disciplinary actions and to lessen union rights, also potential elements of a widescale civil service reform.

They said that under their leadership OPM would stress improvements in its information technology and continuing the shift from paper-based operations to digital, in order to improve OPM services to agencies and to employees. In the latter category they mentioned speeding up processing of retirement applications, which OPM has struggled with for many years.

 

“Piecemeal” changes won’t cut it: Newly installed OPM director Jeff Pon has reiterated the administration’s call for fundamental changes to civil service policies, saying that “We’d like to do a lot of different changes, not at the piecemeal level but as a whole.”

In an introductory video message to federal employees, Pon said, “We will come up with different types of personnel systems for occupations. There are a lot of occupations out there that desperately need a whole entire system. It’s not just about time to hire, it’s not just about how much they get paid, it’s the entire thing.”

He did not provide further details, but the overall message reflects language in the White House’s budget proposal and in the more recently published President’s Management Agenda calling for an overhaul of the Civil Service Reform Act, the basic set of federal personnel laws, now 40 years old.

Numerous exceptions and work-arounds have been carved out of that law over the years in response to special needs for certain occupations or agencies. Pon did not specify which occupations he considers in need of separate systems, but IT-related positions in particular have been cited as an area where the government has particular trouble recruiting and retaining employees. That’s in part because salaries are not competitive with the private sector’s and in part because of inferior career development and advancement opportunities.

Pon and Michael Rigas, the new deputy director, also mentioned revising policies to better fit a more mobile workforce in which employees may move in and out of government many times over a career, in comparison with the traditional model of spending many years, if not an entire career, with the government. That also was not detailed. They further did not mention White House proposals to strengthen management’s hand in disciplinary actions and to lessen union rights, also potential elements of a widescale civil service reform.

They said that under their leadership OPM would stress improvements in its information technology and continuing the shift from paper-based operations to digital, in order to improve OPM services to agencies and to employees. In the latter category they mentioned speeding up processing of retirement applications, which OPM has struggled with for many years.

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OPM Details Benefits Proposals Ahead of 2019 Budget Proposal

Published: March 14, 2018
More in: Issue Briefs
Following is the section of a document OPM has sent to Congress in support of its fiscal 2019 budget proposal addressing federal pay and benefits-related proposals outlined in the recent government-wide budget plan from the White House.
OPM prepares various legislative proposals during the preparation of its annual budget submission, which align with the strategic goals and objectives of the agency. OPM designs these proposals to enhance and improve its programs, increase efficiency in executing these programs, and reduce overall costs for the Government.
The Federal Government, with annual civilian personnel costs of almost $300 billion, should seek an optimally sized and skilled workforce operating out of locations best suited to accomplish its various missions.
OPM offers several proposals to begin to bring Federal total compensation more in line with the private sector. In addition, OPM will be working on an effort to begin to research and explore the potential benefits, including the recruitment benefit, of moving to a defined-contribution only annuity benefit for new Federal workers, and those desiring to transfer out of the existing hybrid system.
OPM is proposing legislative reform for the Federal Employees Health Benefits Program as well as retirement benefits. The FY 2019 legislative proposals for OPM are:
Federal Employees Health Benefits (FEHB)
Medical Liability Reform
The medical liability reform proposal would:
1) cap awards for noneconomic damages at $250,000 which will be indexed for inflation;
2) shorten the statute of limitations to three years from the date of discovery of an injury;
3) establish a fair-share rule to replace the current rule of joint-and-several liability;
4) allow evidence of claimants’ income from collateral sources to be introduced at trial; and
5) allow courts to modify attorney’s fee arrangements.
In addition, the proposal would provide safe harbors for providers based on clinical standards; encourage the creation of expert panels and administrative health care tribunals, exclude provider expressions of regret or apology from evidence, and require courts to honor a request by either party to pay damages in periodic payments for any award over $50,000.
If enacted, the Administration’s medical liability reform proposal would affect the FEHB Program beginning in 2021. Capping awards and shortening the statute of limitations could potentially reduce costs for malpractice insurance carriers. Additional costs to carriers are reflected in malpractice insurance premiums.
Therefore, this proposal has the potential to lower malpractice insurance premiums, which in turns lowers healthcare costs overall. In addition, these reforms have the potential to reduce unnecessary healthcare utilization, or ‘defensive medicine,’ also reducing healthcare costs.
Modify the Government Contribution Rate Based on Plan Performance
Consistent with OPM’s strategic objective to improve healthcare quality and affordability in the FEHB Program, the government contribution formula would be revised to encourage enrollment in high performing health plans to achieve savings. This proposal would revise the government contribution rate to base it on a plan’s score from the FEHB Program Plan Performance Assessment.
The base Government contribution will be 70 percent of the weighted average FEHB premium up to 75 percent of an individual plan’s premium, whichever is less. This amount would then be further adjusted based on the performance score.
Under this proposal, FEHB plans would be divided into three groups representing lower performing plans, plans scoring within an expected range, and higher performing plans. Plans performing in the middle range would receive the base Government contribution. The percentage of premium paid by the Government will be increased or decreased by 5 percent for each individual plan in the top and bottom ranges, respectively.
This proposal would incentivize enrollees to select high performing, high value plans by making them more affordable while simultaneously saving the government approximately 2 percent in premium contributions based on performance scores, enrollment, and rates.
Provide OPM Authority to Incorporate Provisions of the Anti-Kickback Act to the FEHB Program
This proposal would provide OPM the discretion to apply provisions of the Anti-Kickback Act to the FEHB Program. Providing OPM the authority to incorporate provisions of the Anti-Kickback Act will allow the FEHB Program to prohibit kickbacks, if deemed necessary.
Modify Existing Statute on Indemnity Benefit Plans in FEHB
This legislative change clarifies that an insurer offering the Indemnity Benefit Plan in FEHB does not need to be licensed in all states and the District of Columbia.
Provide Tax Preemption for Federal Employee Dental/Vision Program
This proposal provides a technical change to align FEDVIP with other Federal benefit programs and makes it clear that States taxes and fees may not be imposed on FEDVIP carriers.
Retirement and Government-wide Proposals
Change Retirement Calculation from High-3 Years to High-5 Years
This legislative proposal would change the annuity benefit calculation of future retirees. Rather than using the current average of a Federal employee’s three highest salary-earning years (High-3), the calculation would use the highest five consecutive salary years.
The financial impact of utilizing the High-5 average salaries versus the High-3 for all new FERS retirees would create a savings to the Government of approximately $5.9 billion over ten years. Annual savings are projected to reach approximately $944 million in FY 2028, and are expected to continue to grow, as an increasing number of retirees would receive annuity benefits under this new calculation.
Eliminate FERS COLA, Reduce CSRS COLA by 0.5 Percent
This legislative proposal would eliminate cost of living adjustments (COLA) for current and future FERS retirees. Under current law, FERS retirees (starting at age 62) receive a full COLA if the Consumer Price Index (CPI) is up to 2 percent and up to 1 percent less than the change in the CPI if the change is more than 2 percent. This legislative proposal would change the policy, by eliminating the FERS COLA, and reducing the COLA for CSRS retirees by 0.5 percent. Approximately 75 percent of current retirees receiving benefits are from the CSRS population.
The financial impact of this proposal would create a savings to the Government of approximately $13.0 billion over five years and $50.2 billion over ten years.
Eliminate the FERS Annuity Supplement
This legislative proposal would eliminate the annuity supplement FERS retirees receive until the reach age 62, the age when they become eligible for Social Security. It would apply to all new FERS retirees.
The financial impact of eliminating the Annuity Supplement for FERS retirees would create a savings to the Government of approximately $18.7 billion over ten years.
Increase Employee Contributions to 50 Percent of Cost, Phased in at 1 Percent per year
This legislative proposal would increase Federal employee contributions to the Federal Employees Retirement System (FERS) such that an employee and employer would each pay half the normal cost. Under current law, Federal employees contribute between 0.8 percent and 4.4 percent of their salary towards their Federal pension. Federal agencies contribute the remainder of the normal cost. To mitigate the impact on employees, this provision would be phased in over several years, with individuals contributing an additional one percent of their salary each year until equalized.
The financial impact of this proposal would create a savings to the Government of approximately $2.3 billion in the first phased-in year, approximately $21.4 billion over five years, and approximately $68.7 billion over ten years.
Convert to a “Paid Time Off” Leave Model
At this time, a Federal employee with less than three years of service earns 13 paid vacation days each year. An employee with 3 to 15 years of service earns 20 vacation days and an employee with more than 15 years earns 26 vacations days annually. All employees, regardless of the number of years of service, earn 13 paid sick days each year that can be used if the conditions for use of sick leave are met. By combining Federal vacation and sick leave into a Paid Time Off plan, similar to that offered by some large, private sector employers, Federal employees would gain flexibility in how total leave balances are spent. This proposal would reduce the total number of leave days accrued by an employee annually, while adding a short-term disability insurance policy to protect employees who experience a serious medical situation or other eligible short-term disability event.
Scale Back Time-Based Pay Progression
The General Schedule (GS) pay system covers roughly 70 percent of Federal civilian employees. Separate pay systems cover other employees, such as senior executives and blue-collar workers.
The GS pay system consists of 15 pay grades and 10 steps within each grade. The standard within-grade (step) increase requires completion of a waiting period and certification that the employee is performing at an acceptable level of competence. Since almost all employees are certified as meeting the required minimum level of performance, standard within-grade increases are virtually automatic.
This proposal would slow longevity-based progression through the 10-step GS pay scale by adding one year to each within-grade increase waiting period. Thus, the waiting periods would be two years (instead of one year) for progression to steps 2, 3, and 4; three years (instead of two years) for progression to steps 5, 6, and 7; and four years (instead of three years) for progression to steps 8, 9, and 10.
This proposal would curtail wage growth based on longevity of service by increasing the amount of time it takes an employee receiving only standard within-grade increases to progress from step 1 to step 10 —from 18 years in the current system to 27 years.

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