In a 215-214 vote, the House of Representatives passed President Donald Trump‘s “big, beautiful” budget reconciliation bill, including major proposed cuts to federal retirement benefits within the Federal Employees Retirement System (FERS).
What Happened: The House’s budget package, determined mainly along party lines, initially included multiple cost-saving reforms impacting federal employees.
These measures were outlined to aid fund tax cuts and increased immigration enforcement. Notably, a proposal to move annuity calculations from a “high-3” to a “high-5” salary average was scratched on account of bipartisan pressure.
However, the bill still seeks to remove the FERS supplement for most federal workers retiring before age 62. As per the Government Executive, this benefit is typically worth around a third of post-retirement income.
Other provisions, such as a requirement for new recruits to either contribute nearly 10% of their basic pay toward retirement or work without civil service protections, remain in the bill. A few exemptions were included for law enforcement officers and others, subject to mandatory retirement ages.
See Also: What Net Worth Is ‘Enough’ To Send Your Kids To Private School Without Sacrificing Retirement?
Why It Matters: If enacted in its current form after moving through the Senate, the bill would dissolve a crucial bridge benefit that supports early retirees until Social Security eligibility, which rises to 67 in 2025. The FERS supplement elimination is scheduled to begin January 1, 2028, but includes a safeguard for those already eligible by that date.
The American Federation of Government Employees President Everett Kelley labelled the cuts “toxic,” and said they could “drive out experienced and dedicated federal workers” while having only a nominal effect on overall spending.
Bill Shackelford of the National Active and Retired Federal Employees Association highlighted that even retirees who accepted early separation packages were likely to be impacted retroactively.
Read Next:
Photo courtesy: Shutterstock
