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Federal Employees News Digest : June 3, 2013
Kristi Dougherty General Manager Phil Piemonte Managing Editor Sherkiya Wedgeworth Online Managing Editor Becky Fenton Circulation Manager Nathan Abse Writer Mike Causey Columnist Edward Zurndorfer Columnist Published by 1105 Government Information Group, Anne Armstrong, President. 1105 Government Information Group is part of 1105 Media, Inc. Neal Vitale, CEO. Corporate Headquarters: 1105 Media, Inc. 9201 Oakdale Ave., Suite 101, Chatsworth, CA 91311 www.1105media.com Office: 8609 Westwood Center Drive, Suite 500 Vienna, VA 22182-2215 Phone: Editorial: (703) 891-8554 Subscriptions: (800) 989-3363 Fax: (703) 876-5130 Internet: www.FederalDaily.com Subscription Rates: 1 year---$39 Site Licenses are available: E-mail: FENDsitelicense@ FederalDaily.com For single article reprints (in minimum quantities of 250-500), e-prints, plaques and posters contact: PARS International Phone: (212) 221-9595 E-mail: email@example.com www.magreprints.com/QuickQuote.asp The Comptroller General has ruled that federal agen- cies and departments may buy Federal Employees News Digest publications with government funds. This decision is No. B-185591. Federal Tax ID 20-4583700. DUNS #612031414. FEDERAL EMPLOYEES NEWS DIGEST (ISSN 1065-0970) is published weekly except first week in January and last week in December by 1105 Media, Inc., 9201 Oakdale Avenue, Suite 101, Chatsworth, CA 91311. Annual subscription rate is: US $39. Subscription inquiries and customer service: Mail to: Federal Employees News Digest, PO Box 15428, N. Hollywood, CA 91615-5428, customerservice@feder- aldaily.com or call (800) 989-3363, fax (818) 487-4550. © Copyright 2013 by 1105 Media, Inc. All rights reserved. Reproductions or distribution in whole or part prohibited except by site license or reprint purchase. The information in this newsletter has not undergone any formal testing by 1105 Media, Inc. and is dis- tributed without any warranty expressed or implied. Implementation or use of any information contained herein is the reader's sole responsibility. While the information has been reviewed for accuracy, there is no guarantee that the same or similar results may be achieved in all environments. Technical inaccuracies may result from printing errors and/or new develop- ments in the industry. This publication's subscriber list, as well as other lists from 1105 Media, Inc., is available for rental. For more information, please contact our list manager, Merit Direct. Phone: (914) 368-1000; E-mail: 1105media@ meritdirect.com; Web: www.meritdirect.com/1105. June 3, 2013 Vol. 62, No. 44 2 Visit us on the Internet at www.FederalDaily.com Fewer than half of all large companies ever offered defined benefit plans, and many are dropping them in favor of defined contribution plans---in which the worker makes the contributions via Social Security and a 401 (k) plan. In many instances companies don't make matching contributions to the 401 (k) plan (unlike Uncle Sam, who does make contributions for FERS employees). Most small companies never did, and still don't, offer retirement benefits. Many companies that had defined benefit plans for decades have dropped them. They have gone from being similar to (but not as generous as) the CSRS program to similar to (but not as generous as) the FERS plan (like FERS without any benefit from the employer). So federal retirement programs, whether for CSRS or FERS people, are good by comparison to virtually anything offered in the private sector. Especially because the benefits are linked to living costs---a perk that is virtually unknown in the private sector, according to the Employee Benefits Research Institute. But, and there is always a but ... There is a proposal, very serious and very likely to happen, to rein in the future cost of Social Security, civil service and military retirement benefits. The idea is that while you would still get cost-of- living adjustments when living costs go up, they would be smaller than under the current system. By one estimate. the typical retiree would lose---that is, not get---about $1,500 in benefits in the first five years of retirement and lose---as in not get---about $14,700 over 15 years, because of reduced COLAs. Over time, like the lobster in the pot, you wouldn't know what you weren't getting until it was too late. Because it is so complicated, it is hardly controversial. Most people simply don't understand it. But groups representing federal workers and retirees and people under Social Security get it. And they are terrified by it. So how would it work? The White House has proposed changing the tool/gauge/yardstick now used to determine the cost of living. Currently it's the CPI-W (consumer price index), one of the measures used by the Bureau of Labor Statistics to keep tabs on monthly changes in the cost of living for urban wage-earners and residents. Some experts believe the current system overstates living costs because it fails to take into account the fact that when prices go up, people adjust. So when gas costs more, people drive less. When steak is out of sight. you go for hamburger or chicken. At least that's the logic behind the proposal to switch from the CPI-W to a "chained CPI" method for calculating more modest cost-of-living increases. Carried to its extreme, critics say, is that after hamburger and chicken get too expensive, what's left? What do you eat? Tofu? Same for rising gasoline costs. Is there a point where everybody will be walking to work, or taking public trans- portation? Does that make sense? Would it work? The Simpson-Bowles commission set up by the president was supposed to come up with a series of belt-tightening recom- mendations. If approved by a majority, those recommendations would have gone to Congress for a noncontroversial, nonpartisan up or down vote. Like the Defense Base Closure and Realignment Commission. But the Simpson-Bowles commission failed to reach near-unanimous agree- ment. Congress didn't get involved. But its recommendations---including a chained CPI proposal---are part of the template the administration is using now to attempt to get a handle on the deficit. Groups representing feds, retirees and those under Social Security say there is a good chance that Congress may OK the White House plan this year, because it goes after entitlements. So keep watching and listening for updates on the chained CPI. A lot of your future income could depend on the outcome. INSIGHT by Mike Causey continued from page 1
May 27, 2013
June 10, 2013