Another Budget Legislation Update

6.20.25: Audio automatically transcribed by Sonix

6.20.25: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Welcome back to another episode of the Federal Retirement Show. I'm your host, Val Majewski with American Benefits Exchange. And as always, really appreciate you taking the time out of your busy schedule to view our content, to view our show. Uh, if you like what you see, please remember to subscribe. Remember to get notified when a new episode comes out and do me a favor. Share it with your federal employee colleagues. They need this information just as much as you do, so you tuned in for a reason. Maybe you're curious. Maybe somebody pointed you this way to the federal retirement show. Do me a favor and point somebody else in our direction, because that's what we're here for. To give guidance and to give solutions and to give just information to federal employees just like you who are looking for it. So hope you enjoyed today's content. But go back also and view all of our previous episodes, we've got over 130 of them and again, they're geared towards you, the federal employee that's looking for accurate, honest information. So today we're kind of piggybacking off of this topic that's been very popular. I've been getting a lot of questions, a lot of emails, our reps across the country, a lot of phone calls when it comes to the new legislation that's going out. People are freaking out and this is what happened or started with the deferred resignation stuff. Right? There was a deferred resignation that came out earlier this year. People were freaking out wondering, what the heck should I do? Should I take this option? Should I not take this option? What are some of the the the good, the bad, the ugly with this decision? And then with all of that going on and the varas being offered and the reduction in force and all of those things, the new budget legislation came out, the first proposal came out, and we did an episode on that of what was in it and what were they proposing what was going to go for a vote? And now we're at kind of the second stage, right? It's gone through and there's been some edits to it, and we just want to touch base again and give a status update, another legislation update as we're calling this.

Speaker1:
But just so you can see what's in, what's out and what you should be concerned with. Now, understand the reason why we do this is because things can change. Things can be modified with or without your say I right. It's not just you get to choose what's in and what's out there making decisions. I mean, what I mean by they is people on Capitol Hill, those that are voting on this to determine what can happen to you down the road. And I'm going to get into some of that again, if you've not heard of any of this, and this is your first time seeing this episode and you're like, wait a second, what's going on with this budget legislation? What should I be aware of? Well, we're going to kind of fill in the blanks as we go so you can go back and view our previous episodes, the content that we've done on this legislation.

Speaker1:
But I'm going to give you kind of a brief synopsis. We're going to go deeper. You can go to our previous episodes, but there's updates being made and there's things that you should be in the know of. Some of it's good, some of it's still still out there. So I'm just I'm not trying to, uh, you know, lean either way. Don't shoot the messenger. Right. I'm just here to report the news. But these are things that you need to be up to speed on. And I'm going to touch on this a little bit later also. But you need to be informed. You need to be up to speed on what's going on, because these things can directly impact not only your current employment, but your future retirement. So let's dive into today's content and let's see what's updated when it comes to the budget. Budget legislation. So when it comes to the budget legislation, there have been some things that have been modified. And I'm going to talk about what's in and what's out now. First of all, let's start with what's out, because there are a number of concerns that we had, and I know federal employees had. When it comes to the budget legislation that was originally proposed and how it was going to affect not only you currently, but also in the future when you get to retirement.

Speaker1:
So eliminating provisions, provisions that have been knocked out as of today, reviewing this and going over it again, this is all subject to change. So bear with me. But as an update for today, what is what has been eliminated? Now, first of all, is the provision requiring all federal employees currently hired and new employees to contribute 4.4% towards the pension system. Now you go back to the Fers system, right? I'm mostly going to talk about first because there's not as many CSRs left and they're not making any new ones. So we're talking mostly to Firs employees. But if you were hired prior to 2013 as a Firs employee, your contribution is 0.8%, 8/10 of 1%, point 8%. So they were going to try to make some folks, maybe not everybody that was a little gray, little not clear, but get up to 4.4%. Then there were the folks that were hired in 2013, and they were contributing 3.1% towards the pension system. Were going to try to get those to 4.4. And then the new hires after 2013 were contributing 4.4% towards the pension system. This provision was going to make everybody get up to 4.4. So they've eliminated that. Awesome. Another thing that they've eliminated was going from a high three to a high five. Now that's good. Good news for those when it comes to retirement. Because the high five would have expanded the average for the number that they used to calculate your pension.

Speaker1:
And the more that they expanded it the less that number was going to be okay. So this is going to keep you at the high three in order to get a higher pension compared to the high five calculations, so that's good. What else is out? The first supplement elimination. Now we've been talking about this recently. Our last episode talking about the first supplement on Social Security. And what if they got rid of it? Now, this is not something that they're thinking of eliminating at this point. I will say it again that the first supplement elimination. That provision or that idea has been out there every single year since I started working with federal employees way back to 2012. Ever since then, there has been legislation out there that has tried to eliminate the first supplement. Luckily for federal employees, it has not been eliminated, but it's always something that's on the chopping block. So be aware of when this provision actually becomes a reality of them trying to eliminate this thing. So that's what's out. So of the previous episode that we did, outlining the initial budget legislation that was coming, that was going to directly affect you. As of right now, they're not making all active employees get up to 4.4%. They're not going to go to a high five as of right now, and they are not going to eliminate the first supplement.

Speaker1:
So what's still in it? First, we're talking about new hires. So this before was for active hires, right. For actively employed federal employees. We were not going to change contribution percentage, but for new hires, the provisions that are still in it, their contributions are drastically more than current federal employees. So I said the most that somebody is currently putting in now is 4.4% for a Fers free employees. The new hires, if this goes through, will contribute two different levels. The first would be 9.4%. For those that are willing to be at will employees, they're not under the protections of title five. They're at will, which means they could be let go, they could be fired. They could be terminated. Really, for whatever reason, they don't have the same protections as somebody that's under title five for those that want those protections. It's not 9.4, it's 5% higher. So it's a bigger jump, 5% higher, 5% more than the most that federal employees are currently putting in. Right. Currently, as far as employee, I said the max is 4.4%. Not only if you want to be covered under those title five protections. Do you have to put in more? But you have to put in more. The amount more is greater than the maximum somebody is putting in now, and that goes up to 14.4% of somebody's current check. So you see the deductions. Now when you look at your leave and earnings statement you can see what is coming out. You're either 8/10 of 1%, 0.8, 3.1 or 4.4.

Speaker1:
New hires can be at 9.4 or 14.4, depending upon whether they want to go at will or not. Now that's a that's a big jump. Still 6.2% to Social Security. That doesn't change to 1.65 for Medicare. Um, and you still want to put money towards your TSP most likely. But this can reduce the amount that's available to go to TSP. If there's a big net change in the what's coming out to go to the pension system. What I have not heard is any change to the pension calculation. So putting in a lot more to get out the same. That's a tough deal for new hires. So if you're newly hired great. Hopefully your grandfather on this I don't know what if the the budget legislation did go through if it's new hires from that point or if it's new hires for next year, we'll see what comes out. But just be thankful if you're currently employed that they're not raising your contribution rate, but unfortunately they are raising it for new hires. There's still the, um, the $350 filing fee for the MSP. Um, that's the, uh, Merit System Protection boards. So just understand that if you do want to file for that, you do have to pay that fee. You do get your feedback if you win your case, but it's just there to prevent, you know, any, uh, you know, I guess taking advantage of the system or just trying to frivolous.

Speaker1:
They called it filings, uh, to that, to overload the system that they put that fee in place. They're still going to be doing the FB audit. So they're going to be auditing that system. And the enrollees that are in there, which means if they find that somebody ineligible or shouldn't have been eligible, they're going to enroll them from the program. So it's really I guess it's a benefit for you all, I would assume, because you're under a group plan, and group rates are determined by the overall health of the group. You do not want people that are not eligible in your group that could be dragging it down. Now, if there's a lot of them and a lot of people, the reasons why they're in there, not only are federal employee health benefits good, but maybe they're sick, they can be negatively affecting the pool and the group and all the companies and end up increasing your rates. Now that's a a very broad reason of why. You know, it's good. Obviously, if you have family members that aren't eligible or people that are in your program that aren't eligible, they're going to be dis enrolled. That's a negative to them, but they most likely should have been enrolled in the first place. This is, in my opinion, if they were ineligible to begin with. So doing that audit should help in the long run. You know, keep your your costs um, lower or maybe not have your raises in what those, uh, costs are going to be down the road.

Speaker1:
So these are things that are still in. Right. But the change in the contribution percentage for new hires, that's drastic. Uh, the filing fee, I don't think that's that huge of a deal. Right. If you're confident in your case and you win the case and you can get that back, great. It just it's meant again to prevent, um, you know, frivolous claims and then the FBB, I think that's a win. That's not something that's really negative for you guys, because those are the big things that were out. I'm glad they're no longer talking about eliminating the first supplement. They're no longer talking about increasing to a high five. And they're no longer talking about increasing everybody's contribution percentage just to get out the same thing. And we've talked about this before. Right. Just because you're putting in more doesn't mean you're going to get out more in the end in general. So the fact that they're going to make these folks these new hires, if this goes through, pay a lot more, I wonder how that's going to be received and how that's going to change the retirement system that they're going to change the the calculation and the way that these new hires get their their retirement. That's yet to be seen. I'm not sure. But that is a big drastic increase in the amount of, uh, contributions that people are going to make to that retirement system. So next steps.

Speaker1:
Why are we talking about this continually and why do I keep I feel like I'm beating a dead horse, uh, on the federal retirement show talking about the new legislation. Well, it's important These are things, as I mentioned earlier, that get changed or modified with or without your say, and they can directly affect you both now while you're working and as you're preparing and going into retirement. Right. The first statement was big. If they eliminated that for new retirees, that can be huge. For people that were retiring based on the the the knowledge that they were going to get that if it's taken away from them. Well, that's a big problem. There's that's a drastic hit to their retirement income. You know the high three to a high five. All of these things you need to be in the know of because they are going to directly affect your career as you're working and as you're planning for retirement. And I said, these things can change on a dime with or without your say. So I want you to stay informed. I want you to be in the know. I want you to do your research, fact check anybody you're listening to, do your googling and see if you can confirm all of these things. Because I we did before we did make a slight mistake and we've made an adjustment with some of the things that we say. But this is for you to stay informed. It's your job, it's your career, it's your retirement.

Speaker1:
You should know all these things. And I've said this before, one of the mistakes that federal employees make, there's a false sense of security, a false sense of security saying, hey, I work for the government. All is taking care of all is great. I put in my 30 years, I put in my time, I'm going to be taking care of in retirement. And that's not necessarily true. It's true to a point. But you have to take some steps to ensure that you're going to retire properly or retire how you want to retire. So stay informed, be knowledgeable. I do not want you to have that. Any ignorance of thinking, hey, the government is going to take care of me. I'm good. That false sense of security, hey, I'm taking care of because I work for the government. Yeah. I want you to have true peace of mind, knowing 100% that you're planning properly for your future. That is huge. That's what you're working for. I have to assume that because most federal employees that I talk to, that's what they are working for, is to eventually retire. Stop working and live the way they want to live. Live the way they've been planning for years. So we have to have a plan. In order to be planning. We have to be properly informed. You need. And this is my opinion here. But if I were suggesting something to each and every employee that's watching is you need to get a benefits every time an evaluation.

Speaker1:
You need to you need to talk to an expert. You need to talk to somebody that knows what they're talking about and review your benefits and retirement situation. Okay, I'll explain why. Why do you go to the doctor every year for a physical? Hopefully I'm going to pause there. Hopefully you go to the doctor every year to get a physical. You go there because there may be some things that you are not sure of. There may be some things that you want a medical expert to check out and review. And in the end, you go for your physical, you get your blood work done, you get your analysis done. You want them to patch on the back, give you a thumbs up. Hey, everything checked out. Everything's great. Keep doing what you're doing. It. But if you didn't go. What are the consequences? You might be dealing with something that you can't feel. There might be something going on in your bloodwork that you can't see or feel. There may be something that can be prevented that you're just not being made aware of because you didn't talk to the expert, you didn't get the test done. You didn't get the analysis done, you didn't get the review done. It's the same. I'm not complaining. I'm not comparing myself, I should say, to a doctor, but like a doctor in a similar fashion, what we do and what our reps do across the country is we review your situation, just like you're going to get your health care taken care of by going to your annual review or your annual physical.

Speaker1:
We're going to lay it all out there. And best case scenario, after we review your entire situation and look at how you're planning for retirement and taking advantage of the benefits and trying to reduce costs as much as possible, we want to pat on the back, give you a thumbs up, say, hey, keep doing what you're doing, you're on the right track. But just like in the example of not knowing what's going on medically. If there's something that's wrong, you can be made aware of it. There can be a red flag that goes up. There can be an alarm bell that keeps ringing that you say, hey, there's something wrong here. And if you don't make any changes, this is what the result can be. You may not be able to retire when you want. You may not have the amount of money that you want to have in retirement. You may be paying too much for your benefits. Now, you may not know all the options and be taking advantage of everything and be set up as properly as possible, as as maximized as possible. Right? I use that a lot. I want you to maximize your benefits every time and information. I want you to ensure that you're on the right track. So those are the things I highly recommend doing that now how do you do it? How do you talk to you next? You can certainly reach out to us.

Speaker1:
Our website is Federal Retirement Show. There's a form on there. You fill that out. One of our reps, if it's not me personally across the country, will reach out to you, um, in the end of the review as a as a token of our appreciation. You can get a copy of my book. There's no excuse. It's your guide to maximizing your federal benefits. You can get a copy of that as a reference piece. Okay, so not only can you get a review done by an expert, you can get all of your questions answered, maybe even answer some questions that you didn't know to ask, but ensure that you're on the right track if you're not. What does a doctor do if you're not on the right track? They prescribe something, right? They give you a remedy. They give you a solution. They give you a treatment plan. Same thing here. We give you a retirement benefits treatment plan. We give a suggestion. We give you a remedy, a cure or a, uh, a prescription of what we think you should do to make sure that you're on the right track, the right now, the road to recovery, so to speak. So you're on the right track for retirement. That's huge. I'd say consistently track your progress or progress. You don't normally go to the doctor one time and they say you're good to go.

Speaker1:
Congratulations. Never have to come here again. We checked it out once. No, I think you should continually go to the doctor and get annual physicals. But you should continually, on an annual basis, get a review done of your benefits. Because what has changed, right. The reviews that I've done with federal employees in 2012 are going to be different today. If they make these changes or if they made some of these changes, what if they eliminated the first supplement? That's not something that I would have shown. What if they went to a high five? That's a totally different calculation. So make sure that you're getting this a continual progress check done. That way you can keep knowing that you're on the right track, right? If you've got a pat on the back, the thumbs up. We'll go back again next year with the goal of getting another thumbs up and the next year, and the next year and the next year. We do annual reviews with our federal employee clients all the time, because people want to insure or make sure that they're on the right track and continue to be on the right track. This allows you to take control, right? Do not allow the government to make all the decisions for you. You should take control of your future retirement. This is your life. This is your future. The government, yes, provides some benefits and provides things that you can take advantage of.

Speaker1:
You want to maximize those things, but you should be taking control of it and of everything else beyond that. Because a lot have has to do with you. This is not the old school way of the company's going to take care of me. The government is going to take care of me when I retire. I'm good to go. Right? You have to take control of this. You have to make decisions. You have to constantly monitor to ensure that you're on the right path. And I can't say this enough, guys, especially with all the confusion and things that are coming out in the past year, the changes that are being made, some positive, some negative depending on your perspective. But you need to know those changes. You need to know the modifications. You need to take control of what you know and do not rely on others. You can hear it from us, but take control of that and learn it for yourself. I think that's the way you're going to be best suited to go forward and make sure you're properly prepared for retirement, because that's the end goal. That's what we're I said earlier. I here for I believe yes, you want to do a good job, but ultimately you want to put in your time so you can retire. Right. Spend some time doing what you want to do when it's all said and done. You've worked your life. You've you've worked your tail off. Now you want to ensure that you're set up properly so you don't have to, uh, you get another job in retirement or not live the way you want to live when it's all said and done.

Speaker1:
So when it comes to another budget legislation update, there might be another. Another. You never know until they get to the final end. I want to keep you as informed as possible so you can make the right decisions. Right? And my goal is not to fear monger, right? It's not to do anything that is going to negatively impact you. You. We want to positively help you. That's why we're giving you this information. But I encourage you to take that next step. Get any benefits every time review done, talk to an expert and go to our website again. Federal retirement show. Com. Fill out the form. We'll schedule a review and in the end, you'll get a copy of our book as a good reference piece. And you can use that going forward. So I hope you found today's information helpful. I hope you found the content that we're discussing across the entire show helpful. If you do like it, I remind you again, subscribe. Get notified when there's new episodes coming out. Tell a colleague. Tell a friend. Do not keep us a secret. Allow them to to share in the same wealth of knowledge that you're experiencing right now. Um. Look forward to speaking to each and every one of you. Also look forward to seeing you on a future episode. We'll talk again soon.

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