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Lawmakers Question TSP Foreign Investment Decisions, and More

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Senators from both parties this week called on the agency that administers the federal government’s 401(k)-style retirement savings program to reconsider its decision to shift the Thrift Savings Plan’s international (I) Fund to an index that invests in Chinese companies.

Sens. Marco Rubio, R-Fla., and Jeanne Shaheen, D-N.H., sent a letter Monday to Michael Kennedy, chairman of the Federal Retirement Thrift Investment Board, asking the agency to reverse its 2017 decision to base the I Fund’s investments on a stock index that includes companies from a broader swath of countries, including China. Rubio and Shaheen objected to the change based on the Chinese government’s history of human rights abuses and other national security concerns.

“The FRTIB’s decision to track this [new] index constitutes a decision to invest in China-based companies, including many firms that are involved in the Chinese government’s military, espionage, human rights abuses and ‘Made in China 2025’ industrial policy, and therefore poses fundamental questions about the board’s statutory and fiduciary responsibilities to American public servants who invest in federal retirement plans,” the senators wrote. “This change, which is expected to be implemented next year, will expose nearly $50 billion in retirement assets of federal government employees, including members of the U.S. Armed Forces, to severe and undisclosed material risks associated with many of the Chinese companies listed on this index.”

The lawmakers noted that several companies included in the new index produce weapons systems for the Chinese military, surveillance cameras used to monitor Uighur Muslims in Xinjiang province, and that some companies have been barred from operating in the United States or have been targeted by U.S. sanctions.

“Were the members of the board aware at the time of the motion to adopt the new index for the I Fund that constituent firms of this index were previously subject to U.S. government sanctions?” the senators asked. “Since the board’s November 2017 vote, the U.S. government has censured constituent firms of the [index]—or the controlling shareholders of such firms—through such measures as designation to the Entity List and federal procurement prohibitions.”

TSP spokeswoman Kim Weaver said in an email that the agency has received the letter.

“We are reviewing it and we will respond in a timely manner,” Weaver said.

Elsewhere on Capitol Hill, senators representing Maryland and Virginia on Tuesday joined the growing outcry from lawmakers regarding the recent decision by the Agriculture Department to reduce the buyout and early retirement payments offered to Economic Research Service and National Institute of Food and Agriculture employees who declined orders to relocate to Kansas City by the end of September.

Democratic Senators Mark Warner and Tim Kaine of Virginia, and Ben Cardin and Chris Van Hollen of Maryland blasted the department for failing to inform employees who had applied for Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments that maximum buyouts would be $10,000 rather than the originally offered $25,000 until one week before the acceptance deadline.

“USDA has stated that its decision to reduce the amount per VSIP was made in order to accommodate all employees who were eligible to receive the buyout,” they wrote. “However, USDA has failed to explain why employees were not notified earlier that VSIP offers would be significantly less than $25,000, considering the agency already knew that more than half of ERS and NIFA employees had declined to relocate by the time VSIP applications were due. We are troubled that USDA did not relay this information to its employees sooner considering the impacts this decision can have on an individual career.”

The senators asked Agriculture Secretary Sonny Perdue how much the department budgeted for VSIP and VERA payments, how the department came to the decision to reduce the maximum buyout payment, and why officials waited until a week before the August 26 deadline to inform employees of the change.

The letter was published just one day after Government Executive reported that, in order to cope with the mass exodus of employees who refuse to move to Kansas City, the department is looking to hire retired former employees on a part-time basis to preserve continuity of service. Those hired under the Reemployed Annuitants program would work from the Washington, D.C., area and receive both a salary prorated to what they made before they retired and their full defined-benefit annuity payments.

So what do you think? So should you question TSP on it’s new Foreign Investment decisions, or should you look at some other alternatives?  We have some great ideas and would offer you to come and explore them with us.

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Why did USDA reduce buyouts with so little notice?

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Senators representing states surrounding the U.S. capital called on the U.S. Department of Agriculture Aug. 27 to explain not only why it decided to dramatically reduce the buyout amount offered to departing research agency employees, but also why it gave them very little time to accept that amount.

USDA announced June 13 that it planned to move its Economic Research Service and National Institute of Food and Agriculture from their current offices in Washington, D.C., to Kansas City.

Employees that notified USDA that they would rather leave federal service than move with the agency were eligible for a voluntary separation incentive payment, which the agency initially said would be offered on a limited basis at the $25,000 maximum allowed by federal policy.

Employees had from July 22 to July 29 to notify the agency whether they planned to accept the payment, which prohibits them from working for the federal government for five years.

USDA sent employees formal documentation of their planned VSIP payments Aug. 20, at which point employees were informed that they would be receiving $10,000, rather than the $25,000 initially offered. Employees were given until Aug. 26 to notify the agency of whether they still planned to accept the lower payment.

“USDA has stated that its decision to reduce the amount per VSIP was made in order to accommodate all employees who were eligible to receive the buyout,” Sens. Mark Warner, D-Va., Ben Cardin, D-Md., Chris Van Hollen, D-Md., and Tim Kaine, D-Va., wrote in a letter to USDA Secretary Sonny Purdue.

“However, USDA has failed to explain why employees were not notified earlier that VSIP offers would be significantly less than $25,000, considering the agency already knew that more than half of ERS and NIFA employees had declined to relocate by the time VSIP applications were due. We are troubled that USDA did not relay this information to its employees sooner considering the impacts this decision can have on an individual’s career.”

The senators also questioned where the agency was getting the funds for the VSIP payments and how much total they had budgeted for those payments.

Agencies generally tend to offer the maximum allowed for VSIP payments, as the nearly 37,000 employees receiving VSIP between fiscal years 2012 and 2017 averaged $24,470 per payment.

The senators wrote that while they in general opposed the ERS and NIFA move, they at the least hope that the agency will reconsider their VSIP offers and opt to provide the maximum allowable for departing employees.

Thinking about taking a Buyout, or thinking about retiring, let us assist you with a Free Federal Retirement Review, we have been helping Federal Employees for many years get into retirement without any questions unanswered before making the decision.  Request your Free Retirement Review today!

Who knows, I might have already met you at one of the Seminars that the USDA has put on for the last few years during the Summer USDA Meetings, would like to talk again!

Pay & Benefits USDA Slashes Buyout Payments for Scientific Agency Employees By 60 Percent Ahead of Relocation

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The Agriculture Department this week informed employees at two scientific agencies who applied for buyouts following their decision not to relocate to Kansas City that they would receive significantly less money than originally promised.
In June, USDA officials told employees at the Economic Research Service and the National Institute of Food and Agriculture that it would offer “a limited number” of Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments to those who declined to move to Kansas City by the end of September. VSIP payments would be capped at $25,000, the maximum allowed by law, the department said in a memo.
When employees accept buyouts, they receive a lump sum equal to the amount offered by the agency, or their total severance pay, whichever is less. Additionally, employees who accept buyouts cannot work for the federal government for at least five years, or they will be required to repay the government the entire amount of their VSIP payment.
But this week, the department sent employees their VSIP acceptance letters, which noted that the maximum buyout payment would be only $10,000, a 60% cut from what was initially offered. Employees have until August 26 to decide whether to accept the buyout.
Due to the volume of applications and in an effort to afford all employees who applied the opportunity to receive the incentive payment, the amount provided for all applicants has changed from $25,000 to $10,000, USDA wrote.
ERS and NIFA employees had until July 15 to tell the department their initial intentions regarding whether they would agree to relocate to Kansas City, although they have until the end of September to make a final decision. Employees interested in early retirement or buyout payments were required to apply between July 22 and July 29.
It is unclear why the department did not announce a decrease in the maximum buyout payment ahead of that window, given that officials knew that more than half of ERS and NIFA employees already either declined to relocate or did not respond to their relocation orders.
An Agriculture Department spokesperson told Government Executive that the department decided it would be more equitable to allow all employees who applied to receive a buyout, rather than offering a larger sum to fewer people on a first-come first-served basis.
“The department maintained we would offer a limited amount of VSIPs and ultimately decided to offer a VSIP to every employee who applied and were found to be eligible to receive a VSIP,” the spokesperson said.
The department did not answer questions about how much was budgeted for VERA and VSIP, when it realized the volume of buyouts would be higher than could be accommodated at the $25,000 level, or why officials did not inform employees until this week.
The spokesperson said that although the VSIP acceptance form is due on August 26, employees can change their mind “and decline the VSIP payment up until their separation or retirement date.” Employees also are still able to change their mind and accept relocation orders.
In a statement, American Federation of Government Employees National President J. David Cox, whose union represents ERS and NIFA workers, sharply criticized the department’s handling of buyout payments. The department’s VSIP process began prior to USDA’s recognition of the agencies’s bargaining units and thus was not part of the agreement reached between the parties earlier this month to ease the impacts of the planned relocation.
“It’s no secret that employees are extremely upset by USDA’s decision to relocate these two agencies halfway across the country,” Cox said. “Two-thirds of employees rejected the agency’s orders to move by Sept. 30, so USDA should have planned better for that reality and budgeted accordingly. Employees now have less than a week to decide whether to accept the reduced buyout, which also bars them from working at another federal agency for five years. Many of these employees have spent their careers devoted to agricultural research and furthering their agencies’s missions, and they deserve to be treated better than this.”


USDA Office Relocations Are Illegal, IG Says

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The Agriculture Department is in violation of spending laws by relocating employees out of the Washington, D.C., area, according to a new watchdog report.

USDA is in the process of moving the employees at two of its components—the Economic Research Service and the National Institutes of Food and Agriculture—to Kansas City. The USDA inspector general found those moves violate a 2018 appropriations law, which included language preventing the department from implementing any reorganization efforts without prior approval from appropriations committees in Congress. The law specifically prohibited spending money on any effort that “relocates an office or employees.”

The same language was included in a fiscal 2019 spending law and a House-passed Agriculture appropriations bill for fiscal 2020.

The auditors instructed USDA to “take appropriate action” for any violations of the Antideficiency Act, the law that prohibits federal agencies from spending funds that have not been appropriated. In October 2018, USDA entered into a $340,000 contract for reviewing potential destinations for the new headquarters locations.

The IG recommended USDA go back to Congress and to get approval for the moves before spending any additional money on them.

The department said it would not punish anyone for Antideficiency Act violations, citing a decision from its general counsel last month that USDA had complied with applicable parts of the law and the “committee approval” requirements “are unconstitutional and are without legal effect.” In the general counsel review, USDA said the Supreme Court, the Government Accountability Office and the Justice Department’s Office of Legal Counsel have all previously agreed with that assessment.

“The department’s actions comply fully with all applicable laws,” USDA General Counsel Stephen Vaden said in response to the report. “OIG’s suggestion otherwise ignores these precedents dating back nearly 40 years.”

The IG noted, however, that USDA itself has interpreted the appropriations language differently when it was included in previous spending bills.

“Such provisions have been included in relevant appropriations acts since 2015, and the department has previously taken the position that provisions…are binding upon the department,” the IG said.

The auditors instructed USDA to communicate the department’s new interpretation to its components to ensure consistency. The IG also said the department’s internal guidance requires certain steps before relocating employees, such as a cost-benefit analysis, but USDA said those provisions are waived if the relocation is initiated by the secretary.

While the IG accepted this reasoning, it said USDA would be better served by additional analysis.

“We believe that adopting the approach outlined within the regulation would be beneficial for all such proposed actions going forward because it is intended to provide a structured process to facilitate the implementation of organizational changes throughout the department,” the IG said.

Trump administration officials have generally said moving Agriculture Department offices to Kansas City would get federal employees closer to the constituents they serve and save taxpayer dollars. During a Republican party event in his home state of South Carolina on Friday, however, acting White House Chief of Staff Mick Mulvaney said the relocations would help the administration attain another goal: shedding federal employees.

More than half of ERS and NIFA employees have not accepted their relocation orders.

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Pay Raises Coming for 130K Postal Employees, Along With Higher Health Care Costs

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A union representing 131,000 employees has ratified its contract with the U.S. Postal Service, providing a 4.2% pay increase for the workers but shifting more of their health care costs onto them.

The National Rural Letter Carriers Association ratified the new three-year contract after reaching a tentative deal in May. The union called the contract “fair and reasonable,” while postal management stressed it would rein in labor costs and expand the use of part-time, non-career employees. The contract is retroactive to May 2018 and will expire in May 2021.

The rural letter carriers will receive a 1.3% pay raise retroactively and three additional increases over the life of the agreement. They will also receive cost-of-living adjustments on top of those wage increases. The Postal Service, however, will drop its contributions to employees’s health care from 73% of premiums to 72%. The contract will boost health benefits for non-career rural carriers as well.

The agreement will make it easier for the Postal Service to use non-career carriers for routes outside their normal post offices. The contract also will create a task force to address the hiring and retention of the non-career employees. The two sides agreed to develop a “joint workforce improvement process” to improve the relationship between management and rural carriers while creating a safer work environment.

“Overall, this contract results in continued restraint of rural carrier labor costs while giving the parties the opportunity to focus on implementing new engineered work standards for rural carrier employees,” said Doug Tulino, USPS labor relations vice president.

Ronnie Stutts, the NRLCA president, told his members the talks with President Trump’s postal task force, the 2018 midterm elections and the Postal Service’s ongoing efforts to “rightsize” its workforce delayed negotiations and led to the expiration of the previous contract.

Eighty-six percent of union members who returned their ballots voted to ratify the contract.

NRLCA’s urban counterpart, the National Association of Letter Carriers, also avoided arbitration by reaching a voluntary agreement for its 213,000 members with the Postal Service in 2017. The American Postal Workers Union meanwhile, which represents clerks, mechanics, drivers, custodians and others, remains at an impasse with the Postal Service. The two sides are heading to a third-party arbitrator after the Federal Mediation and Conciliation Service deemed them too far apart to help. USPS has sought to limit layoff protections and is offering a one-time lump-sum stipend rather than wage increases, the union said.

Early Retirement, Severance Options Unclear for Forest Service Workers Facing Layoffs

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Nearly a week after the Forest Service told 1,065 employees their jobs would be terminatedlater this year, federal workers are still waiting to learn what, if any, their options are for early retirement, severance pay or job placement elsewhere in government.

The employees at the agency’s Job Corps Civilian Conservation Centers learned during a conference call on May 24 that the Agriculture Department, the Forest Service’s parent organization, planned to transfer the centers to the Labor Department by the end of September.

While Labor runs the Jobs Corps program nationwide, the Forest Service has operated the Civilian Conservation Centers for decades under an interagency agreement with the department. Labor said it plans to close nine of the centers, which train young people for jobs in conservation and wildland firefighting, and contract out the work at the 15 remaining centers.

In the call with affected workers, Forest Service Chief Victoria Christiansen said the agency would seek reduction in force authority from the Office of Personnel Management so it can offer affected workers job placement assistance, severance pay or early retirement options. She reiterated that commitment in a memo to all employees Friday, when she wrote, “We will need to permanently transition the Forest Service Job Corps workforce and will seek reduction in force authority to do so.”

But in response to Christiansen’s comments reported previously, an OPM spokesperson contacted Government Executive to say, “OPM is not involved in, nor do we approve, agency RIF actions. Agencies are responsible for determining whether a RIF is necessary, and if so, carrying out a RIF in their agency.”

OPM’s website, however, states, “An agency must request [Voluntary Early Retirement Authority] and receive approval from the Office of Personnel Management before the agency may offer early retirement to its employees. It also notes:

“The Voluntary Separation Incentive Payment Authority, also known as buyout authority, allows agencies that are downsizing or restructuring to offer employees lump-sum payments up to $25,000 as an incentive to voluntarily separate. When authorized by the Office of Personnel Management (OPM), an agency may offer VSIP to employees who are in surplus positions or have skills that are no longer needed in the workforce who volunteer to separate by resignation, optional retirement, or by voluntary early retirement, if approved.”

So what does this mean for employees? Will they be offered early retirement or severance payments? It’s not clear at this time. The Forest Service public affairs office referred a reporter’s questions to the Agriculture Department, which in turn referred questions to Labor. Neither department responded to requests for information about early retirement, severance pay or job placement options for employees.

In a letter last week to Labor Secretary Alexander Acosta, Agriculture Secretary Sonny Perdue said USDA’s decision to end its role in the Job Corps program was part of a broader effort to streamline operations at the department: “As USDA looks to the future, it is imperative that the Forest Service focus on and prioritize our core natural resource mission to improve the condition and resilience of our nation’s forests, and step away from activities and programs that are not essential to that core mission.”

According to a Labor spokesperson, “At the vast majority of Forest Service Job Corps centers, student services will continue without interruption.” Labor will contract out the work in accordance with the Federal Acquisition Regulation, which means contract awards will likely be made next year.

The decision to close specific centers was “made carefully with an eye on past performance, efficiency, and student access,” the spokesperson said. “Deactivations do not represent a diminution of the program, but rather a long-term enhancement of it, as they will lead to a higher-performing, more efficient program.” At the centers slated to close, “new student enrollment will cease and existing students will have an opportunity to complete their education and skill instruction,” the spokesperson said.

The transition of the centers to Labor is expected to be completed by the end of the fiscal year on Sept. 30. On Thursday, Labor published a notice in theFederal Register requesting comment on its decision to close nine of the Civilian Conservation Centers. The comment period will be open for 30 days.

Transfer Was Long Planned

The Trump administration first announced its intention to transfer the Forest Service-run Job Corps centers in its 2019 budget proposal, released in February 2018. In the Labor Department funding section, it wrote:

“The Budget takes aggressive steps to improve Job Corps for the youth it serves by: closing centers that do a poor job educating and preparing students for jobs; focusing the program on the older youth for whom the program is more effective; improving center safety; and making other changes to sharpen program quality and efficiency. As part of this reform effort, the budget ends the Department of Agriculture’s (USDA) role in the program, unifying responsibility in DOL. Workforce development is not a core USDA role, and the 26 centers it operates are overrepresented in the lowest performing cohort of centers.”

But the union that represents Forest Service personnel vehemently disputes the assertion that the CCC’s are underperforming: “As shown by [Labor’s] own data, this is false,” the National Federal of Federal Employees wrote in a special report shortly after the administration released its 2019 budget proposal. Citing Labor Department data from 2017, the union noted that the Forest Service centers were actually underrepresented in the lowest-performing quartile—not overrepresented as claimed in the administration’s budget justification—and include the highest-performing centers in the country.

“In addition, a recent [Labor Department] analysis shows that [the Forest Service’s Civilian Conservation Centers] are substantially more cost effective than comparable centers run by private contractors,” the report found.

The union acknowledged that an analysis of Job Corps centers in 2014 showed the CCCs were substantially underperforming, but said the Forest Service took steps to turn the centers around and hold leaders accountable for performance.

“The results were striking,” the report found. One of the centers, Blackwell CCC in Laona, Wisconsin, was ranked 124th out of 125 total Job Corps centers in 2014, but by 2017 had risen to 19th. Another center, Oconaluftee CCC in Cherokee, North Carolina, went from 119th in 2014 to 21st in 2017. Both of those centers are now slated for closure.

USDA to Seek Reduction in Force for 1,100 Employees

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The Trump administration plans to eliminate jobs for nearly 1,100 Forest Service employees who manage the agency’s 24 Job Corps Civilian Conservation Centers, which train young people for jobs in conservation and wildland firefighting. The centers will be transferred from the Forest Service to the Labor Department, which plans to close nine of them and turn 15 over to contractors or other non-federal entities.

Forest Service officials, in a conference call with employees Friday morning, said they were notified of the plan only days ago. “This was a high-level policy decision,” Forest Service Chief Victoria Christiansen told employees on the call. Christiansen was clearly distressed to share what she called “very difficult news” and pledged to do all she could to support those affected.

As the call was underway, Agriculture Secretary Sonny Perdue, whose department includes the Forest Service, formally notified Labor Secretary Alexander of USDA’s intention to transfer the centers to Labor, which runs other federal Job Corps centers. The move is part of Perdue’s efforts to reorganize and streamline operations at the department.

The Forest Service has yet to work out many details for the move. It will begin by requesting reduction in force authority from the Office of Personnel Management as early as next week so the agency can offer affected workers job placement assistance, severance pay and early retirement options. But there are many other issues to work out as well, as was clear by the questions employees raised. Those include:

  • What’s going to happen to students currently enrolled in centers slated to close?
  • How will the cuts affect wildfire response?
  • How will management of centers on Forest Service land be shifted to the private sector?
  • What will happen to employees currently in the process of relocating between facilities, some of whom have sold homes and shipped household goods?
  • How will existing construction contracts be handled where work is ongoing at some facilities?
  • Will employees be able to apply for jobs with contractors expected to take over the facilities?

“We only found out about this four days ago,” Christiansen said. “All of the processes for this transition are not where we want them to be.”

Acting deputy chief for business operations Robert Velasco said he anticipated the process for transferring and closing the centers would take three to six months.

The centers slated to close are in Montana, Wisconsin, Arkansas, Virginia, Washington, North Carolina, Oregon and two in Kentucky.

Forest Service officials said they expected to brief members of Congress on the plans next week. “My guess is the requests for briefings will be accelerated,” Christiansen said.

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TSP Modernization Act Goes Into Effect September 15 2019

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We have had a lot of Federal Employees asking about the TSP Modernization Act of 2017 and when it would be come available for the employees.  For the longest time, we only knew that the TSP would be allowed to have up to two years to be ready, or so wanting to know when the changes implemented by the TSP Modernization Act would take effect. Until today, we only knew a general time frame: September 2019; however, the Thrift Savings Plan has now provided a specific date as to when you can expect the changes to go into effect.

According to a recent bulletin posted by the TSP, the changes under the new law will go into effect on September 15, 2019.

Change to Eliminate Financial Hardship In-Service Withdrawal Six-Month Suspension Rule

The bulletin contains information for federal agency payroll and HR staff about changes to the rules governing hardship withdrawals from the TSP while in service.

The bulletin notes that as of September 15, any TSP participant who received a financial hardship in-service withdrawal and is suspended from contributing to the TSP will be able to re-start TSP contributions even though the participant may not have completed the six-month suspension period.

Key Points to Note:

  • Any participant who received a financial hardship in-service withdrawal and is suspended from contributing to the TSP will be able to re-start TSP contributions effective September 15, 2019, even though the participant may not have completed the six-month suspension period.
  • Participants whose TSP contributions were suspended as a result of a financial hardship in-service withdrawal will receive a TSP notice alerting them that they can resume contributions as of September 15, 2019. Restarting TSP contributions is the participant’s responsibility.
  • Participants and agencies will still need to follow current procedures to resume contributions by having the participant access their employer pay system, or by completing Form TSP-1, Election Form.
  • Report 5501 (Financial Hardship In-Service Withdrawal Report) will be generated through September 13, 2019.
  • As of September 15, 2019, Report 5501 (Financial Hardship In-service Withdrawal Report) will be obsolete as any financial hardship in-service withdrawals taken on or after that day will not require a six-month suspension of contributions.

The TSP will publish a separate bulletin in the third quarter of 2019 with more details providing guidance for agency HR and payroll offices to implement these changes in conjunction with changes from the TSP Modernization Act of 2017.

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OPM Chief to Propose Legislation for Merger With GSA By Week’s End

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Nearly a year after the Trump administration announced its proposal to send the bulk of the Office of Personnel Management’s functions to the General Services Administration, acting OPM Director Margaret Weichert said Tuesday that she will be submitting proposed legislation to Congress authorizing the merger “hopefully by Friday.”

Speaking with reporters, Weichert said that the legislation would transfer the legal authorities currently provided to OPM to an as-yet unnamed office within GSA, akin to its existing Federal Acquisition and Public Buildings services. Additionally, the bill would create a small policy-focused personnel office within the Executive Office of the President, modeled after the Office of Federal Procurement Policy.

“GSA has that structure, that framework, and is also a known expert in IT contracting and procurement, and that is a critical element in supporting the mission of OPM going forward,” she said. “We’re not structured to invest in world class operational excellence. The backlogs in terms of hiring, background checks and retirement processing, those are all endemic to our structure, and throwing money at the problem doesn’t fundamentally fix how we get after shared services support structures.”

A document outlining Weichert’s justification for the merger provided to Government Executive stated that the government’s HR agency lacks sufficient resources or technological capabilities to handle its duties alone. The administration cited the 2015 OPM data breach as an example of structural vulnerabilities within the agency.

“Despite the criticality of its mission, OPM is not currently structured or resourced sufficiently to maintain its mission in a sustainable, secure, and financially stable or sustainable way moving forward,” the document said. “In other words, the status quo is not viable. The disastrous large scale data breach experienced by OPM in 2015 is an illustration of what is at stake.”

The administration did not elaborate about the source of these woes, but said conditions will be worsened by Congress’ decision in the 2018 National Defense Authorization Act to send the agency’s background investigations functions to the Defense Department. President Trump finalized the transfer of the National Background Investigations Bureau through an executive order last month.

The background investigations bureau “accounts for more than 80% of OPM’s revolving fund resources,” the document said. “This decision [to transfer it to Defense] will dramatically undercut OPM’s ability to operate and maintain the systems that support the federal civilian workforce, greatly increasing the risk of another failure on a scale as large as or larger than the data breach.”

Although background investigations currently account for a significant amount of OPM’s workload, it is unclear that the move of those operations to the Pentagon will affect the rest of the agency’s duties. For nearly two decades, OPM farmed out the bulk of its security clearance work to contractor U.S. Investigative Services, until a data breach at that company led to the agency terminating the contract in 2014. And OPM did not officially create the National Background Investigations Bureau until 2016.

Weichert said she “can’t speak to that circumstance,” but said that the departure of NBIB revenues will create a $70 million budget shortfall for OPM, and a greater “tech debt” that would impede IT modernization.

In a statement Tuesday, American Federation of Government Employees National President J. David Cox accused the Trump administration of engineering some of the problems that it now cites as justification for dismantling OPM.

“By divesting OPM of its responsibility to conduct background investigations on federal employees and contractors, the Trump administration has created the crisis it is now using to justify abolishing OPM,” Cox said. “[This] administration is clearly following a ‘ready, shoot, aim’ strategy built on misleading everyone about its motivations. Congress must prevent this reckless move in order to protect OPM from this irresponsible plan.”

In its document, the administration argued that aligning OPM and GSA would develop “synergies around people, facilities and contracts,” producing efficiencies that could result in savings of between $11 million and $37 million annually, although it provided no details about how those figures were calculated.

The document argued that GSA could help guide OPM in its effort to modernize its aging IT infrastructure, which the administration said in some cases relies on systems dating back to the early 1980s.

“GSA’s position as a trusted leader and valued partner in helping improve agencies’ use of information technology is bolstered by its B+ grade on the latest [Federal IT Acquisition Reform Act] scorecard, the highest in the federal government,” the administration wrote. “Additionally, GSA has spent the past decade focused on qualitatively and quantitatively improving its own shared CXO functions, so it is well positioned to support OPM.”

FERS Supplement Questions and Answers

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The Federal Employees Retirement System annuity supplement is important for those covered under FERS who plan to retire before turning 62. The supplement bridges the time between the onset of retirement and the age you qualify for Social Security retirement—which is generally 62. This benefit provides a source of income that mimics the age 62 Social Security benefit, but is computed using only civilian federal service creditable to the FERS retirement benefit.

About half of all FERS employees are entitled to this benefit when they retire. The supplement ends when a recipient turns 62. After reaching the minimum retirement age until the supplement ends at 62, an earnings test is applied by the Office of Personnel Management that can cause a reduction or elimination of the supplement.

Since the FERS supplement can get complicated, let’s look at some key questions and answers about it.

Who is eligible to receive the supplement?

To receive the supplement, you must be eligible for an immediate, unreduced FERS retirement benefit. Some employees are immediately eligible for the FERS supplement when they retire. This includes those who retire with entitlement to an immediate annuity, such as employees who have reached their minimum retirement age with at least 30 years of creditable service or those at age 60 with at least 20 years.

The FERS supplement is especially significant to those who must retire early under special provisions that apply to certain groups of employees, including law enforcement officers, firefighters, air traffic controllers, National Guard technicians, Customs and Border Protection officers, nuclear materials couriers and special agents of the Diplomatic Security Service. It is generally payable at retirement for these special coverage employees when they retire as early as age 50 with 20 years of covered service. It’s sometimes available even earlier for employees eligible to retire when they complete 25 years of covered service. The mandatory retirement age for most of these employees is 57 (56 for air traffic controllers).

For employees who retire under discontinued service (involuntary) retirement provisions or under early retirement provisions (that is, a major reduction in force, reorganization, or transfer of function), the supplement is payable when they reach their MRA if they retire at a younger age.

Who is not eligible?

If you’re already 62 when you retire, you will be eligible for Social Security retirement rather than the FERS supplement. Employees who resign without being old enough or having enough service to qualify for an immediate retirement are not eligible for the supplement even though they may receive a deferred retirement at a later date.

Employees retiring at their MRA with at least 10 years but less than 30 years of service (known as “MRA+10” retirement) and those retiring at age 60 or 61 with more than 10 but less than 20 years, are not eligible for the supplement even though they may choose to postpone their retirement application. Disability retirees are also not eligible.

Who pays it?

There is no special application to receive the FERS supplement. If you are entitled to receive this benefit, it is included with the FERS basic retirement benefit, which is administered by OPM.

What is the earnings test and how is it applied?

Continued receipt of the annuity supplement is subject to an earnings test every year and can be affected by wages earned by the retiree. OPM conducts annual surveys of more than 77,000 supplement recipients to assess their earnings. These surveys are sent in April and must be returned by the beginning of June.

Let’s suppose Lori, a federal law enforcement officer, plans to retire at 52 on Dec. 31, 2019, with 20 years of service. Her birthdate is Nov. 15, 1967 and her minimum retirement age is 56 years and six months. She won’t be subject to the annual earnings test until she has reached that age.

Now, let’s fast-forward and see what happens when Lori turns 56 and six months. Assume she has been receiving a FERS supplement of $1,000 per month, or $12,000 annually.

She will reach her minimum retirement age on May 15, 2024. Lori will not be subject to the earnings test until 2024 because she didn’t reach her MRA by the end of 2023. Lori will continue to receive her full supplement during 2024. The annual earnings survey will be sent to her early in 2025.

Let’s assume Lori earns $36,000 per year. On the earnings survey, she will report all earnings from 2024 received after reaching her MRA. That adds up to a little less than $21,000 (seven months of wages). The reduction to her supplement is computed at $1 for every $2 in earned income over the limit. The earnings limit amount for 2019 is $17,640 per year. If Josie earned $3,360 over the 2024 earnings limit, then her supplement would be reduced by dividing the amount over $3,360 in half, arriving at an annual reduction of $1,680. After the reduction is applied ($12,000 – $1,680), the new supplement rate becomes $10,320 annually, or $860 per month.

So, effective in July 2025, Lori will see her supplement reduced from $1,000 per month—which she had been receiving since retirement—to $860 a month.

Now suppose Lori decides to fully retire in 2026. Once she can provide proof of her earnings level going below the annual limit, she can file to restore the supplement. This proof is generally a tax return—in this case, her 2027 return, which would be the first to show the reduced income. After a long process of submitting new, lower wage reports to OPM and gaining approval to restore the supplement, it will be reinstated. The supplement ends at 62 for all FERS participants.

Should I let OPM know when my income changes?

Dan Jamison, a certified public accountant and retired FBI agent who has a lot of experience helping law enforcement personnel understand their retirement benefits, says it’s not a good idea to contact OPM and report job changes or earnings. Instead, he says, it’s better to wait to receive the earnings survey in the mail. Contact OPM immediately if you don’t receive an earnings survey by mid-May if you have reached your minimum retirement age by Dec. 31 and still haven’t turned 62.

Will the supplement be eliminated by Congress?

Policymakers have proposed eliminating the FERS supplement many times over the years—including this year. OPM has reported that such a move would save the government $18.7 billion over 10 years.

So far, the supplement is still available to eligible federal retirees. The FERS supplement is one of the benefits included when FERS was implemented that allows federal employees to plan for retirement with similar age and service requirements as employees who retire under the older Civil Service Retirement System.

So now with that being said, who would like to receive a Free Federal Retirement Review and take advantage of this provision before it goes away.  You can Schedule your Free Retirement Review here or give us a call at (877) 733-3877 x 1