Top 5 concerns of federal employees with incoming administration set to disrupt the federal workforce and federal retirement benefits.
Top Concerns for Federal Workforce with Incoming Administration
There is very little that is for certain at the moment regarding the future of federal employees and their benefits. A non-government advisory entity called the Department of Government Efficiency (DOGE), led by Elon Musk and Vivek Ramaswamy, has been formed and confused with being a federal government agency. While it can make recommendations to the GOP-led Congress or the second Trump White House, the body cannot implement new policies. This article will look at 5 of the top concerns federal employees might be worried about when it comes to their benefits, job security, and retirement plan.
5. Total Reduction of Remote Work Options for Federal Workers
Getting rid of telework for federal agencies seems to be top of mind for both GOP lawmakers and the new DOGE entity. Musk and Ramaswamy have stated that requiring 5 days per week on-site, thus eliminating telework options for government employees, would cause 25% of federal workers to quit on the spot. While this is probably a high estimate, it is true some feds, who have become accustomed to working from home, would seek employment elsewhere or decide to retire early. 50% of the federal workforce, 1.1 million individuals, are eligible for remote work and this group is already spending 60% of their work hours in the office or on-site. For 25% of the entire workforce to quit over teleworking would mean half of those currently eligible – roughly 550,000 people – would have to decide to leave their job.
There have been laws proposed recently, termed “DOGE Acts” that target teleworking for federal agencies specifically. Of all the concerns detailed on this list, reduction of telework appears the most imminent and plausible at the moment.
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4. Reductions in Force, Buyouts, and Dismantling Federal Agencies
The main objective of DOGE is to “slash spending, waste, and regulations” in the federal government and one way to accomplish such a goal is to downsize federal agencies, or get rid of some altogether. An RIF (reduction in force) requires specific justifications to be approved, however, including evidence of lack of work for the agency’s employees or a lack of funding.
Employee Buyouts: VERA/VSIP
Again, DOGE itself does not have the authority to implement an RIF or directly offer employees special incentives to voluntarily leave their federal job. To offer a VSIP (voluntary separation incentive payment), OPM or Congress has to give their stamp of approval. When the office of the Inspector General for the Department of Labor cut staffing by 20% at the start of 2024, employees were offered a VERA (Voluntary Early Retirement Authority) VSIP of $25,000. Known as “buyouts,” these incentives are usually offered for a brief window to select occupations within the given agency. To learn more, check out this article about early retirement options of federal employees.
If you’re offered a VERA/VSIP, you can meet with a PlanWell Advisor to evaluate your options and make sure you’re financially prepared for an early retirement.
3. The Return of Schedule F
Reclassifying some federal positions to Schedule F would essentially make those federal employees easier to fire and with less justification than what is required of employees under the General Schedule (GS). Earlier this year, OPM established several regulatory protections for federal employees that cannot be undone with a simple executive order. Essentially, a new regulatory process would have to be created to abolish the new safeguards.
OPM Rules and the MSPB
While not impossible, it would take a concentrated effort by the White House and members of Congress to reestablish Schedule F and overcome the hurdles put in place by OPM last spring. These rules require agencies to document the need for any proposed position conversion, along with certification by the agency’s chief HR official, and a stamp of approval from OPM on top of that. If these rules are undone, the first attempt at instating Schedule F showed that logistically, a quick implementation would be improbable. Back in 2020, agencies were required to report certain positions for Schedule F conversion and many either didn’t respond altogether, or at least dragged their feet in reporting to the Office of Budget Management (OMB). Federal employees whose jobs are selected for rescheduling have the right to appeal to the Merit System Protection Board (MSPB), and an uptick in cases could slow any implementation process down even further.
Knowledge is Confidence!
2. Elimination of the FERS Special Retirement Supplement (SRS)
The last two items on this list haven’t been discussed as much recently, but were both proposed during the first Trump presidency and both could have drastic effects on federal retirement benefits. First, let’s talk about the FERS retirement supplement for Social Security, also known as the SRS (special retirement supplement). For federal retirees under FERS that retire with an immediate pension before the age of 62, the SRS provides an income stream that supplements Social Security retirement benefits until they reach the age where they are eligible to claim those benefits from the SSA (social security administration). The benefit was designed for FERS employees with special retirement provisions who have mandatory retirement ages that occur before age 62, but all FERS workers that are eligible for an immediate retirement before that age are able to receive the SRS. Back in 2018, the OMB proposed eliminating the supplement for all employees who were retired in 2019 or later, estimating it would’ve save the government $5.3 billion in the first nine years. With the main objective of DOGE to be the reduction of government spending, the elimination of the social security supplement is likely to be considered as a cost-cutting measure.
1. FERS Retirement Calculation with High-5 Instead of High-3
Currently, the FERS pension calculator utilizes a “high-three average salary” to determine a federal retiree’s base pay amount for their federal retirement pension. The average highest consecutive 36 months of pay is multiplied by years of creditable service and then that product is multiplied by either 1% or 1.1%, depending on several factors. Making the “high-3” into a “high-5” would include 24 months when figuring out the average salary for the federal retirement calculation. In most cases, this reduces the retirement income for the federal retiree and saves the government some cash. While this change to a High-5 average was first proposed in 2010 during the Obama presidency, it was revived in 2018 by the Trump administration.
The following example shows how adding two years to the average salary can impact the annuity, especially if one of those years is lower paying than the rest. The scenarios included in the chart show what happens if this federal worker retires in 2026 using a high-three average, in 2028 with high-5 being used, or in 2028 if the high-3 factor is not changed.
Highest 5 Years’ Salary
2024 | $96,000 |
2025 | $102,000 |
2026 | $102,000 |
2027 | $102,000 |
2028 | $110,000 |
Average | FERS Pension Calculation | Annual Retirement Benefit | |
High-3 Average (2024 – 2026) | $100,000 | $100k x 20 years of service x 1% | $20,000* |
High-5 Average (2024 – 2028) | $102,400 | $102,400 x 22 years of service x 1% | $22,528 |
High-3 Average (2026 – 2028) | $104,666 | $103,333 x 22 years of service x 1% | $23,020 |
*Adding two years of service to the calculation clearly boosts the amount, but the $20,000 benefit would be received 2 years earlier, in 2026, and therefore any annual cost-of-living adjustments in 2027 and 2028 would boost their FERS pension income.
Should Federal Workers Retire in 2024?
If you are worried about the incoming administration as a federal employee, there are some things to consider before jumping ship now. The first is telework. Because this seems the most likely of the 5 listed items to take effect in 2025, then retiring at the end of 2024 might be smart to maximize the payout from unused annual leave. If the elimination of telework is a deal-breaker for you, you are eligible for retirement under FERS, and you were considering leaving your government job in the next couple of years anyway, then now might be decision time. You can attend a FERS webinar to get the ball rolling and see if you’re ready.
As for the dismantling of agencies or the implementation of Schedule F, there’s probably no need to panic just yet. It’s never a bad idea to start saving for a rainy day, though, and making sure you have a financial plan that can withstand a timeframe without regular income from employment. Check out my article about how federal employees can prepare for a government shutdown to find some solid financial tips for feds that find themselves suddenly out of work.
Regarding the elimination of the social security supplement or the federal retirement calculation shifting to a “high-5” average salary, these are two topics to keep an eye on. While unlikely to go into effect during the next calendar year, either of these items could drastically impact one’s retirement plan. Retiring earlier with a pension calculated using the High-3 could result in a higher pension amount than if you were to retire later using a High-5 average. Likewise, retiring a year or two earlier and collecting the supplement might be more advantageous than retiring later at a time where the SRS benefit no longer exists.
Retirement Training: Key Benefits of Attending Federal Employee Webinars
Our free FERS Webinar aims to educate federal employees on a wide array of topics, from understanding the intricacies of the Federal Employees Retirement System (FERS) to navigating the complexities of federal health benefits. By attending these webinars, employees can stay informed about the latest changes and updates in federal retirement policies, ensuring they are well-prepared for any decisions they need to make regarding retirement planning.
Serving What Employees Need to Know Before they Retire
The topics covered in our virtual federal benefits seminar include the various aspects of federal employee benefits and retirement planning. Participants can expect to learn about the Thrift Savings Plan (TSP), Social Security benefits, health and life insurance options, and survivor benefits. Additionally, our FERS webinar will help feds understand their benefits, even the specifics of the retirement application process, providing a step-by-step guide to ensure a smooth transition into retirement. By covering these critical areas, webinars equip federal employees with the tools they need to start preparing for retirement.
Federal Retirement Training Includes Overview of Retirement Planning
Your retirement plan is a crucial aspect of your career as a public servant. Our webinars provide insights into how Social Security benefits and TSP investments integrate with federal retirement benefits, allowing employees to develop a comprehensive financial plan. By attending these webinars, employees can gain clarity on their retirement goals and learn strategies to maximize their retirement coverage.
Stay Fully Informed to Meet the Needs of Your Individual Financial Situation
Take advantage of our Federal Retirement Workshop, designed to help employees learn about their benefits and identify steps they need to take now, whether they are a mid-career federal employee, a new hire interested in learning, or a career fed approaching retirement. Looking for a knowledgeable session that provides guidance on everything from Medicare and Health insurance to tips on how to strategically invest your TSP funds? Sign up today. Our FERS webinar also covers:
- What Are the Steps in the Retirement Application Process?
- What Should Employees Know About Federal Benefits and Insurance?
- How to Choose the Right FEHB Plan for Your Needs?
- Topics such as TSP, Social Security, and Long-Term Care Insurance Options
- What Financial Planning Strategies Should Federal Employees Consider?
- What Are the Best Practices for Ensuring a Secure Financial Future?
- Minimum Requirements for Federal Pension to Make Informed Decisions
How to Register and Prepare for Federal Employee Training Sessions?
Schedule for Upcoming Monthly Retirement Workshops
We typically hold our valuable educational training sessions on secure websites every third Friday at 11:00 AM eastern. Participation is free! Check out the FERS Webinar Calendar.
Ensuring a secure financial future requires adopting best practices that align with your long-term goals. Our federal retirement webinars offer insights into effective financial management, including budgeting, debt reduction, and investment diversification. Employees learn about the importance of regularly reviewing and adjusting their financial plan to accommodate changes in their personal and professional lives. By implementing these best practices, employees can build a solid financial foundation and achieve peace of mind regarding their future. And for no compensation, we offer a 20+ federal benefits summary.
Reach Out to Us!
If you have additional federal benefit questions, contact our team of CERTIFIED FINANCIAL PLANNER™ (CFP®) and Chartered Federal Employee Benefits Consultants (ChFEBC℠). At PlanWell, we are federal employee financial advisors with a focus on retirement planning. Learn more about our process designed for the career fed.
Preparing for federal retirement? Check out our scheduled federal retirement workshops. Sign up for our no-cost federal retirement webinars here! Make sure to plan ahead and reserve your seat for our FERS webinar, held every three weeks. Want to have PlanWell host a federal retirement seminar for your agency? Reach out, and we’ll collaborate with HR to arrange an on-site FERS seminar.
Want to fast-track your federal retirement plan? Skip the FERS webinar and start a one-on-one conversation with a ChFEBC today. You can schedule a one-on-one meeting here.
