Sen. Murray and Rep. Ryan recently inked a compromise to avert another government shutdown. Here’s how the Deal affects Federal Employees and Veterans.
Short answer: No effect on benefits for Active Military and Active Feds, minor effect on Retired NG/Reserves, much effect on Active Duty Retired Veterans, Retired Feds, and Future Feds.
Active Feds: No immediate effect, small impact in the future. Good News – Your FERS formula remains the same (0.8 percent contribution into FERS Annuity).
Bad News – FERS Annuity COLA adjustment formula will be reduced, throttling back on your FERS Annuity annual inflation adjustment in retirement.
Really Bad News – Your agency will have trouble recruiting your repacement when you choose to retire (see next paragraph).
Future Feds: BIG effect. ‘Fake FERS’ (aka FERS Revised Annuity Estimate (FERS -RAE)) gets even more Fake. Feds hired after 2013 will make an even bigger contribution to FERS Annuity (up to 4.4% percent, an increase of 1.3% over the current ‘Fake FERS’ annuity contribution amount).
I think this will have a major impact on recruitment. Announced RIFs (which disproportionately target young workers), Hiring Freezes, the GS-pay scale freeze, and now increased pension contributions will make it increasingly difficult to recruit young talent from the private sector.
Retired Military (20 Years Active Duty)
: Your annual COLA prior to age 62 will be less- 1 percent per year less to be exact. Then, at age 62, you will receive your full annual COLA inflation increase. This reduction in COLA will be phased in over the next 3 years
Retired National Guard(NG) and Reserves: I only foresee minor changes here. I have not seen this analysis posted anywhere yet, but it appears there IS a small effect on retired NG/Reserves.
Once you retire from NG/Reserves, you are offically ‘Retired, awaiting pay’ until age 60. During this ‘Gray Area’ retirement time frame, you continue to ride the coattails of the Active Duty pay scale (your retired rank is static, but the Time-in-Grade continues to the maximum allowable for your rank until you reach age 60). At age 60, you are ‘fully retired’, and you finally draw retirement pay based on your Points, Rank, Time-in-Grade (COLA does not affect any of these three factors).
However, between the ages of 60 and 62, your COLA will be 1 percent less than full COLA. So there IS a minor effect of the Ryan-Murray deal on retirement benefits for NG/Reserves.