I read this article with interest. It says 92 percent of federal workers took the DRP voluntarily leaving. But, I wonder what percentage of those 92 percent took DRP into retirement? Anyone have an idea? I have a feeling it’s a large percentage resulting in a large financial burden of retirement pensions shifted to the workers who are left.
I would say the vast majority, maybe as high as 90%, took the DRP into retirement. And most of those were probably covered under the old Civil Service Retirement System (CSRS) plan. In private industry, the only time you see incentive programs like this is when there’s going to be an involuntary RIF coming, and most of those who take such a package were close to retiring anyway.
Remaining federal workers won’t be impacted by this… their pension contributions are fixed. This is actually a net benefit as it gets a group of people that are largely more senior and highly paid out of the workforce, opening up opportunities for other workers to move up.
The way I read the article, that 92% number means 92% of people who left the federal workforce did so voluntarily. In addition to DRP, there were VERA and VSIP voluntary incentives, and then there were just plain old resignations. What it tells me is that 8% of the people who left the workforce were RIFd.
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I think it’s probably a high percentage that took DRP into retirement as well, but I don’t have any data to support it. My concern is for all those currently and very soon will be collecting their retirement pensions. Are there still enough federal workers out there working to fund the retiree pensions??? (kinda like social security predictions) The math and financial data on federal retirement pensions is difficult to find.
Every pay period, federal workers contribute to their pension. For those hired in the last ten years or so, it is 4.4% of their base salary. Every pay period the government also makes a contribution– not sure of the percentage but it is shown on the leave and earnings statement (LES).
So in principle, each worker is funding their own pension. They actually refer to it as an “annuity.” Its not like Social Security which is ending up becoming something of a Ponzi scheme where new investors are paying off the old investors. But in both cases, in the end both federal pensions and social security benefits are backed up by US taxpayers.
Understood the funding. But funding for how long? The individuals retiring now weren’t contributing 4.4 percent. It was around 1 percent and they are going to living for quite a much longer than time than was expected plus there are fewer workers in the current working generation. Uncertain if the numbers/ratios will continue to hold and definitely not confident with taxpayer funding. We don’t really have an IRS left to collect taxes.