According to official reports, the much-awaited federal budget will be delivered any day now. It probably won’t surprise you to learn that the new spending plan will affect employees of the federal government, so let’s break down the most important items mentioned by a report from The Heritage Foundation.
Federal pay and benefits. According one the Heritage Foundation study, federal employees are paid 22 percent higher wages, on average, than private sector employees. The new compensation plan aims to slash $330 billion from the budget by 2026, by reducing costs by 10 percent.
Changing within-grade increases. The above news might sound alarming, but rest assured that no one is proposing pay cuts for current employees. Rather, the way within-grade pay increases is likely to be changed. Instead of automatic increases based upon time of employment, a merit-based system could be substituted.
Hiring and firing. Policymakers have also discussed proposals to ease firing of “less productive” employees. Measures might include extending the probationary period, reducing the number of forums used to appeal firings, and lowering the standard burden of proof necessary to fire an employee.
Sick and vacation leave. The report mentioned combining sick and vacation leave, resulting in 16 days of leave for workers with fewer than three years of service, and up to 27 leave days for those with longer careers. Alternately, another idea keeps leave types separate, but reduces the number of total leave days.
Health insurance benefits for retirees. The subsidy for retiree health benefits might be on the chopping block (only for new employees).
A new retirement system. It’s a bit nerve-wracking to contemplate, but one suggestion mentioned by the Heritage Foundation involves transitioning to a new retirement system. There would be no changes for employees with more than 25 years of service, but those with between 5 and 25 years would face some choices with regard to their current retirement system versus the new one.
That last item is the one of most concern to us. While the new budget has yet to be fully fleshed out, we are keeping a close eye on the news. We will continue to keep you informed of changes that might affect you, particularly with regard to your retirement benefits.
In the meantime, remember to schedule regular appointments with us. We can help you stay on top of your current retirement plan, anticipate any changes, and help guide you if you need to make important decisions in the future.
