As part of the budget deal announced Dec. 10, civilian federal workers will pay more to fund their pensions and the pensions of military personnel will increase at a lower rate. In an effort to save $12 billion, the agreement — intended to avoid another government shutdown at least through fall 2015 — includes provisions increasing civilian federal workers’ contributions to their pension plan by 1.3% and decreasing cost-of-living adjustments for military workers.
State and municipal pension funding issues are top-of-mind issues, but the federal pension system is much healthier, according to experts, because of its size and ability to run deficits. In addition, most federal workers have access to 401(k)-like plans. The budget deal puts pension funding and the looming retirement crisis front and center again.
