Could Federal Workers’ Retirement and Health Benefits Get Cut?

by | Feb 9, 2017

Last Updated May 20, 2024
Federal employee learning about federal benefits

President Donald Trump threw his support behind drastic changes to federal employees’ retirement and health benefits. He called the current system “unsustainable”.

White House Press Secretary Sean Spicer said in a statement that federal employees’ benefits are overly generous and outdated. This is a top issue for legislative reform in the 115th Congress.

Concerns About Federal Benefits

Spicer said, “Federal employee health and retirement benefits continue to be based on antiquated assumptions and require a level of generosity long since abandoned by most of the private sector. These costs are unsustainable for the federal government, just as they are proving to be unsustainable for state and local governments with similar health and retirement packages.” He also noted executive branch civilian employment grew by 17 percent from FY2000 to FY2014. Although, the workforce remains smaller than it was in most years since 1966.

President Trump’s order gave the directors of the Office of Personnel Management and the Office of Management and Budget until April 22nd to come up with a long-term plan to cut federal workforce through attrition. Decrease to federal employee benefits will likely come through Congress.

On the retirement issue, House Oversight and Government Reform Chairman Jason Chaffetz (R-Utah) said he will push to move new federal employees to only a defined-contribution benefit, like the Thrift Savings Plan. He also said he would protect employees already vested in their pensions, saying he didn’t want to scare an employee already on the job for 7 years.

Efforts to Trim Federal Workforce

Republicans are looking at ways to shrink the federal workforce and looking at legislation that would require two or three employees to leave before that agency could hire one new worker. He said there are trying to avoid mistakes in the past where a reduction in force only led to more contracted work. “There are a lot of good, quality workers, but there are too many of them.”

For more information, check out our blog titled “There May Be Sweeping Changes Coming to Retirement and Job Security”.

If you are worried how these changes may affect you and think you may qualify for federal disability retirement, please give us a call at 877-226-2723 or fill out this INQUIRY form!

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