After making some governmentwide changes, OPM is now calling on agencies that manage their own independent pay systems to review their policies, and make adjustments where they find pay inequities. The goal, OPM said, is to help address the current 5.6% pay gap between men and women in the federal workforce.

In a memo last week, OPM Acting Director Rob Shriver tasked agencies with other, smaller pay systems to conduct a review process similar to OPM’s recent reviews of the General Schedule, Federal Wage System and Senior Executive Service pay systems.

“Our work is not finished, and we need to do more,” Shriver wrote in a July 18 memo to agency leaders.

Specifically, Shriver told agencies to identify any areas where pay gaps exist in their policies, figure out the reasons behind the disparities, create a plan for reducing those gaps and then keep track of how the disparities change over time.

To try to help agencies through the required pay review process, OPM also published further guidance on how agencies should conduct their data analyses over the next couple months.

“In some cases, agency data analysis may need to probe deeper than the analysis conducted by OPM to fully understand the factors behind a gender or racial/ethnic pay disparity,” OPM wrote in the guidance. “For example, an agency may generate data for major occupations that show gender pay gaps by age groupings within each occupation.”

The new instructions from OPM stem from a 2021 executive order on advancing diversity, equity, inclusion and accessibility (DEIA) in the federal workforce. Part of the sweeping DEIA initiative tasked agencies with identifying strategies and eliminating barriers to equity in federal pay and compensation policies.

Agencies have until mid-October to complete their reviews and report back to OPM.

Federal workforce pay gap over time

The federal government is already a step ahead of the private sector when it comes to pay equity. The national gender pay gap is 16%, while the federal pay gap is 5.6%, according to 2022 workforce data. In other words, in the federal workforce, women make about 94 cents for every dollar men make.

The federal gender pay gap has also improved over time. The current 5.6% disparity is much smaller than the 24.5% pay gap that existed back in 1992.

But at the same time, pay inequity in the federal workforce continues to disproportionately affect women of color. Minority women in the federal workforce, on average, earn less in overall salary.

In numbers, some minority groups of women have better representation in the federal sector than in the private sector. But many minority demographic groups are still behind in pay and representation in leadership, according to several 2023 reports from the Equal Employment Opportunity Commission.

Currently, white federal employees make up a larger portion of the workforce from the GS-7 level, up through the Senior Executive Service. By contrast, people of color hold a higher portion entry-level positions between GS-2 and GS-6, according to a July 2024 workforce report from the Partnership for Public Service.

In its memo last week, OPM asked agencies to focus particularly where there are wider gaps in pay among federal employees.

“When we compare average salary of women and men in various racial-ethnic groups to the average salary of white males in the government, we find larger pay gaps that need to be addressed,” OPM wrote in a July 18 press release.

OPM’s ban on salary history in hiring

The new review requirements for agencies also come after OPM finalized regulations in January 2024, prohibiting agencies from using a federal job candidate’s previous salary history when setting pay in a job offer.

OPM has said its goal with the salary history ban is to address the federal pay gap by removing potential biases that can stem from a federal job candidate’s previous pay rates. In practice, considering past pay rates has often led to higher salaries for men than for women.

OPM’s regulation changes on salary history are expected to take effect for agencies by this October.

“The regulation further positions the federal government as a model employer that prioritizes fairness and opportunity. By helping to close gender and racial pay gaps, the rule is one more step to attract and retain a qualified, effective workforce drawn from the full diversity of America,” the Biden administration wrote in a February 2024 President’s Management Agenda update.

The Department of Justice Gender Equality Network (DOJ GEN), a federal employee organization, has been a long-time advocate of fully banning agencies’ use of salary history in the federal hiring process.

“DOJ GEN applauds OPM for delivering on its commitment to pay equity in the federal sector — first by issuing a robust regulation that bans the consideration of salary history in federal hiring, and now by pushing agencies to go even further,” DOJ GEN President Stacey Young wrote in an email to Federal News Network. “We urge agencies not only to conduct pay audits, but also to meaningfully address any inequities they reveal.”

The post ‘We need to do more’ to close gender-based pay gap, OPM says first appeared on Federal News Network.

A proposal to reform the Federal Wage System (FWS) has moved into the early stages of the government’s rulemaking process, the Federal Prevailing Rate Advisory Committee (FPRAC) announced during a public meeting Thursday morning.

The proposal, if finalized, would amend the federal pay system for blue-collar government workers, more closely aligning it with the locality pay areas for the General Schedule (GS). An estimated 15,000 blue-collar feds would see their pay rates increase.

After FPRAC, a council that advises on pay for blue-collar feds, approved the proposal last December, the changes were sent to the Office of Personnel Management for review. OPM then handed off the proposal to the Office of Information and Regulatory Affairs, an arm of the Office of Management and Budget, to begin the rulemaking process.

Edward George, an American Federation of Government Employees official working at Tobyhanna Army Depot, expressed both gratitude and residual frustration around the proposal’s advancement.

“We are having a hiring problem, we do have skills gaps because of what’s going on with the way that our wages are calculated,” George said during Thursday’s FPRAC meeting. “I appreciate you taking this up once again. It’s very frustrating for our employees … It just seems like it’s [a never-ending] process. We would really like to see this fairly and equitably adjusted across the country as soon as possible.”

The proposed regulations are expected to be published to the Federal Register this October. Once published, OPM will accept comments on the regulations before making any potential revisions and finalizing the rule on FWS.

In total, FWS covers about 192,000 federal blue-collar employees working in trade, craft and laborer jobs. The federal pay system was established decades ago to try to keep federal wages aligned with “prevailing,” or market rates in localized areas.

But since fiscal 1979, many blue-collar feds have seen limits on their annual federal pay raises. And as a result, wages in 75% of FWS localities no longer align with local pay rates for similar jobs.

The idea to align the pay maps for the FWS and GS systems first came up more than 15 years ago, to try to reverse the growing disparity. FPRAC’s current proposal, though, comes from more recent calls from Congress in 2022, asking OPM to consider ways to reform the FWS locality pay map.

If implemented in its current form, FPRAC’s proposal would move about 10% of FWS employees from one wage area to another. Rearranging the FWS locality mapping would, in many cases, impact local pay rates for blue-collar feds working across the country. While about 15,000 employees would get pay increases, another 2,000 or so employees would be covered by “pay retention,” which would maintain pay rates of employees who would otherwise see a decrease to their pay.

But there is still opportunity to make adjustments to the current proposal. Once the proposed regulations are available in the Federal Register, likely later this year, stakeholders will be able to share any feedback they might have about the planned changes to FWS.

And already, there has been plenty of discussion on how to work out the details of the coming changes. When advancing the draft proposal in December 2023, most FPRAC members agreed that some type of FWS reform was necessary, but a couple members expressed disagreements over what those reforms should actually look like.

For instance, some FPRAC members raised concerns about costs and potential complications of implementing FWS map changes. Some members also said they were worried about agencies having to work within their current budgets to implement the pay adjustments, rather than receiving additional funding for them. One suggested alternative was to consider pay changes on a regional basis, rather than amending the entire pay system.

During Thursday’s FPRAC meeting, many attendees also indicated plans to write public comments on the proposed regulations coming this fall.

The public comments, AFGE’s George said, will be “more than they’ve ever seen.”

The post Blue-collar federal pay reform heading toward rulemaking process first appeared on Federal News Network.

One measure of a career is the financial remuneration and whether your money and health needs are taken care of. One federal retiree analyzed the question of whether he was right to switch from the private sector to federal. Joining the Federal Drive with Tom Temin with the details, Abe Grungold, owner of AG Financial Services.

Interview transcript:

Tom Temin  One measure of a career is the financial renumeration and whether your money and health needs are taken care of. My next guest, a federal retiree analyzed the question of whether he was right to switch from the private sector to federal. Here with what he found, Abe Grungold, owner of AG Financial Services. You took a long look back at a long career, Abe. Just give us what you are doing here.

Abe Grungold  Tom, this was a question that has always plagued me my entire federal career. Did I make the right choice from leaving my senior position at a hospital and transitioning to the government? Because I took a $12,000 pay cut, which was about 35% of my previous salary, to work for the government. And I always wondered, did I make the right choice?

Tom Temin  Well, let me ask you this, though, what was the motivation in the first place to go to the government?

Abe Grungold  Well, the hospital was going through a lot of financial problems. They had merged with another hospital and I saw the beginning of the decline of this hospital, and I didn’t see a future with the hospital. I was afraid I was going to get laid off one day.

Tom Temin  Sure.

Abe Grungold  So, that’s why I sought something else a little bit more secure. And, it’s funny. In 1985, I started with the government, and a very close friend of mine also started at the hospital in 1985. I recently had dinner with her, and we discussed our salary, our benefits, and her future retirement. She’s going to retire in three years. And it was just wonderful, comparing my federal salary and benefits and retirement, comparing to hers, and I learned quite a bit.

Tom Temin  Now, we know from previous interviews that you are a multimillionaire in the TSP. And you are not three years from retirement, but about three years into retirement, enjoying the pickleball life and so on. So, tell us about what some of the findings were, compared to your friend.

Abe Grungold  Yes, so we hit upon five major areas: salary, health insurance, the TSP or her 401K, the retirement monthly annuity, and life insurance. So, what I found out from salary is that in the hospital, they did not provide very many COLAs. Over the past 40 years. I remember receiving a COLA once in the seven years that I was there. Now, with the government, I basically received a COLA every year with the government. I think during my last 40 years, there were two or maybe three occasions where the government did not provide a COLA. So even though I started my federal career at a lower hourly rate, I accelerated through promotions, and my salary was much higher than my friend’s present salary, who was also a manager, but I think that was largely due to the COLAs.

Tom Temin  The cost of living adjustments, by the way, for those that don’t yet know what a COLA is. So, you ended up ahead in the long run on salary, then.

Abe Grungold  Yes, yes. I ended up with a $75 per hour last salary that I had three years ago, and her present salary is $55, with a maximum she can achieve of $65 per hour. And I was already at the maximum when I retired with the government. But I think that difference in salary was certainly due to all the COLAs that I had received during my federal career. And, with respect to health insurance, the government provides a large variety of health insurance plans to pick from. The hospital where my friend works, they basically only have two or three choices. And variety is really the spice of life and health insurance. You want to pick a health insurance plan that really tailors to your needs, and that is very important. But the most critical part of the health insurance benefit is, I carry my health insurance into retirement. My friend will not have that opportunity to take their health insurance into retirement. That is a big, big benefit that I received.

Tom Temin  Yes, in some ways, it’s one of the biggest ones. And it’s really pretty much that situation for the rest of the private sector as well as your friend. We’re speaking with Abe Grungold, retired federal employee, and now owner of AG Financial Services. And then there’s the TSP, and the ability to save in a 401K, in which the government and private are a little bit more equal in most circumstances.

Abe Grungold  Yes, my friend had a variety of different deferred compensation plans to pick from: a 401K, a Roth IRA, and a 403B. And I remember participating in the 403B when I was at the hospital. But with the government and the TSP, I have always received a 5% matching to my TSP every year of federal service. My friend has never received any matching from her employer to her tax deferred plan. And that is probably the most important benefit that a federal employee can obtain, in addition to their health insurance. So, that is where I really grew tremendously with my 401K. I certainly didn’t ask my friend what her balance was, but the key is that she never received any match.

Tom Temin  There’s so many variables, such as your tolerance for aggressive investing for much of those years. And you had a pretty good tolerance for that.

Abe Grungold  Yes. I mean, I was a roller coaster rider, and I was always aggressive with my TSP and the merry-go-round riders are the ones who are solely in the G fund. There’s nothing wrong with those investors, but if you want to be a TSP millionaire, you’ve got to ride the roller coaster. And that was a big difference I found in our discussion was the employer matching.

Tom Temin  And then the other factor is, if you had a steadily higher increase in pay, then the more you contribute to social security, which means that at the end of a career, your social security benefit is greater.

Abe Grungold  Yes. I mean, certainly my social security benefit would be higher. I didn’t even ask my friend about that, because I knew that was already going to be true. So, we didn’t even hit upon that question. But what I did ask her was about her retirement annuity that she would receive from the hospital after 39 years, or she’ll have over 40 years when she retires. Now, I didn’t have her formula for her retirement annuity. But we did discuss what the amount is, and mine was more than twice what she would be receiving. She’s going to receive $1,800 per month, and I received at retirement $4,500 per month as my annuity. Now, that is probably also largely due that I have a higher salary. And I also received COLAs for my retirement annuity. She did not know if she’s going to receive any COLAs and I don’t think she will, because they usually buy those from an insurance company.

Tom Temin  You’re a FERS.

Abe Grungold  I was always a FERS employee. And certainly, your retirement annuity is very important. It’s one of the three-legged parts to your stool, and your three-legged stool is your annuity, your TSP and also your FEHB plan that you can take into into retirement. And the last thing that we discussed was life insurance. Life insurance is something that she was always able to obtain at the hospital and I could obtain it through the government. But the key difference is that she cannot take her life insurance into retirement. That benefit will end when she ends her employment. With the government, you could take your life insurance into retirement, and the government provides a basic $10,000 free portion to your life insurance, I believe when you hit age 65. But you could still carry any amount of life insurance into retirement as a federal employee. That is also a significant benefit.

Tom Temin  Well, it certainly helps your spouse take you to your eternal reward in style\, should that need arise.

Abe Grungold  Actually, Tom, I terminated all my life insurance when I left federal service. I just didn’t see a point of needing any, and that was just a personal decision. Every employee needs to evaluate their life insurance needs. And for us, we terminated ours. But, basically, what I learned, Tom, is that overall, I absolutely made the right decision with my federal career in all five of these categories. My federal career excelled in all these categories with salary, benefits, retirement, and certainly social security as well. And there were many other little benefits that we talked about. But certainly these were the five most important.

Tom Temin  All right, so the federal slot machine comes up with a row of cherries, but I have to ask you one existential question. Did you like the work? Was it good to work for the government and you didn’t go crazy waiting until the end?

Abe Grungold  I loved all four federal agencies that I worked for. It provided me with a feeling that I was doing good. Each position was a little bit different. But I was always sort of in the investigative side of government and trying to, you know, correct problems, and catching criminals, etc. And I found that work to be very fulfilling. I mean, I certainly enjoyed working at the hospital. But my federal career far exceeded my needs, in that self actualization on the Maslow hierarchy of needs. Yes, it certainly fulfilled that. All right, Abe ‘Moneybags’ Grungold is a federal retiree and owner of AG Financial Services. Thank you for that detailed analysis.  Thank you, Tom. It really was important to be finding out and now I’m so happy that I did.

Tom Temin  That’s right. Well, you know, living well is the best revenge, they say. We’ll post this interview at federalnewsnetwork.com/federaldrive. Hear the Federal Drive on your schedule, subscribe wherever you get your podcasts.

The post One way to figure if you made the right federal career choice first appeared on Federal News Network.

OPM previously suspended all new enrollments in the program after a recent surge in fraudulent activity that impacted hundreds of federal employees with Flexible Spending Accounts. OPM’s inspector general said the suspension came “out of an abundance of caution,” and to try to prevent further fraud in the program.

Enrollments in FSAFEDS, including any enrollments based on Qualifying Life Events (QLEs), will reopen Aug. 1, OPM wrote in an email to agency benefit officers Thursday afternoon, shared with Federal News Network. Also beginning Aug. 1, the program will transition to a “.gov” website domain, FSAFEDS.gov, rather than the current domain, FSAFEDS.com.

Enrollees who missed a QLE deadline due to the pause on enrollments should still be able to make modifications once the enrollment pause is lifted, OPM said. Employees who are in that situation will have to call FSAFEDS at 877-372-3337 to request a change to the effective date for the QLE.

Additionally, federal employees will be able to get reimbursed for any claims that were incurred after the effective date for the QLE, OPM said.

OPM is also taking more long-term steps to address security concerns in FSAFEDS, including transitioning to Login.gov, the government’s platform for accessing government benefits and services online.

Once the enrollment pause is lifted next month, any federal employees who create new FSAFEDS accounts or update their enrollments following a QLE will have to complete identify verification using Login.gov.

Overall, the switch to Login.gov for FSAFEDS users will take place in a phased approach. Beginning this October, FSAFEDS users who created their accounts during or after 2023 will be required to complete identity verification steps through Login.gov to be able to continue accessing their accounts. Feds who created their accounts prior to 2023 will then have to go through the same verification process starting in January 2025.

“Enhanced identity verification is one of several steps we’ve taken to combat fraud in the FSAFEDS program,” OPM wrote in Thursday afternoon’s email.

Along with pausing FSAFEDS enrollments for several weeks, OPM also for a short time suspended claims payments from getting distributed to enrollees. All reimbursement payments were paused on June 16, and subsequently restarted on June 26.

During the 10-day payments pause, several federal employees told Federal News Network they did not receive any advance notice that the reimbursement payments would be paused.

OPM said it has been working with third-party vendor HealthEquity, which manages the Flexible Spending Account program, to strengthen security measures and secure all accounts impacted by the fraud. A HealthEquity spokesperson has referred all questions on the situation to OPM.

OPM said it will continue to communicate with federal employees and agency benefits officers in the coming days and weeks with any new updates on the situation.

The post OPM to lift pause on FSAFEDS enrollments in August first appeared on Federal News Network.

National elections often have economic effects. This year’s presidential election is proving a bit more volatile than we’ve seen in recent years. With what that might mean for investment returns, the Federal Drive with Tom Temin turns to certified financial planner Art Stein of Arthur Stein Financial.

Interview transcript: 

Tom Temin  This is a question you’re getting these days, huh, Art?

Art Stein  Oh, so many people ask me about the election and and what it will mean for investment returns going forward after the election. And, you know, there’s a real split. The Democrats are, you know, panicked that if President Trump wins again, that’ll be bad, and Republican clients are worried about, you know, if President Biden or some other Democrat wins, that that’ll be a disaster. And, so, you know, there have been a lot of studies on this. I look at it every four years, because people do bring it up, although not quite with the level of concern that I feel like I’m hearing now. And, basically, you know, there’s just no discernible relationship that you can come up with. And people have split the statistics a lot of different ways, Tom, but, one, investment markets do not tend to do better with either Republicans or Democrats. There’s just no statistically significant difference, and that’s partly because there just haven’t been that many presidential elections by the standards of statistical significance. The other thing is, in my opinion, that looking at what happened before World War Two, it’s just not so relevant to what’s happened since World War Two, because now the Federal Reserve is much more powerful, much more interventionist. And, you know, there’s a lot more transparency in the investment markets, a lot of things are different. But, just as an example, if we rank investment returns per year for each of the presidents since World War Two, by far the best was President Clinton. I mean, the Dow Jones averaged 16% a year. Then, we’ve got five Republicans and one Democrat who are in the 10 to 11% range per year. That’s Ford, Eisenhower, Trump, Reagan, and George H.W. Bush, and then President Biden, where its averaged 11% a year, three presidents where the market actually lost during their term, President Nixon and George W. Bush and Jimmy Carter. Market, Dow Jones all had a negative rate of return during their presidency. So, there’s just not much there to hang your hat on. One of the things a lot of this is from a firm called Bespoke Investment Group, and they really did a deep dive this time around. They looked at what would happen if you only invested when Republicans were in office, or you only invest when Democrats held the presidency. And if you just looked at it like that, then you’d be much better off only investing when the Democrats were in office. You’d have about twice as much money as only investing when Republicans were in office. But if you just stayed invested, no matter which party held the White House, you would have 30 times as much money over the period they looked at.

Tom Temin  Right, and anyway, the Republicans say if they’re doing well, it’s because of their policies. And the Democrats say if we’re doing well, it’s because of our policies. And if things happen, good or bad, sometimes they’ll blame it on the previous administration of a different party, or the party out of power will claim it’s what we did that’s helping this next guy in power, who’s of a different party. So, it’s all this gamesmanship. I guess, ultimately, what this says is that the economy itself in the investment markets are resilient, depending on what policies the administration might pose.

Art Stein  Absolutely. And, you know, the fact of the matter is, in today’s world, the Federal Reserve Board has a lot more influence over the economy than the White House and Congress. And you may think that’s a good or a bad thing, but I think that’s what’s going on. And you know, and they looked at a couple of other things. One thing that I liked was whether stock market returns 12 months before an election where there was a sitting president running an incumbent president running, did incumbent presidents, were they more likely to be elected? So, they looked at every time going back to 1900, where that was the case. And 52% of the time, if this stock market was positive before the election, the incumbent won. Well, 52% is a coin flip, you know, so what good is that? And they’re only they looked at, you know, suppose the Dow Jones decline before the election, well then the incumbent lost only 13% of the time, and the rest of it was just didn’t fit anybody’s theory.

Tom Temin  And anyway, you’re talking about percentages of small samples. I mean, there’s twenty presidents.

Art Stein  Very small samples. And you know, the extraneous things going on are so important. Wars, revolutions, COVID. I mean, it’s just, there isn’t a relationship, except that there’s a very strong relationship to just staying invested and not worrying about who gets elected president and letting that take care of it. And you know, for listeners, I’m posting a blog, and then today or tomorrow, with a lot of these charts in it, and statistics, you know, if people want to look at that, take their own look at it.

Tom Temin  We’re speaking with Art Stein of Arthur Stein Financial near us in Bethesda, Maryland. And, therefore, I’m guessing that the best advice then at this point is just leave your TSP alone, maybe make some adjustments in the funds if you feel like that. But don’t pull out because you’re afraid of Trump, don’t pull out because you’re afraid of Biden. Don’t double down for the same reason.

Art Stein  Yeah, exactly. I mean, you TSP investors need to choose an appropriate allocation between the stock funds and the bond funds. And if it’s appropriate, then they should just stick with it. And time in the market is a much better strategy than timing the market, the money that TSP investors have in the stock funds should be for long term needs, not for money they need to take out the next year or two. But for the money that, you know, someone retiring at 65 is going to need money 10, 20, 30 years in the future. And that’s where the stock funds are very likely to, you know, outperform.

Tom Temin  And I guess sometimes events can cause gyrations in the stock market. I don’t know what happened. I don’t remember when Kennedy was assassinated, President Kennedy back in 1963, or whether you know, the markets jittered in the last few days after the near assassination of candidate Trump, but those tend to be like knocking a top. It’s going to go to its natural momentum after the little shock is over.

Art Stein  Most of those, you know, there was a dip in the market after Kennedy was assassinated. And then it recovered and just kept going up. And, you know, the big event in our lifetime was 2008 when we had that massive crash in the real estate markets. I mean, that definitely had an effect. But that was an economic effect, not a political event. And things like Brexit. I don’t know if you remember, years ago. That was supposed to have a huge effect on the markets. Didn’t. You know, all these things just, and even you know, when President Trump was elected in 2016, the general feeling on Wall Street was that that would cause a market crash. Not everybody said that. But really the stuff I read was, that’s going to be a major crash if he’s elected. And what really happened was that the market had been going down until three days before the election, three trading days, then it started going up. And clearly no one knew that Trump was going to win. And it just kept going up after he got elected. I mean, so if you read anything from that, it’s just the stock market does better when there’s no election going on. And there’s a certain, there might even be a reason for that. Because, you know, they tend to say the stock market doesn’t do well with uncertainty.

Tom Temin  All right. Well, if you’re uncertain, then stick with what you’ve got going. Stay the course and you’ll probably be better off in the long run. Fair to say?

Art Stein  Fair to say, Tom.

Tom Temin  Certified financial planner Art Stein, proprietor of Arthur Stein Financial. As always, thanks so much.

Art Stein  Thank you, Tom.

Tom Temin  We’ll post this interview with federalnewsnetwork.com/federaldrive. Subscribe to the Federal Drive wherever you get your podcasts.

The post How the election could affect your Thrift Savings Plan returns first appeared on Federal News Network.

Financial planning is not something you set and forget. It requires periodic review and changes to maximize results and those changes often depend on the stage of your career.

So how should you tackle that planning? We will talk to experts at OPM, federal unions and more — who are also at various stages of their own careers — to find out!

Federal Drive Host Tom Temin will lead this lively panel discussion as part of WAEPA’s Annual Member Meeting. Our panel of experts will share tips, tactics and best practices that can help you maximize your own financial results — whether it’s your first year in the federal government or your 20th.

Plus, one CPE credit will be earned after you attend the full webinar.

Here are just a few of the topics slated for discussion:

• How to set financial and other life goals as a fed
• When to make financial changes tied to the stage of your government career
• How to maximize return on your TSP contributions
• Where to find tools to help guide your financial planning

WAEPA CEO M. Shane Canfield will open the event and share a brief overview of the association’s 2024 state of the association. Be sure to register now for this must-attend virtual event!

Accreditation: Training certificate for 1 CPE

Federal News Radio, part of the Federal News Network, is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

The post Financial Wellness Across Your Federal Career first appeared on Federal News Network.

The post Federal firefighters could see bigger paychecks next year first appeared on Federal News Network.

A modern-day retirement can last a long time, almost as long as a working career for those who make it into their 90s. That means retirement planning has to follow a few basics by what our next guest calls a bucketed approach to investments. Thiago Glieger is a principal with RMG Advisors of Rockville, Maryland, and he joined the Federal Drive with Tom Temin earlier to talk more about those basics.

Interview transcript: 

Tom Temin
The statistics show that more and more people of good health and reasonable income, are in fact making it into their 90s.

Thiago Glieger
That’s right. There’s data out there from the Society of Actuaries Social Security Administration, a lot of different researchers. They’re talking about close to a 70% chance of couples who are in the good health, right, non-smokers, taking care of themselves, living into their 90s. It’s really not until we get to 95 that we start to see probabilities going down. And as the decades have gone, through the years, we see people’s average lifespan starts to increase. And so, more and more we have to start thinking about, you know, am I really going out at 80 to 83? Like everybody says, or am I going to make it to 90, in which case, I probably need to plan for a little longer. Because if you screw up and live too long, what are you going to do then?

Tom Temin
Of course, one basic approach would be to work longer, so that you have the same number of years at the other end.

Thiago Glieger
That’s right, although, you know, becoming a barista at 93 could be a little challenging, or, you know, whatever it is that someone might want to do.

Tom Temin
Right. But I mean, the standard 65 retirement, I mean, there’s still lots of people that retire at 62, 63, 64, 65. But a lot of people 71, 72, 73, 74 you see nowadays.

Thiago Glieger
You do. We have clients who are well into their 70s and they’re still working, because they love what they do. They’ve got a specialized skill set that is very marketable after they’ve left federal service. And it’s a way that they can continue to feel like they’re being fulfilled, and hey, they earn some extra income on the side.

Tom Temin
All right, but for everyone else, there is that possibility of a really long retirement tail in your life. So, talk about bucketed investments, what’s a good strategy for rethinking the longevity that you’ll have?

Thiago Glieger
Yeah, I think one way to really help protect against this kind of risk of living too long is having this bucketed approach, as you mentioned, to your investment planning. It involves having different parts of your wealth segmented into varying buckets, and each one is going to have a different job. So, for example, you might have a bucket that’s addressing the next five years of your spending, because maybe you decided you’re going to do more traveling over the next couple of years. So, you’ve got your income for that travel set up in a particular way. And then 10 years from now, you also need income, because maybe you’re slowing down travel, but you’re going to start a college education fund for some of your grandchildren. And so, you’re starting to address these different needs both now and in the future, adjusted for inflation. And what that allows you to do is you’ve got parts of your money growing for your future, continuing to fight inflation, and replacing some of that spending that you’re doing, which is going to help increase the longevity of your money. But at the same time, you also have other parts that are addressing, hey, I need money right now. And I can’t invest in really growth-oriented investments, because that’s going to create too much volatility. I might lose the money in the short term, and I need to use it. So, by segmenting your money in this way, you get to achieve multiple objectives at the same time.

Tom Temin
But then you also have to know what the returns are for various instruments that you’re going to put into the buckets or that the buckets will be put into.

Thiago Glieger
That’s right. And, you know, I’ll have federal employees say to me, hey, why don’t we just sell when the economy looks bad? And then buy again, when things look good again. You know, and I always joke with them. Listen, if you can find somebody who can do that with repeated success, let me know, because I’d love to hire them. And so, we have a good sense for how certain asset classes can behave over time. So, things like the S&P 500, which is the TSP C fund, we know how overtime those things tend to behave. And it’s different than how a small cap fund or a mid cap fund would behave, or bonds or anything else. But we rarely know what the markets are going to do next year. And frankly, anyone telling you otherwise is, at best, making an educated guess. And so, the key to remember, and this is this is the most important part, people need to remember that they should build portfolios based off of needs, over which the concept of timing has influence but not interference. And that’s what’s going to give you the best chance of achieving your objectives. We can’t know what the market is doing next year, but we know that 10 years from now, the S&P is probably going to be higher than where it is today. So, we know that the S&P is a long-term investment. And when we think about short-term needs, what kinds of investments are going to best suit that? There’s money markets, cash, things like bonds, right? These are things you should talk to your planners about.

Tom Temin
You point to something that’s kind of a recent reemergence, and that is money markets and CDs, which I remember from the 80s. Some of them paid really high double-digit pay offs for a year or two years, then they disappeared when inflation disappeared. Now that inflation is back, maybe not double-digit instruments, but there are things that pay, holy cow, 3%, 4%, 5%. That’s a new phenomenon for a lot of millennials and Generation Z-ers.

Thiago Glieger
That’s right, especially for people who have some cash aside that they’re leaving in the bank, for you to get $500 on every $10,000 that you have sitting in cash in the bank. That’s a really high amount compared to what it’s been in the last several years. And, so, if you’re sitting on 20, 30, 40, 50, $60,000, of cash, you can be using instruments like money markets. And if you use US Treasury money markets, you’ve got the full faith and credit of the US government behind them. Money markets are daily liquid, you can access the money the very next day. And this is a great way to be able to kind of keep your money working for you. Instead of just cash in the bank in your checking account, which is really losing purchasing power every day that it sits there.

Tom Temin
We are speaking with Thiago Glieger, a principal with RMG Advisors in Rockville, Maryland. And a lot of people as they age worry about the catastrophic health event that might tax what is available from their health care plan, even Medicare, let’s face it, has pretty strict limits on what you can get out of it. And, so, people worry about outrunning those resources. What are some ways to think about avoiding that?

Thiago Glieger
I think a lot of people tend to not plan to have hundreds of 1000s of dollars into their 90s. Because they’re thinking, hey, I’m not going to live well into the hundreds, I don’t need a million dollars by the time I’m 90. I could have drawn my assets down. But then to your point, what happens if there’s a health scare, what if there’s a healthcare event, or what we call a long term care event, where you have additional needs for two to three years, which is the average amount, and it could range to thousands of dollars a month. We’ve had clients that have had to spend $10,000 a month for that additional support. So, you have to address the risk in a couple of ways. Either you’re self-insuring, which is you’re holding some of that money aside earlier in life, and investing it for your future so that you’ve got a sum later waiting for you. Or you can pass on some of that risk to something like an insurance carrier. So, the use of long term care insurance can be very helpful. I really liked the federal long term care insurance program. Unfortunately, it’s not open to new applicants still. But anybody who’s in there, I think it makes a lot of sense for people to really consider continuing to pay those premiums. Because if we look at the cost of health care, over time, it rises faster than regular inflation. So, our cheeseburgers are rising at one rate and the cost to take care of ourselves for eating those cheeseburgers is usually twice as fast and growing costs. And that’s a challenge, because how do we grow our money fast enough, right?

Tom Temin
Or just keep eating lots of cheeseburgers and make it to 90 and have some good years, and then forget the last five bad years because you’ll be gone? Just kidding.

Thiago Glieger
That’s exactly what they want.

Tom Temin
Yeah, just if you would maybe talk about the idea of the fixed index annuities and the value or choice of those.

Thiago Glieger
Federal employees are often looking at fixed indexed annuities to be able to still participate in market growth, while having an insurance wrapper around it through the form of an annuity to protect them against market volatility. So, a lot of ways this is pitched to them, as they’ll say, well, you can still get growth in the markets, but protect your principal from any decline in your in your portfolio or your TSP values. That can be very attractive for people who are very skittish or risk-averse in investing in equities or stock, which is what’s going to grow your portfolio over time. The one caveat that I have to put out there with these things is that often there’s a lot of strings attached, right? Sometimes you’ll hear that there are no fees, and no fees doesn’t necessarily mean that there are no costs. There are restrictions to how much you can earn, there’s restrictions to how much you can take out. There’s all kinds of things that again, if you are paying for a guarantee, they’re saying you’re not going to lose principle, then how are you paying for that? You’re paying for that in some kind of way. But that can be an instrument that at least allows somebody who’s so scared of the markets to put their money to work a little bit so that they’re at least earning something. Because if you hang out in the G fund for all of your retirement, you’re going to have problems come 15, 20 years into retirement.

Eric White
Thiago Glieger is a principal with RMG Advisors of Rockville, Maryland. We’ll post this interview at federalnewsnetwork.com/federaldrive. Hear the Federal Drive on demand. Subscribe wherever you get your podcasts.

The post Memo to Gen Z about retirement: Life is longer than you think first appeared on Federal News Network.

The Veterans Benefits Administration is shifting to a system of mostly voluntary overtime where employees can work for a maximum of 20 hours of overtime each month.

VA Under Secretary for Benefits Joshua Jacobs told reporters VBA has relied on mandatory overtime for the past seven years to keep up with its increasing workload.

“We’re producing and delivering veteran benefits at a very high level. But as I’ve said before, I have never thought that mandatory overtime is a sustainable operating practice,” Jacobs told reporters in a call Tuesday.

VBA has delivered record-breaking level of benefits to veterans for the past three years, and is on track to break yet another record by the end of this fiscal year.

The agency processed 1.98 million disability benefits claims from veterans and their survivors in fiscal 2023 — a nearly 16% increase from the year prior. VBA issued $163 billion in total benefits in FY 2023.

VBA is seeing a higher volume of claims because of the PACT Act, a 2022 law that expanded VA health care and benefits eligibility for veterans exposed to toxic substances during their military service. VBA recently granted its millionth benefits claims under the PACT Act.

Jacobs said VBA is on pace to process 30% more claims in fiscal 2024 compared to last year. The agency, so far this year, has awarded $112 billion to veterans and their survivors in compensation and benefits.

VBA currently has a claims backlog of about 277,000 — nearly 30% of its total inventory of claims.

VBA is also growing its workforce to keep up with demand.  Since October 2022, VBA has grown its workforce by nearly 33%, to more than 34,000 employees.

“Our growing workforce has gone above and beyond to deliver these earned benefits, and we remain focused on achieving our primary mission, which is delivering timely, high-quality and equitable decisions for veterans and their survivors with a world-class customer experience,” Jacobs said. “At the same time, we’re laser-focused on ensuring that our workforce can achieve these outcomes sustainably in the long term.”

Jacobs said VBA ended mandatory overtime, based on feedback from VBA employees and his own “personal concern about the ability of our workforce to sustainably deliver benefits at the scale that we have been doing for a very long time.”

“My goal is to leave this organization better than I found it. And I was concerned that a continuation of mandatory overtime perpetually would be very problematic for our ability to continue delivering at the levels we have been,” he said.

Jacobs said VBA plans to keep growing its workforce until it reaches 36,000 employees — but added that the agency is “constantly evaluating our numbers.”

“We are very focused on evaluating incoming receipts, the total production, and then making sure we revalidate that our assumptions and our goals remain accurate,” he said.

The Veterans Health Administration is becoming more selective with its hiring, after it saw record workforce growth last year. The agency is also seeing higher workforce retention.

VA is also looking to shed about 10,000 jobs in its fiscal 2025 budget request. Most of those job cuts would come from VHA. VA expects to achieve the reduced headcount through attrition.

Jacobs, however, said VBA has the funding it needs to continue workforce growth.

“We are fine from a discretionary perspective. We have the funds that we need to deliver the historical level of benefits that we have been delivering,” he said.

Jacobs said VBA is also seeing higher retention rates for its employees, compared to its six-year average retention rate. He added that as VBA continues to hire, employees have had opportunities to advance into higher positions.

“As we’ve increased hiring, that hiring has both come from employees outside of VBA, but also employees within VBA,” Jacobs said. “As we’ve provided more opportunities, more employees have chosen to stay — in addition to the mission.”

VBA will keep mandatory overtime in place for some employees. That includes workers who process claims for military sexual trauma, radiation exposure, Camp Lejeune contaminated water and pensions.

“We have a workload that requires more timely decisions, and so we want to focus on continuing to bring that work, the total inventory down to improve the timeliness,” Jacobs said.

“As we’re training those new employees, we’re going to continue the mandatory overtime,” he added. “We will assess, as we watch our work in those areas progress, if and when we can make changes to that policy, and transition them to voluntary overtime. But right now, our assessment is that we need to maintain that policy, to continue making improvements for veterans who have filed those claims.”

VBA held a national quality stand-down and wellness day last month, with a focus on addressing burnout and the mental health of its workforce, as well as improving overall work quality. Jacobs said the agency is also rethinking training for its new employees and “refresher” courses for existing staff.

“Investing in our employees matters and can ultimately yield significant returns for our veterans and survivors. Because we know what’s good for our employees is good for those we serve. This stand-down was a necessary part of our effort to improve the accuracy of our claims decisions and support our employees. But it’s certainly not going to stop there,” he said.

VBA expects its employees to work in the office at least five days per two-week pay period, adhering to a VA-wide policy and the Biden administration’s goal of bringing federal employees back to the office at least 50% of the time.

The post VA ends mandatory overtime for most employees processing benefits claims first appeared on Federal News Network.

• Participants in the Thrift Savings Plan will see some new features available on the TSP mobile app. Users now have the option to use facial recognition or a fingerprint to log into their accounts from their phones. Once logged into the app, TSP participants can access a summary of their retirement accounts, along with other investment information. The TSP app was first launched in 2022 as part of a major update to the TSP’s platforms.
  (TSP mobile app update - Thrift Savings Plan)
• The Nuclear Regulatory Commission will update its separation policies after several employees left the agency without returning their laptops. In a new audit, the NRC inspector general found multiple instances in 2023 where departing staff held onto their work computers. The IG found the NRC did not have a policy for ensuring the return of items under a $2,500 threshold. The NRC agreed with recommendations to update its policies and complete an inventory of agency-issued laptops, desktops and tablets.
  (Evaluation of the U.S. Nuclear Regulatory Commission's Information Technology Asset Management - NRC IG )
• The Defense Information Systems Agency’s intelligence director is laying the foundation for the agency’s brand new intel shop. The new intelligence unit will initially comprise about 30 people, which is small compared to other J2 units. Army Col. Richard Leach, DISA’s intelligence director, said he wants to start with a more agile team and scale it in the future. Onboarding all 30 people and fully operationalizing the intel shop will take at least two years. Last year, DISA introduced the J-code system, creating the first-ever intelligence unit at the agency.
  (DISA working to fully operationalize its new intel shop - Federal News Network)
• The Army is getting more serious about the transition to IP version 6. Leo Garciga, the Army's chief information officer, set a series of deadlines for all of the service's new and existing IT-related networks and systems. Garciga said starting in fiscal 2025, all new information systems must be IPv6 enabled before they are approved for operational use. For existing systems, they must transition to IPv6 or operate in both IPv4 and IPv6 environments by the end of 2025. Finally, any system that cannot be transitioned to IPv6 must have a plan to be replaced or retired by the end of 2025. Garciga said he will issue a separate policy focused on operational technology and its migration to IPv6 in the future.
  (Chief Information Officer Guidance for the Army’s Transition to Internet Protocol Version 6 - Department of the Army)
• The Defense Information Systems Agency is developing a system that will allow cyber analysts to search data across multiple data sources from a single interface. This will provide analysts with a federated search capability where they can search for data wherever it exists within the agency without having to log into various databases. Creating a federated search capability is part of the agency’s efforts to get rid of data silos and connect its security tools as the agency is working to achieve a target level of zero trust by 2027.
  (DISA wants to automate 75% of cyber activities, but it’s nowhere near the goal - Federal News Network)
• Federal employees and citizens with disabilities will see changes to the areas in front of and around federal buildings in the coming years. As part of adopting new accessibility standards for real property design and construction, the General Services Administration will shorten travel distances from on-street parking to building entrances, will increase the sidewalk sizes, and will reduce the incline around passenger loading zones. GSA issued a final rule under the Federal Management Regulation outlining the changes to ensure areas around federal buildings are readily accessible to and usable by persons with disabilities. The rule applies to all new construction, alteration and renovation projects.
  (Federal Management Regulation; Accessibility Standard for Pedestrian Facilities in the Public Right-of-Way - Federal Register)
• Federal workforce diversity is still lagging in higher levels of the General Schedule. People of color make up about 40% of the federal workforce overall, according to 2023 data. But at the same time, they take up just about a quarter of career positions in the Senior Executive Service. The SES is also disproportionately male. Just about a third of career SES members are women. Data from the Partnership for Public Service shows that there is a slight trend toward more racial diversity in the SES, rising by 1% in the last year.
  (Federal workforce diversity still lagging in more senior roles - Federal News Network)
• U.S. Citizenship and Immigration Services continues to grapple with staffing challenges. In a new report, the USCIS ombudsman found the agency has about 21,000 employees — 3,000 positions less than its fully authorized workforce. The ombudsman said USCIS is struggling to fill positions after a lengthy hiring freeze was lifted in 2021. Still, the agency was able to cut the immigration backlog for the first time in a decade last year. USCIS handled about 40,500 requests for various immigration benefits each business day in 2023.
  (USCIS Ombudsman 2024 report - Department of Homeland Security)
• A public-sector advocacy group is suing the Office of Personnel Management over a nearly seven-year delay in implementing a law passed by Congress. The Administrative Leave Act allows agencies to put federal employees on paid administrative leave for a maximum of 90 days while they investigate alleged wrongdoing. The group Public Employees for Environmental Responsibility says federal employees have spent years on paid administrative leave, and seen their careers suffer. OPM introduced proposed guidance for the legislation in 2017, but has yet to finalize it. PEER filed its lawsuit to compel OPM to finalize its guidance.
  (Lawsuit urges OPM to end 7-year delay to keep feds off indefinite paid administrative leave - Federal News Network )
• The IRS expects it will recover billions of dollars in taxes owed — just as soon as it sorts through a backlog of more than 30,000 whistleblower claims. The IRS paid nearly $89 million dollars to more than 120 whistleblowers in fiscal 2023. That’s about a quarter of the $338 million those whistleblowers helped the IRS recover. But it’s no quick payday. Whistleblowers wait, on average, between 10 and 11 years before receiving a financial award for their disclosure. The IRS only pays whistleblower awards once taxpayers under investigation have exhausted all of their appeal rights. The IRS Whistleblower Office has helped recover nearly $7 billion in taxes owed since 2007. Whistleblowers have gotten more than $1 billion of that money.
  (IRS recoups billions from whistleblower claims. Tipsters can wait a decade for their cut - Federal News Network )

The post TSP mobile app gets update, new features first appeared on Federal News Network.

Government employee recruitment often relies on the appeal of the mission. Still people want to be paid and have some financial security. A recent study of state and local emergency response employment seems to indicate one important factor in attracting job candidates, namely having a defined benefit pension plan. Tyler Bond, research director for the National Institute on Retirement Security joins  the Federal Drive with Tom Temin.

Interview Transcript: 

Tom Temin
So tell us, I think I know or can guess what the answer is. But are the existence of defined benefit pension plans important to recruiting public sector employees?

Tyler Bond
Yes. The evidence that we’ve seen through a number of reports strongly suggest that defined benefit pensions are essential for recruiting and retaining public sector employees, especially those public sector employees who work in public safety. So police officers, firefighters, corrections officers, other public safety employees really value the reliability and security of a defined benefit pension. And our new report, I think really speaks to that.

Tom Temin
One of the reasons possibly, as you outlined in the report, is that these types of employees tend to complete their career and retire on that benefit that was offered at their point of employment to a much greater degree than those in the private sector.

Tyler Bond
Yes. Certainly, what we saw with the public safety employees is that once they start working for the fire department or the police department, if they make it past the first few years, they’re very likely to stay through a full career and retire from that plan. Now, it should be said that, especially in the case of a firefighter, a career may be 20 years. And so often what you’ll see is a firefighter who has a second career. Sometimes they begin that second career while they’re still firefighting, sometimes they start that second career after firefighting. But yes, we do see that in our research, we found that 52% of 25 year old new hires are expected to retire from the pension plan that they join when they begin their public safety career.

Tom Temin
Now, this was based on survey of those people that are the recipients. Did it also include the view of recruitment viability of the hiring organizations?

Tyler Bond
So we collected data directly from 28 state and local public pension plans. So we’re using the plans own data about the behavior of their employees. But I think we’ve seen in the real world that employers are realizing the value of a defined benefit pension. So in Connecticut, there’s a town called Trumbull, Connecticut that in 2014, close their defined benefit plan moved all their police officers into 401k style defined contribution plan. At the end of last year, after less than a decade of having their police officers in the defined contribution plan. The town council in Trumbull voted unanimously to reopen the defined benefit plan. And so starting this year, police officers will go back into the defined benefit pension plan. And we’ve seen up in Alaska, they closed their two statewide public sector pension plans on July 1 of 2006. So 18 years ago to the day, and most police officers and firefighters in Alaska participate in one of those plans. And they’re reaching crisis levels of staffing shortages in Alaska right now because of the lack of a defined benefit pension plan. So to give you a concrete example, the city of Fairbanks, Alaska does not have police officers on patrol between 8am and noon every day because they’re so understaffed in their police department. And the lack of a pension is not the only factor, but it is a contributing factor to that staffing shortage.

Tom Temin
Well, I guess everything is in the details. That leads to a couple of questions. But first, let me remind people who we’re speaking to. Tyler Bond is the research director for the National Institute on Retirement Security. And briefly, do you have any evidence or hunch as to whether these results are projectable to federal level law enforcement and public safety and first responders?

Tyler Bond
So we’ve seen that the federal government has retained a pension for its employees for decades now, even when the system was reformed in the 80s and the Civil Service Retirement System was closed in favor of the Federal Employees Retirement System. It still retained a defined benefit pension component to that system. So I think at the federal government level, as well as at the state and local government levels, there is a recognition that it’s important to maintain a defined benefit pension in order to recruit and retain employees who want to make a career out of public service. There’s data from the Bureau of Labor Statistics that suggests that the average tenure for a public sector employee is twice the average tenure of a private sector employee. I think the public sector, especially in certain professions, has really retained that career employment model. And having a pension helps to bolster that.

Tom Temin
Right. When they went from [Civil Service Retirement System (CSRS)] to [Federal Employees Retirement System (FERS)], the pension got much smaller as a percentage of top three salary years and so forth with the added provision of Social Security, and then the TSP and so forth. So you have that kind of three legged stool which exists in most municipalities, I guess. So the question is, what is the correct percentage for the people that have to bear the burden of this pension cost? Is it 100% of the salary for the rest of their lives. Is it 80%? That would seem to be a crucial question. How much is the pension?

Tyler Bond
So it’s very uncommon, in my experience, to see a pension that awards 100% of salary at retirement, the exact amount varies from plan to plan. And I think it’s important to keep in mind that it’s the local stakeholders, the plan sponsors that set those amounts. And so they look at what their workforce needs, and they determined provisions of their pension plan benefits in accordance with what their workforce needs.

Tom Temin
Well. Let me ask you about the affordability side, because when the federal government doesn’t have an affordability problem, because it can print money without regard to whether it actually raises that money in revenue, that is not available in general to state and local governments, unless they want to float bonds, which are probably not great fiscal policy for paying pensions. But you look at some of the places like Chicago or some of the big Midwestern states where upwards of 25, 35, almost 50% of revenues they raise are going to public pensions and health care benefits. There’s no money left for the schools, roads, bridges, etc. How do we get around that in the long term?

Tyler Bond
So most state and local government pension plans are well funded, a lot of plans have been moving in an upward trajectory in recent years. Most state and local pension plans received the majority of their revenue from their investment earnings. On average, it’s only about a quarter of revenues into the plan that come from taxpayer dollars in the form of employer contributions. Where we see the outliers in places like Chicago and Kentucky and elsewhere. There’s really a history of underfunding the pension plan that goes back decades. And that is largely contributing to the problem there. The money wasn’t put in when it should have been. And that’s contributing to the problems they have now. It’s not really a flaw in the design of the plan itself, because we see so many other plans are doing well. And there’s a number of plans that are at or above 100% funding today.

Tom Temin
So the lesson then is have a funding strategy that doesn’t depend ever and ever increasingly on year to year revenues to keep your pension going.

Tyler Bond
That’s right. Just like anyone saving for retirement, you have to put in the money and let that money grow over time. So it’s there for you when you retire. A pension, the same logic applies, you need to contribute the money so that money can be invested and the investment earnings can grow since they represent such a significant portion of plan assets. If the money’s not put in, then that’s when we see plans tend to get into trouble.

The post How important to recruiting is a traditional pension plan? first appeared on Federal News Network.

The rest of the TSP funds saw a decline in returns for the month of June, but remained in the positive. The Common Stock Index C Fund posted the highest return of  3.58%.

The I fund posted the lowest return and saw a huge drop from 4.86% in May to -1.62% last month, while the S fund fell from 3.36% last month to -0.10% in June.

The C fund continues to post the highest year-to-date return at 15.28%, and a 11.08% return over the last 12 months.

All Lifecycle funds posted positive returns in June.  The L 2055, L 2060 and L 2065 all posted a 1.25% return, with year-to-date-returns of 10% and 13.60%, respectively,  for the last 12 months.

The post Two TSP funds post negative returns in June first appeared on Federal News Network.

We’ve created a primer of all the must-know info.

• Discover the ideal time to retire
• Learn 5 must-dos as the big day nears
• Prep for critical late-life financial planning
• Get the lowdown on Medicare Advantage

Plus, we’ve included a special update on the new Postal Service Health Benefits (PSHB) program.

Download our exclusive Retirement Guide, brought to you by GEHA!

The post Federal News Network Retirement Guide first appeared on Federal News Network.

• Younger Thrift Savings Plan participants will soon see a new investment option in the TSP. The Federal Retirement Thrift Investment Board is launching the "L 2070" lifecycle fund at the end of July. The retirement investment fund is meant for TSP participants who will retire during or after 2068. Once the new fund is created, it'll bring the total up to 11 different L funds that are available through the TSP. The TSP's L funds generally track target-date retirement funds.
  (New Lifecycle Fund coming soon - Thrift Savings Plan)
• The 2024 Feds Feed Families campaign is officially underway. The annual food drive gives federal employees the opportunity to donate to, or volunteer for, local food banks. The program is run by the Department of Agriculture and began back in 2009. Since its inception, federal employees have collectively donated more than 99 million pounds of food. This year's Feds Feed Families campaign launched last week and will run until September 30.
  (2024 Summer Campaign - Feds Feed Families)
• The National Institute of Standards and Technology is getting feedback on its draft plan for advancing federal tech standards. NIST will accept comments on the draft roadmap for setting standards on critical and emerging technology through July 12. The roadmap is intended to broaden standards participation, grow a standards-savvy workforce, and ensure inclusivity and integrity in developing tech standards. NIST is charged with taking a lead role in championing U.S. standards in areas like artificial intelligence.
  (NIST seeks public input on draft roadmap for USG national standards strategy for CET - National Institute of Standards and Technology)
• The State Department has a new AI hub. Secretary of State Antony Blinken says AI.State includes training and other materials to help employees harness new AI tools. The State Department has rolled out several new capabilities, including a chat bot and a media analysis tool. During an event Friday, Blinken and other officials said State Department employees are encouraged to experiment, “I'd encourage everyone to test it out, to try it out, to explore it, to try to learn from it. And also lend your own ideas and input because this is something that will continue to be iterative and a work in progress,” Blinken said.
  (With new AI tools available, State Department encourages experimentation - Federal News Network)
• The Defense Information Systems Agency wants to automate 75% of its cyber capabilities. Brian Hermann, DISA's director of cybersecurity and analytics, says that while there is no set timeline to achieve the goal, the agency is currently not where it needs to be. Because of a large number of data silos, the agency is currently working on streamlining its data to get closer to the goal. The agency is also implementing a federated search capability, which will allow their team to search data wherever it exists.
  (DISA wants to automate 75% of cyber activities - AFCEA International)
• The Defense Information Systems Agency’s Hosting and Compute Center continues to expand its cloud capabilities to the military services and mission partners outside the continental U.S. The Center is working with the agency’s Program Executive Office transport and cloud service providers to find out where they are planning to expand their cloud services to and how they connect back to U.S. data centers and cloud facilities. The goal is to provide low latency to the service branches as they move from tactical to operational to strategic levels of capability. DISA unveiled its plans to expand its cloud capabilities to the military services and missions partners overseas last year.
  (DISA continues its push to provide OCONUS cloud services - AFCEA International)
• The long-awaited Alliant 3 solicitation has hit the streets. The General Services Administration met its first goal with the next version of the Alliant 3 governmentwide acquisition contract for IT services: Get the RFP on the street in the third quarter of 2024. That happened Friday. Now, the work begins to stay on track. Industry has until October 28 to submit bids for the multiple award contract. In the meantime, GSA will be accepting questions about the solicitation through July 26 and plans to offer answers by August 23. GSA outlined at least 45 IT services covered under Alliant 3, ranging from 3D printing to energy sustainability management to quantum computing.
  (GSA released RFP for Alliant 3 IT services GWAC - SAM.gov)
• The departments of Transportation and Housing and Urban Development are the latest agencies seeking more funding to address ongoing emergencies. The Biden administration submitted a new request to Congress for almost $4 billion on Friday to address two big challenges. First, the White House is asking for $3.1 billion for Transportation’s Emergency Relief Program. This money would help cover increased needs for repairing and rebuilding highways and roads that have been damaged in disasters and other emergencies across the country, including the cost of rebuilding the Francis Scott Key Bridge in Baltimore. The administration is asking for $700 million for HUD's Community Development Block Grant Disaster Recovery program. The additional funding is for victims of the Maui fires in Hawaii as well as other disasters such as hurricanes in Florida and Georgia and flooding in Vermont.
  (White House seeks additional funding for DOT, HUD - White House)

Correction: The audio version of this article says the Alliant 3 contract has a ceiling of $75 billion over 10 years. There is actually no ceiling for the contract.

The post New TSP option for younger federal employees first appeared on Federal News Network.

When to start, and what you need

Justin Pierce and James Campbell, both fiduciaries and Federal Retirement Consultants℠ with the Federal Employee Benefit Advisors, said the best time to start seriously thinking about it is roughly five years from retirement. That’s also the best time, they noted, to contact a Federal Retirement Consultant℠.

“I would say, the sooner, the better,” Campbell said. “For sure, once you’re getting within five years of retirement is a great time to start to talk with one of us, or definitely once you get 59.5 and older. Even if you think you’re going to work maybe until 70, there are some strategies that we can start to help you with to maximize your retirement.”

Estimated annuity statement: Aside from that, the first thing a federal employee planning to retire will need to do is request their estimated annuity statement. This document takes into account years of service, projected salary during your three highest-paid years, and an estimate of what you would get from your annuity if you retired on a certain date. This doesn’t lock you into specifics, nor will it draw negative attention from agency leadership; it’s purely informational, a best-guess look at what you can expect from federal retirement.

This document can be requested multiple times, either from the Government Retirement and Benefits (GRB) platform, or directly from human resources. The final time you request it should be about six months before your retirement date, as much of the information transfers directly over to retirement forms.

SF50: The next form to request, also about six months before your retirement date, is the SF50: Notice of Personnel Action. This will be a record of the entirety of your career, from your start date in federal service and what grade you started at, through pay raises, step increases and locality adjustments — everything needed to calculate your retirement and annuity.

Federal employees planning for retirement can also get this form from GRB or HR.

“It’s not a bad idea to [review the SF50] when you’re six months out, just to see that everything is correct, because OPM does make mistakes. They’re human too. So if you can correct it sooner, then it’s a little bit easier than having to go back,” Pierce said.

SF 3807 and SF 2801: These are the actual federal retirement forms that will be submitted to the agency. SF 3807 is for Federal Employee Retirement System (FERS) employees, is about 15 pages long, and requires feds to make big, permanent decisions about some key retirement benefits. SF 2801 is somewhat longer, and for Civil Service Retirement System (CSRS) employees, but is otherwise comparable.

These are the forms that will pull data directly from the estimated annuity statement. But Pierce and Campbell cautioned that these are very difficult documents to get right the first time; paperwork errors are the most common cause of retirement process delays. Consultants like FEBA’s can help ensure that these documents are filled out correctly and completely.

SF 2818: Prospective retirees will also need to complete their Federal Employee Group Life Insurance (FEGLI) retirement form (SF 2818), which will determine how they take their life insurance into retirement. The Office of Personnel Management encourages retirees to confirm their beneficiaries and review survivor benefit options at this time as well.

What comes next?

All of this paperwork, Pierce and Campbell said, should be submitted to the agency as early as allowed, usually 90 days before retirement. This gives the agency as much time as possible to process it, because there will be delays, Campbell said. Then on the date of your retirement, that packet goes from your agency to OPM. OPM does have a processing backlog; it can take up to 90 days for them to begin processing your retirement packet.

Retirees can expect their first, estimated annuity payment within two to three months. OPM refers to this as “interim” pay: Usually, it’s about 60-70% of what your actual annuity will be. More is held back than is actually required for projected taxes and benefits payments while the exact calculations are happening. Once those calculations are finished, the total amount underpaid will be paid back.

That’s why it’s important to save up a lump sum ahead of retirement to cover those first few months between the last paycheck and the first full annuity payment. Many federal employees will save up annual leave time, which is paid out in one lump sum at the end of your employment, to help get over the hump. Others rely on the Thrift Savings Plan accounts, but it’s important to remember that it will be two to four weeks before TSP recognizes you’ve retired; during that time, there will be a blackout period where you won’t be able to withdraw money. So if TSP figures into your early retirement plans, it’s important to withdraw what you need before actually retiring.

But the main thing prospective retirees need to remember to make this process as quick and painless as possible is to fill out the paperwork correctly.

“One of the biggest things that’s going to cause you delays in your retirement processing is incorrect or incomplete paperwork,” Campbell said. “This happens all the time, and this is what really slows down the process.”

The post Planning for federal retirement? Here’s how, and when, to get your documents in order first appeared on Federal News Network.