Annuitants are retired federal employees that receive monthly benefits for their previous service. Those retirees can be rehired into the federal government under certain circumstances.

“Data provided to our committee indicates that many rehired employees stayed beyond their allowed 13-month terms. Five out of 11 employees under re-employed annuitant status have served for seven years or more,” said Sen. Amy Klobuchar, D-Minn.

Annuitant hires are only supposed to be for emergency situations at AOC, where the loss of a person’s skills or knowledge could prove detrimental to the agency’s work. But senators said that a seven-year emergency was hard to believe.

According to Christine Merdon, acting architect of the Capitol, the few annuitants that have been hired by the agency long-term remain for two reasons: previous changes to the annuitant hiring system only impacting certain hires and the agency still needing the niche skills of those employees.

Merdon said that the AOC looked at its annuitant hiring practices in 2015 “because we had rehired annuitants on there for many, many years, and that’s when we instituted that temporary employee part of the rehired annuitants.”

Those annuitants that were hired on a permanent basis, prior to the 2015 decision to limit them to 13 months of employment, cannot be moved into temporary employee status, as it would be considered an adverse action against them.

Annuitant employees make up a very small portion of the AOC workforce, just 11 out of the total 2,300 full-time employees, but members of Congress worry that a reliance on annuitants could prevent other employees from getting jobs higher up the chain of command. And some of those annuitants are authorized to receive both their position’s full pay and retirement annuity.

“When you keep bringing people back, it certainly makes it hard for the promotion part of that, as well as you would think it should,” said Sen. Roy Blunt, R-Mo.

And AOC is likely to bring on more annuitant employees in the coming weeks.

“We will be potentially bringing on just a few more as the Senate moves, as we typically do to handle the paining, and are here fore a month or two, and then they leave,” said Merdon. “Because they know the buildings, they know the agencies.”

And though the current number of annuitants falls within the 10 to 15 person average for the agency, Merdon said that her office could be better about making sure other employees can fill those jobs.

“I do believe there is opportunity to strengthen that … as well as take a look at our better succession planning for the agency. I’m committed to do that in the interim,” said Merdon.

Succession planning requires that the AOC have younger employees trained in the more obscure skills needed to maintain Capitol buildings and grounds so that when one person retires, the agency isn’t scrambling to find someone with the necessary skills.

Annual leave

Most employees can only carry over 240 hours of annual leave from one leave year to the next. If you have more than 240 hours of “use or lose” leave, there’s a big incentive to retire before those hours are lost. That’s because you’ll receive a lump-sum payment for every hour. More importantly, those hours will be projected forward as if you were still on the job. Because there will be a pay increase in 2018, the closer you retire to the end of the 2018 leave year — January 5, 2019 — the more of those hours will be paid at the higher hourly rate.

There are two other factors to consider before you put in your retirement papers. First, if you are a FERS employee, you’ll have to retire no later than Dec. 31, 2018, to be on the annuity roll in January 2019. If you are a CSRS employee, you’ll have to retire no later than Jan. 3, 2019, to be on the annuity roll in that month. However, for every one of those three days you aren’t on the annuity roll, your annuity for that month will be reduced by one-twelfth.

Second, because you’ll be retiring at the end of the year both your agency’s personnel office and the Office of Personnel Management’s Retirement Operations Center will be flooded with applications. As a result, there will be a longer than usual delay before your agency sends your paperwork to OPM, where it will land in their overflowing in-basket. However, as soon as OPM can get to it, they will send you a partial payment each month until they can finalize your application and send you your first full annuity payment. While you’ll eventually receive all the money you are due, it could take a couple of months. So be prepared.

Taxes

If you retire at the end of a calendar year, the amount you pay in taxes for that year will be greater than they will be in the year after you retire, even if you’re paid for a lot of unused annual leave and/or receive a buyout. That’s because you’ll be receiving an annuity that is much less than your salary was. And a portion of that annuity will be tax exempt.

In closing

Consider the financial consequences of your decision, have a clear idea about why you are leaving, and make sure you know what you’ll do after you retire.

The task force, mandated by an April 2018 executive order, issued a report on increasing USPS financial sustainability Dec. 4, which advocated for both pricing and management changes to U.S. mail operations.

“The USPS is on an unsustainable financial path which poses significant financial risk to American taxpayers,” said Treasury Secretary Steven T. Mnuchin in a news release. “President Trump tasked us with conducting a thorough evaluation of the USPS, and today’s report contains achievable recommendations that fulfill the president’s goal of placing the USPS on a path to sustainability, while protecting taxpayers from undue financial burdens and providing them with necessary mail services.”

Slumps in first-class mail coupled with an increase in package shipments driven by e-commerce have upset the USPS funding model, according to the task force.

In its government reorganization plan, the Trump administration proposed preparing the postal service for privatization, a move which was heavily opposed by both Democrats and Republicans.

The report recommended bringing USPS employee pay more in line with the broader labor market, placing scrutiny on the bargaining power of employee unions in wage and benefit negotiations and recommending that employee compensation bargaining power be eliminated.

“Career postal employees are represented by nine unions and two management associations,” the report said.

“However, unlike other federal workers, the [Postal Reorganization Act] authorizes collective bargaining on compensation, some benefits and conditions of employment, and postal unions are therefore able to negotiate compensation, benefits and working conditions. Given their federal employee status and the role that the USPS plays in the economy, USPS employees maintain a unique collective bargaining position. They can bargain for wages and benefits as private sector unions do, without the same level of risk that their company will go out of business.”

The report also called out the retiree health benefits system, suggesting that the agency re-calculate its required payments to the Postal Service Retiree Health Benefits Fund based on the population of employees at or near retirement age.

But the report recommends that USPS keep with its current mandate to prefund the system, which both members of Congress and federal employee unions have called misguided and pointed to as one of the core reasons for USPS’s current financial difficulties.

The Government Accountability Office predicts that the fund will run out of money by 2030 due to USPS inability to make payments.

The task force also recommended reforming the entire federal government pension system, in which USPS employees participate, by increasing employee contributions and converting to a defined contribution system.

USPS has a generally positive track record for funding employee pensions when compared with the rest of the government, but the task force recommended reforming the entire system to meet more with private sector trends for ending the accrual of funds in pension accounts.

Beyond employee benefit changes, the report also recommends removing cost caps on mail and package delivery, more concretely defining what constitutes part of the USPS Universal Service Obligation — which ensures a minimum level of service to all Americans, no matter their geographic location — strengthening the USPS Board of Governors, relying more on private sector involvement and pursuing cost-cutting measures.

But postal unions contest much of the task force’s basis for its recommendations in the first place.

“This poorly conceived report makes many of its recommendations based on myth and misinformation that instead of improving mail services, would deliver higher prices and less service for the public,” said Mark Dimondstein, president of the American Postal Workers Union, in a statement.

“This report calls for slashing universal service. Recommendations would slow down service, reduce delivery days and privatize large portions of the public Postal Service. Most of the report’s recommendations, if implemented, would hurt business and individuals alike. No institution is better suited for the e-commerce revolution than the USPS. This is why some on Wall Street and their enablers on this task force want to position the Postal Service for sale to private interests. The recommendations of the task force are not in the public interest.”

“It is, for all sorts of reasons, extremely difficult to do,” Warren said at a Nov. 29 Creating Future Forward Government event hosted by FCW. “We have put forward legislative proposals, we will continue to, but, again, we’re not going to miss the opportunity.”

He explained that the stars would have to perfectly align to allow for the policy and legislative actions necessary to effect complete transformation, and the Trump administration “would be unwise” to act on the expectation of full reform.

But that doesn’t mean that the administration can’t find avenues for reforming and improving the federal workforce for the 21st century within current legislation.

The Civil Service Reform Act of 1978 established the federal workforce rules and protections that agencies still use today, but the 40-year-old legislation was not designed to accommodate the highly skilled and technically advanced workers of today.

“The workplace in general has changed dramatically,” said Warren, explaining that the original CSRA was designed for a clerk-based workforce, whereas today the small number of clerking duties left at federal agencies are often outsourced.

To adapt, administrations have issued special hiring authorities and workarounds so that agencies can hire for modern needs.

“If you look at how government has adapted over that time, it’s actually pretty impressive,” said Sean Morris, federal human capital leader at Deloitte. “Some aspects of what we have is actually working.”

The problem, according to Morris, is not so much that the workforce needs are changing, but that they are happening at such a fast rate.

“The change is coming at us so quickly, we don’t have the ability in government to be able to pivot,” said Morris.

According to Warren, the best solution in lieu of a total civil service overhaul is to use the “tremendous latitude in this area of the law for administrative discretion” to make government hiring more adaptable.

The Trump administration has already taken advantage of some of this, issuing direct hiring authorities and an alternative pay and classification system for sorely needed positions at federal agencies.

But agencies still need to be given a better grasp of what the regulations and authorities actually allow them to do in hiring new personnel.

“Even amongst the experts in this area and the [chief human capital officers] … there is a very imperfect understanding,” said Warren, explaining that agencies have historically sought out special hiring authorities and then never actually used them, because they didn’t know what was allowed. ”Part of it is an abundance of caution.”

The Trump administration is also looking to change federal retirement benefits practices to better attract personnel that only want to spend a couple of years or so in government work before moving on to something else.

The last time the Office of Personnel Management attempted to change the retirement benefits structure, it was met with strident opposition from federal employee groups.

Those proposals, however, simply sought to eliminate certain benefits without offering alternative systems.

According to Warren, a defined contribution retirement package that an employee can take with them after leaving government service may be a better alternative.

About 19 percent of the 1.6 million people eligible have chosen the new system, according to Defense officials. While DoD has no target or goal for the number of people to enroll in the BRS, they want to make sure everyone is informed of the choice available — and that the deadline is Dec. 31, said Jeri Busch, DoD’s director of military compensation policy, during a Wednesday press call.

Among other things, they’re sending notifications through the Defense Finance and Accounting Service’s Smartdocs email system to every service member who is eligible and hasn’t made an opt-in decision; and they’re including reminders on Leave and Earnings statements, she said.

About 1.6 million active-duty and reserve troops are eligible to opt into the new retirement system, which promises a smaller pension check for those who complete a 20-year career but offers cash payments into a personal retirement account that service members can keep regardless of how long they stay in the military, as well as other benefits such as continuation pay at 12 years. Traditionally, only about 20 percent of service members stay long enough for the traditional retirement.

All troops entering the military starting in 2018 are automatically enrolled into the new Blended Retirement System. But those with fewer than 12 years of service as of the end of 2017 can make the choice in 2018 to either stay with the legacy system or switch to the new BRS. They must actively choose and opt in to BRS either in MyPay (Army, Air Force and Navy) or Marine Online.

“For some, this can be a difficult decision, that requires weighing both options, and considering personal and professional goals,” said Busch.

“We’re certain there are individuals out there who may not have made their decision yet … or as we all tend to do, may just be procrastinating,” she said. For those, there are a number of credible resources and tools that are available for free, she said, to include certified, qualified personal financial managers on installations or available through Military OneSource.

Officials said 307,213 service members had made the decision to opt in as of Nov. 26, including 243,715 active duty and 53,498 Guard and Reserve members.

DoD’s position is still that there is no target or goal for the number of service people to opt in to the new BRS. Instead, their goal is to make sure troops have the resources to help this highly personal decision, Busch said.

The Dec. 31 deadline is set in law, and DoD doesn’t have the authority to extend that deadline. Officials are also prepared to handle any last-minute surge in the online enrollment systems that could happen, Busch said. The DoD MyPay system, for Army, Navy and Air Force, as well as the separate Marine Corps system, MarineOnline, have been fully tested, including stress-tested, she said.

The Army, Navy and Air Force don’t require their service members to take any steps if they’re going to stay with the legacy retirement system. If they do nothing, service members will automatically remain enrolled in the traditional retirement system. But in order to choose the BRS, they must actively take the steps to opt in and fill out paperwork stating that intent.

The Marine Corps is the only service that requires its members to register their decisions regardless of whether they opt in to the BRS or stay with the legacy system. Of those eligible, nearly 37 percent of Marines had opted in to the BRS as of Sept. 30, a higher percentage than the other services.

And more than half of the eligible Marine Corps members had made their decision as of Sept. 30.

But officials don’t attribute the Marine Corps participation rate to the requirement to register their decision, regardless of the choice, Busch said. “We think it’s more the fact that the Marine Corps, as is their culture [is] very much engaged from a leadership perspective, all the way down to the squad level, to make sure their members are aware of all the information about BRS, and are taking action,” she said.

Consequently, DoD will continue to engage with the leadership within all the service branches as the deadline approaches, she said.

Resources available for those making their BRS decision:

• BRS Website: https://militarypay.defense.gov/BlendedRetirement/ 
• BRS Comparison Calculator: https://militarypay.defense.gov/Calculators/BRS/ 
• Installation Personal Financial Managers: These trained professionals can provide free financial counseling to service members and their families, and have received training on the BRS. Ask the family center or finance office where the personal financial managers are located, and make an appointment. Contact information is also available on MilitaryOneSource. (Scroll down to the installation program directory. 
• MilitaryOneSource: Provides free financial support 24/7, which is especially helpful for Reserve and National Guard members and those stationed in remote areas. Call 1-800-342-9647.

Postponed annuity

If you retire under the MRA+10 provision but postpone the receipt of your annuity, you can reduce or eliminate the age penalty by holding off applying for it until a later date. The longer you delay, the smaller the impact will be. Even if you are under age 62 when you apply for your annuity, you’ll be entitled to receive the special retirement supplement, which approximates the amount of Social Security benefit you earned while you were a FERS employee.

If you are eligible to carry your Federal Employees Health Benefits of Federal Employees’ Group Life Insurance into retirement, those benefits will end after a 31-day free extension of coverage; however, you may re-enroll in either or both when your annuity begins. Note: Under the Temporary Continuation of Coverage (TCC) provision, you can continue your FEHB coverage for up to 18 months by paying the full cost of that benefit plus 2 percent to cover administrative expenses.

In addition, any unused hours of sick leave you had to your credit when you retired will be restored and included in the computation of your annuity.

Deferred annuity

Here’s the good news. You’ll be entitled to a deferred annuity if you resign from the government before you are old enough to retire, have at least 5 years of service, and don’t ask for a refund of your retirement contributions. If you were covered by FERS, you can apply for that annuity when you have one of the age and service combinations mentioned in this column’s first paragraph. However, if you were covered by CSRS, you’ll only be eligible for that benefit at age 62.

Now here’s the bad news. First, any unused sick leave you had to your credit when you left government won’t be used in the computation of your annuity. Second, regardless of how many years you were enrolled in the FEHB or FEGLI programs, you won’t be able to re-enroll in either one when your annuity begins. Third, if you are covered by FERS and under age 62 when you apply for your annuity, you won’t receive the special retirement supplement.

As of fiscal year 2017, the agency is behind by $38.2 billion in required payments to the fund, but USPS has said that its current financial outlook has made filing those payments unaffordable.

And USPS finances aren’t projected to get any better. For more than a decade the agency has experienced large operating costs, while finding few ways to increase revenue or cut costs, according to the report.

“If the fund becomes depleted, USPS would be required by law to make the payments necessary to cover its share of health benefits premiums for current postal retirees. Current law does not address what would happen if the fund becomes depleted and USPS does not make payments to cover those premiums,” the report said.

“Depletion of the fund could affect postal retirees as well as USPS, customers and other stakeholders, including the federal government. About 500,000 postal retirees receive health benefits and [the Office of Personnel Management] expects that number to remain about the same through 2035.”

According to the report, even if USPS added $1 billion to the fund every year from now on, the lifespan of the fund would only increase by a couple years, and it would only last until 2035 if the agency added $2 billion per year.

Congress has attempted to remedy the depleting retiree benefit fund through bipartisan legislation that would require USPS retirees to enroll in Medicare alongside their usual benefits.

The bill has received mixed reactions, as some groups applauded the bill’s intent to provide financial relief to the agency, while others claimed that the bill balanced the budget on the backs of government employees.

In addition to the Medicare enrollment requirement, GAO offered seven other options for addressing the insolvency of the retiree health benefits fund:

1. Supplemental federal appropriations — Once the fund is depleted, Congress could provide USPS with additional appropriations, which would likely increase the federal deficit and become inconsistent with USPS’s status as a self-financing agency.
2. Reduce eligibility — The agency could make new hires ineligible for retiree health benefits or reduce eligibility for the fund in some other way that would cut down on the obligated payments for the agency.
3. Increase retiree and employee premiums — Employees and retirees could be asked to pay for a larger percentage of their premiums or pay for their retiree health benefits before retirement.
4. Change federal contributions to a fixed subsidy — Health benefits could be moved to a defined contribution structure that would include a fixed amount subsidizing health benefits. The subsidy may or may not keep up with actual costs.
5. Establish a non-federal voluntary employees’ beneficiary association — The VEBA would be located outside the federal government, and its governing board would determine what benefits would be provided to retirees and employees through either initial contribution from the Retiree Health Benefit Fund or the Treasury.
6. Reduce the required level of prefunding — Legislation could alleviate the current USPS responsibility for prefunding health costs at 100 percent, thereby reducing the agency’s burden but increasing the risk that it would not be able to pay future costs.
7. Outside investment — Legislation could move 25 percent of the fund’s assets to be invested in outside securities, increasing the chance for return on investment but also increasing the risk of losses in a stock market downturn.

The report recommended that Congress pass legislation to change the USPS retiree health benefits system in some way that would put funding on more stable footing.

USPS agreed that congressional action would be needed to address the problems with the current health benefits fund.

Regardless of how much you have before retirement, your first step should be to sign up for a preretirement counseling seminar at your agency. Most agencies and their field activities hold these seminars periodically, with more sessions scheduled when buyouts and RIFs are imminent.

If your organization doesn’t provide a preretirement course at a time convenient for you to attend (or even offer one), consider enrolling in a course offered by an outside firm. In some cases, your agency will pay for it.

Your next step is to meet with your agency’s benefits counselor to go through your official personnel folder (OPF) and make sure that it includes complete documentation of all your federal employment (including any military service), the effective dates of each adjustment to your pay, and records of your health benefits and life insurance coverage, plus any designations of beneficiaries you may have filed.

If your OPF is accurate, ask your benefits counselor to verify when you will be eligible to retire and whether you will be able to carry your health and life insurance into retirement.

Next ask for an estimate of your potential retirement annuity. If you owe any deposits or redeposits, you can ask your benefits counselor to show you the effect of making or not making the payment. Then if you want to make a deposit or redeposit, you can ask the counselor to tell you how to do it.

If you had a period of active duty service in the armed forces (or are or will be receiving reserve retired pay), you’ll need to assess the impact of making or not making a deposit to get credit for that time in your annuity. On the other hand, if you are (or will be) receiving military retired pay, you may have to make a deposit to get credit for that time and, at retirement, waive that pay.

Finally, if you owe any money to your agency, you’ll want to arrange a repayment schedule so that your annuity is not offset in order to recoup the debt.

When you have set your retirement date, you’ll need to ask your benefits counselor for two copies of the necessary retirement forms. You’ll fill one out for your counselor and one for yourself. Your counselor will review the forms and contact you to clear up any questions or problems that may arise.

Once the paperwork is done and you’ve confirmed your retirement date, you can relax and start enjoying the time that remains.

Reg Jones was head of retirement and insurance planning at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

The Tricare Retiree Dental Program ends Dec. 31 and will be replaced by the Federal Employees Dental and Vision Insurance Program. Most military retirees and their families who are enrolled in Tricare will be able to enroll in FEDVIP for dental coverage, vision coverage or both.

Military officials have been getting the word out in a variety of ways, include postcards to the millions of retirees and families eligible for the coverage.

Active-duty family members are eligible to sign up for vision coverage under FEDVIP, but not dental coverage. Active-duty members and their family members may still enroll in the Tricare Dental Program. The vision coverage, including eyeglasses or contacts, is in addition to the routine eye examination benefit that many beneficiaries currently have under Tricare Prime or Select.

That FEDVIP coverage will be effective Jan. 1, but you can’t enroll in FEDVIP just yet. The enrollment period is during the federal benefits open season, which runs Nov. 12 through Dec. 10.

Retirees and their family members must enroll during the open season to get that dental and/or vision coverage in 2019. The only way to enroll in the FEDVIP, or change that coverage, outside of that enrollment period is if there has been a qualifying life event: a marriage, for example, or retirement from the military.

During the open season, you can choose between 10 dental carriers and four vision carriers. In some cases, the dental carrier is limited to certain regions of the country; other dental carriers provide national and international coverage.

Some carriers offer standard coverage as well as a premium plan. Those who tend to need more costly dental procedures, or expect to, might consider whether the higher-cost coverage is more cost-effective.

The 2019 rates and plan information for the carriers isn’t expected to be available until around mid-October.

In the meantime, there are some steps you can take to prepare, according to Defense Health Agency spokesman Kevin Dwyer:

• Make sure your information is up to date in the Defense Enrollment Eligibility Reporting System, better known as DEERS. Defense Health Agency officials have sent postcards to all military retirees who are eligible to enroll in FEDVIP, Dwyer said. If you haven’t received a postcard, that may mean that officials don’t have a good mailing address for you.

• Go to the FEDVIP site for military beneficiaries, operated by the Office of Personnel Management: https://tricare.benefeds.com/InfoPortal/indexAction. There you’ll find information about the program, and you can get an idea of what the different carriers offer and how it works, by looking at the 2018 rates. Remember, those numbers will likely change.
• At Tricare.benefeds.com, you can sign up for updates about the FEDVIP program, by email and text. 

Some families already are seeking advice from their dentists on which plan best suits them, said Karen Ruedisueli, government relations deputy director for the National Military Family Association.

Overall, she said, “I’m sensing some excitement about the option to pick the plan that meets your needs.”