Former President Donald Trump is supporting a new plan that could make major changes to how federal employees retire. Backed by House Republicans, this plan is part of a larger effort to reduce government spending and is being called the “grand and beautiful bill.”
At the heart of this proposal is a goal to save at least $50 billion. One of the biggest changes includes raising how much current federal and postal workers pay into their retirement system, known as the Federal Employees Retirement System (FERS).
Right now, how much you pay into FERS depends on when you were hired. If you were hired before 2014, you might only be paying 0.8% or 3.1% of your salary. But newer employees hired after 2014 already pay 4.4%.
The new plan wants everyone to contribute 4.4%, no matter when they were hired. This means many workers will have to pay more from their salary every month, which could reduce their take-home pay.
Changes to Early Retirement Benefits
Another big change in the proposal is removing a benefit called the supplemental annuity. Right now, if you retire early, this extra payment helps you cover your expenses until you qualify for Social Security.
If this benefit goes away, many workers nearing retirement could face financial gaps during the transition.
Pension Calculation Formula May Change Too
The plan also wants to change how pensions are calculated. At present, your pension is based on your highest-earning three years in the job.
Under the new system, it would be calculated based on your top five years. This might sound small, but it could lower your final pension amount, especially if your earnings varied over time.
A New Offer for “At-Will” Employees
There’s also a proposal for employees who are willing to work “at will,” which means without strong job protections.
These workers could get a lower retirement contribution rate. It’s being seen as a way to encourage more flexible employment terms within the government. However, it could also raise concerns about job security and fairness.
Appeal Fee for Employment Disputes
Another change included in the bill is related to the Merit Systems Protection Board (MSPB) — the body that handles job-related disputes.
The plan suggests adding a fee to file an appeal. But if the employee wins, the fee would be refunded. This move is meant to stop unnecessary appeals, but could also make it harder for some workers to fight unfair treatment.
Why These Changes Matter?
These proposed updates are part of a broader attempt to balance the federal budget and control spending.
While the government says the changes will help save money, many employee unions and workers worry about losing important retirement protections they’ve counted on for years.
Critics argue that the proposals place too much of the financial burden on government employees, especially those close to retirement.
They also say that removing benefits and increasing contribution rates could hurt the morale of public servants who’ve worked under the promise of a stable retirement.
On the other hand, supporters of the bill believe that aligning older employee contributions with newer standards is a fair move and necessary to keep retirement funds sustainable in the long term.
What’s Next?
The proposal has already been approved by the House Oversight Committee, which means it’s gaining momentum.
But before anything becomes law, the bill will still need to pass through other stages in Congress, including debates and possible amendments. In the meantime, federal employees and unions are closely watching and preparing to voice their concerns.
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