WASHINGTON—Two top federal worker unions and a federal employee retiree group are blasting a Trump administration plan to cut pensions for past and present federal workers by $143.5 billion over the next decade.
The cuts, which would hit retirees as well as current feds, would – combined with Trump’s pay freeze – also harm future hiring, adds J. David Cox, president of the Government Employees (AFGE).
And that’s important because the Baby Boom generation is reaching retirement age, including among federal workers, leaving tens of thousands of vacancies to fill. The alternative is to see needed tasks ranging from air traffic control to serving vets to policing borders go unmet for lack of workers.
Taken together, the pay freeze and pension cuts are part of Trump’s “war on working people,” Cox said.
“Federal offices across the country are struggling to recruit and retain workers because federal wages and benefits are falling further behind the private sector,” he added. “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.”
Trump’s new director of the Office of Personnel Management, the executive agency that oversees and directs the civil service, outlined the proposed cuts in a May 7 letter to House Speaker Paul Ryan, R-Wis. Ironically, OPM chief Jeff Pon did so during an annual week recognizing federal workers. Trump lauded federal workers with faint praise – and then promptly said they must be more efficient.
Trump’s cut is in line with past presidential demands, which Congress acceded to, to freeze federal pay and make current federal workers contribute even more into the Treasury for their pensions. Those payments, totaling $182 billion, were applied to reducing the federal deficit – and the workers were told they would not get corresponding increases in future pension payments.
But Trump’s cut is different because it would hit current retirees, too. And the letter to Ryan said the “savings” from the workers’ and retirees pension payments, combined with Trump’s proposed cuts in domestic spending programs, would be used to allegedly reduce the federal budget deficit.
Pon cloaked the cut in reasoning that said, in so many words, that because private firms are cutting pensions and shifting from traditional defined benefit plans to 401(k)s and defined contribution plans – which pay out less and load risk onto workers – the federal government should do so, too. In short, a race to the bottom, though Pon did not say so.
“The employee retirement landscape continues to evolve as private companies are providing less compensation in the form of retirement benefits,” Pon wrote Ryan. “The shift away from defined-benefit programs and cost of living adjustments is part of that.”
Trump also wants to kill the cost of living hikes federal retirees now get.
“By comparison, the federal government continues to offer generous retirement benefits,” Pon claimed. “Consistent with the goal of bringing federal retirement benefits in line with the private sector, adjustments to reduce the long-term costs” of the retirement benefits – fancy language for cutting future payments to present workers and pensioners – “are included in these proposals.”
The cuts to the pensioners come in the base for each monthly payout. Right now, each retiree’s pension payment is based on his or her average salary for the highest three years of pay, times how many years the worker toiled. Trump would change the average to the highest five years of pay, thus lowering it.
He also would kill the cost of living increases for retirees.
Besides Cox, Jeff Thissen, head of the National Active and Retired Federal Employees Association, blasted the Trump scheme. He called Trump’s proposal “especially disappointing” at the start of Public Service Recognition Week.
Trump’s proclamation of the annual week contained the criticism of the workers –- unlike proclamations from prior presidents of both parties. He’s previously charged the civil servants are part of the “deep state” seeking to undermine him.
“In exchange for years of hard work over long careers, our government made a commitment to middle class federal and postal workers that they would receive federal pensions in retirement. Those pensions are not gifts,” Thissen said.
“Diminishing their value in any way for those who have already earned them – including by eliminating or reducing COLAs, altering how they are calculated, or eliminating an entire element of the pension – fails to honor the basic commitments made to our public servants.”
“These are benefit cuts for the sake of benefit cuts. They are nothing less than a direct attack on our nation’s public servants, particularly troubling because they come at a time when the Trump administration touts a strong economy and rising private sector growth.”
Congress has yet to weigh in on Trump’s new plan. The last time it discussed federal worker pensions – briefly – was during last year’s budget debate. Rep. Jim McGovern, D-Mass., put a letter in the record, from Treasury Employees President Tony Reardon, opposing pension cuts. Reardon expanded on the issue a May 9 letter to lawmakers.
“Federal employees are middle class workers who can ill afford a 6 to 7 percent take-home pay cut, during a time a formal pay freeze has already been proposed by the adminis-tration,” he wrote to the leaders of a House committee that would handle the Trump proposal.
Reardon noted federal retirees under one of the pension systems, the Federal Employee Retirement System, take home an average of $1,100 monthly. Trump’s cut would shrink that sum
“The proposals are yet another attempt to try to cut the deficit by inflicting serious financial harm on secretaries, park rangers, customer service representatives, law enforcement personnel, physicians, scientists, accountants, inspectors and anyone who works on our nation’s security, the health and safety of the public, and the stability of our economy.”
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