Tag: Consumer Price Index

Government Could Save Billions By Reducing Federal Pay and Benefits

Government Could Save Billions By Reducing Federal Pay and Benefits

Some of the major proposals floated by lawmakers and the Obama administration to reduce the pay and retirement benefits of federal employees and service members would save the government at least $265 billion over the next decade, according to a new analysis from the nonpartisan Congressional Budget Office.

CBO detailed 103 policy options for decreasing government spending and increasing revenue over the next decade in a 305-page report released on Wednesday, including several that would affect the pay, benefits and size of the federal civilian and military workforce. The office does not make policy recommendations; it provides cost estimates of legislation and federal spending projections and analyses. The latest comprehensive report on options for reducing the deficit looks at possibilities for savings across a range of areas, including defense, health care, Social Security, taxes and veterans’ benefits, as well as federal employment.

Continue reading “Government Could Save Billions By Reducing Federal Pay and Benefits”

Obama budget proposes hike in pension contributions for feds

Obama budget proposes hike in pension contributions for feds

Copies of the Obama Administration's proposed FY 2014 federal budget are on display before going on sale at the Government Printing Office Book Store on April 10 in Washington.

Copies of the Obama Administration’s proposed FY 2014 federal budget are on display before going on sale at the Government Printing Office Book Store on April 10 in Washington. (Chip Somodevilla / Getty Images)

President Obama’s budget plan for 2014 proposes increasing the retirement contributions for federal employees hired before 2013 by 1.2 percentage points, phased in over three years, as part of his fiscal 2014 budget.

This would bring the contributions of Federal Employees Retirement System (FERS) workers up from 0.8 percent to 2.0 percent, and Civil Service Retirement System (CSRS) employees’ contributions up from 7 percent to 8.2 percent. Obama proposed the same increase last year, as part of his fiscal 2013 budget request. Continue reading “Obama budget proposes hike in pension contributions for feds”

Fed groups blast possible fiscal cliff switch to less generous COLA formula

Fed groups blast possible fiscal cliff switch to less generous COLA formula

  • By Kellie Lunney ; December 18, 2012

Advocates for federal employees and retirees urged lawmakers Monday to oppose a switch to a less generous formula for determining cost-of-living adjustments as part of a fiscal cliff deal.

Moving to the chained CPI would be “unfair” and “reduce significantly earned retirement benefits,” according to a Dec. 17 letter from the National Active and Retired Federal Employees Association to members of Congress. President Obama and House Speaker John Boehner, R-Ohio, both reportedly have offered proposals that include switching from the current formula to what’s known as the chained CPI to calculate annual cost-of-living adjustments for federal retirees and Social Security recipients. Continue reading “Fed groups blast possible fiscal cliff switch to less generous COLA formula”

Social Security: 6 Facts You Need to Know

Social Security is our most important family protection program that works not just for retirees, but also for people with disabilities and children who’ve lost a working parent. It’s a promise for all generations. People pay for this benefit throughout their working lives. Social Security is immensely popular with voters across the political spectrum, which is why those who would like to dismantle the program consistently distort the facts and falsely claim the program is “bankrupt.” It’s important for working people to know the truth about the program and push back against Social Security myths and lies and fight for more, not less retirement security.

Here are six Social Security facts you need to know:

  1. Working Families can count on Social Security for decades to come. Social Security can pay 100% of promised benefits until 2033. Without any changes, the system can pay three-fourths of promised benefits every year after that. See “A Summary of the 2012 Annual Reports” from the Social Security and Medicare Boards of Trustees.
  2. While Social Security benefits are modest, they’re a big deal to most people. The average annual benefit paid to retired workers is about $14,800  today. Among people 65 and older receiving benefits, two-thirds of them count on Social Security for 50% or more of their income. More than one-third of them get 90 cents of every dollar of income from Social Security. See “Income of the Population 55 or Older, 2010” from researchers at the Social Security Administration.
  3. Social Security has become increasingly important because people can’t count on pensions or retirement savings. Just 15% of workers in the private sector have a real pension at work. Just 60% of families closest to retirement (ages 55 to 64) have any retirement savings at all in a 401(k), IRA or similar account. Even a $100,000 account, for a couple retiring at age 65, translates into just about $400 per month in income. See “Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances.“
  4. Raising the retirement age is a big benefit cut for all workers. If Social Security’s full benefit age were increased to 69 (from 67 today), a worker who would have gotten $12,000 a year retiring at 67 under current law would see her benefits cut by nearly $1,600 per year. See “Cuts in Retirement Benefits Resulting from Raising the Retirement Age to 69” from Strengthen Social Security.
  5. Wealthy earners don’t pay the Social Security tax on all their earnings. The Social Security contribution tax, which shows up as the OASDI contribution on your annual W-2 form, doesn’t apply to earnings above $110,100 in 2012 ($113,700 beginning in 2013). That means a $1 million earner is paying under 1% of his or her earnings to support Social Security in a typical year, compared to the 6.2% of anyone making $110,100 or less contributes. Scrapping the cap so that all earnings are subject to the payroll tax would go a long way toward closing Social Security’s entire projected 75-year funding gap. See 2012 Social Security Changes from the Social Security Administration for information on the tax cap. Also, see the Social Security Administration’s analyses of proposals by Sen. Tom Harkin (Iowa) and Sen. Bernie Sanders (Vt.) that scrap or raise the cap.
  6. Proposals to make the annual cost-of-living adjustment (COLA) “more accurate” cut benefits for today’s retirees. Changing the way benefits     are adjusted, such as by using the “chained Consumer Price Index,” actually make the COLA less accurate because it does not adequately take into       account the health care costs paid by Social Security beneficiaries. The impact will snowball for today’s retirees. By age 80, an average earner getting     the lower COLA every year in retirement would have lost $8,100 in lifetime benefits, and if she lives to 90, the total cut adds up to more than $19,000. See “Cutting the Social Security COLA by Changing the Way Inflation Is Calculated Would Especially Hurt Women” from experts at the National Women’s Law Center.

 

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