The House of Representatives is taking a major step toward repealing windfall reduction provisions and government pension offset provisions.
While it will take Senate intervention to finally bring a knife to the heart of WEP/GPO, Congressional support may come at just the right time.
The number of Civil Service Retirement System (CSRS) retirees and survivors affected by the repeal is reaching its peak, according to data collected by Federal News Network. As of fiscal year 2022, the number of active employees under the CSRS was 44,000, according to the most recent data available from the Office of Personnel Management. The number is definitely lower now.
Meanwhile, the number of Federal Employees Retirement System (FERS) retirees will soon exceed the number of CSRS retirees.
Tammy Flanagan, a federal retirement expert and president of Retire Federal, said the history of the WEP/GPO effort is filled with failed repeal attempts.
“It’s very promising, but I don’t know how it’s going to go this time. It comes with a price tag, so I think it may or may not pass. Maybe there will be some amendments in the Senate that will give us a better chance.” I think it might be,” Flanagan said in an interview with Federal News Network. “For some people, my husband, for example, I think it’s good to have full Social Security without any reductions, but do we need it to survive? No. But there are some people who can’t retire because of it, mainly widows and women who haven’t worked outside the home for years, so there has to be some kind of relief for them because of this windfall clause and certainly government pensions. They are most affected by offsets.I think the amendment would be easier to pass, but this bill that is being introduced in Congress repeals the amendment and repeals it all at once.”
While the future of WEP/GPO remains in the hands of lawmakers, Congressional Research Service data showed some other trends in federal retirement.
For example, the average retirement age for federal employees has gradually increased since 1990. In 1990, the average retirement age for federal employees was 61.3 years. According to CRS research, he is now 63.6 years old.
Mr Flanagan said there could be two reasons for the rise in retirement ages.
First, she said, when the program first began, it was instilled in many FERS participants that they would never have enough money to retire.
“Some of our FERS employees really understood late in their careers the importance of investing, saving, managing volatility, and all the things you need to know to have a source of income in retirement. “I think some of our employees can’t afford to retire at 57,” she said. “We now have a large number of federal employees who join the government later in life, probably because they spent part of their careers in the private sector and didn’t have a pension, and they didn’t have lifelong health insurance. They’re coming to make up for lost time. They probably started working in the federal workforce in their 50s, and they want to stay in the workforce for 15 to 20 years. So these days, many more are working until they’re 70. It will be.”
Additionally, people generally want to live longer, be healthier, and contribute longer in the workplace and society. According to a 2022 Gallup study, the average retirement age in the United States is 61, an increase of four years since 1991.
Additionally, Gallup found that men are retiring for longer, at 18.6 years and women at 21.3 years, up from 12.8 and 16.6 years, respectively.
“I was very interested to see all these statistics, and it’s hard to believe, but there are 2,535 retirees over the age of 100. What’s even more interesting is that there are 2,535 retirees who are over 100 years old. These are the people who lived longer than the people who lived longer than them.” So you’re basically their spouses. We have 4,000 people over 100 years old. So I think there’s a good reason why OPM writes a little happy birthday note when a retiree turns 100. Make sure the person is actually still alive,” Flanagan said. “To me, the number of retirees over that age is an astonishing number. If you compare survivor pensioners to employee pensioners, the number of people over 90 alone is close to 100,000. So the federal retirees live longer, which suggests good things for federal careers.”
Male retirees will say they earn more than they did when they were working as CSRS retirees. The average monthly income for people in the old system is about $4,464, and the median monthly income is $3,897, according to the data.
Flanagan said that while the overall monthly income for FERS employees may be low, many he spoke with were more than satisfied with the program.
“FERS was never meant to exist on its own, so all of its employees might feel sorry for them and say, ‘Oh, look at that little pension.’ But these are people who have $1 million in a frugal savings plan. Because they receive the FERS supplement, which replaces Social Security, they can retire at a relatively young age. So FERS was always intended to be this three-level system. And as much as we see today that FERS employees are every bit as good financially as CSRS employees, we really didn’t want to go back to FERS. “Whatever Congress does, it has to be good for the government, not good for us,” she said in 1987. “We had negative thoughts about FERS, but it turned out to be a very good system. It gives us more flexibility and more control over our retirement income sources. I really like how it turned out. I don’t think many employees would go back to CSRS if they had the choice, because at least we still have a pension.”
Speaking of pensions, the Social Security Administration is expected to announce cost-of-living increases (COLA) for retirees as early as next week.
Although CSRS employees have traditionally received higher cost of living increases, their COLAs have remained the same eight times in the past 11 years.
Flanagan said the states with the highest numbers of federal retirees always surprise him: California, Florida and Texas. States with the lowest numbers of federal retirees include Vermont, North Dakota, and Wyoming.
“I don’t know if this is what Congress had in mind when they developed FERS, but it seems like the system was designed to keep people in government until at least age 62. If you want to, you only have 30 years of service, but I think you look at the numbers and you’re going to be retiring for the next 40 years, maybe 5, so you want to make sure your TSP lasts. “Always,” she said. “I run their numbers at 57, but that’s a big difference, so I run them again at 60 or 62 because if you have 20 years of service or more, you get a 10% bonus at age 62. There are no cost-of-living adjustments to your FERS base benefit. So imagine you’re 57 years old when you retire, and you’ve had zero raises, especially over the last five years. Without COLA, you may find yourself returning to work before you are 62 years old. Social Security contributions are paid at age 62. The COLA is not paid until age 62, after which the bonus is paid, so there is a lot to suggest that 62 is the new magic age for retirement.
Copyright © 2024 Federal News Network. Unauthorized reproduction is prohibited. This website is not directed to users within the European Economic Area.
