This year, the Office of Personnel Management (OPM) received far more retirement applications in August than July. However, despite the increased number of claims, OPM managed to make a reduction in the backlog for August.

The goal for the backlog is 13,000 according to OPM, but this is a level that has not been met since 2015. August’s total backlog was reduced to 17,513 all the way down from 18,334, which is an approximate 4.5% reduction overall. For July, there was actually a slight increase in the backlog regardless of the fact that were significantly fewer applications that arrived in July compared to August.

In August, it took an average of 56 days for OPM to process each claim. OPM was able to handle and process 9, 647 claims in August, but only 8,826 were received.

Generally, the backlog trend gradually reduces in size in the fall since fewer new claims make their way in. However, due to many federal employees retiring at the end of the calendar year, OPM tends to see a sharp increase in January and February. Only time will tell if this year will prove to follow the trends of the previous years.

In the coming months, service members and retirees face some important decisions when it comes to their healthcare coverage for 2019. Open season is right around the corner (November 12 – December 10), and during this time most beneficiaries can choose which TRICARE plan they would like to participate in. A TRICARE plan won’t need to be selected by anyone who is an active-duty or reserve-component service member as their coverage is already included unless they are nearing retirement. However, active-duty family members and retirees have the option to change their TRICARE plans if desired.

The FEDVIP vision plan is not included for active-duty service members as they do not qualify. If reserve-component members, family members, and/or retirees would like to enroll in vision coverage, then they will need to make this choice during this year’s open season.

One major change this year involves coverage for dental. The current TRDP program comes to an end on December 31. Retirees (and their family members) that are opted into either TRICARE Prime or TRICARE Select, as well as retirees and family members who use TRICARE for Life, are required to enroll during this year’s open season in the FEDVIP dental plan.

If you would like more information on this, you can visit TRICARE.benefeds.com.

A letter was written to House and Senate leadership September 5 by democratic members of the House that represent in and around Washinton D.C. This letter urged them to counteract the proposed freeze of federal pay intended to begin in 2019.

Many reps called for what they refer to as an end to the “vilification” and “ongoing assault” on federal employees. Among these reps were Steny Hoyer, John Sarbanes John Delaney, Anthony Brown and Jamie Raskin of Maryland; Gerry Connolly and Don Beyer of Virginia; and Eleanor Holmes Norton of D.C.

Donald Trump’s letter that announced his intentions to freeze pay for federal workers suggests that the move would transition employee compensation to be more in line with a performance-based system as well as reduce federal spending.

However, some critics believe that it is another attack against the federal workforce from the Trump administration.

The congressmen wrote that federal employees have endured many attacks and made sacrifices of their own over the last six years, including contributing $200 billion to deficit reduction, undergoing federal pay and hiring freezes, and losing family income to sequestration-related furloughs, and increasing their pension contributions. They also said, “We cannot recruit and retain the talent we need to support a 21st-century federal workforce if this assault on public servants continues.”

The current Senate version of the general government appropriations bill features a 1.9 percent pay raise for federal employees, counteracting the intended pay freeze. However, the House version doesn’t mention federal pay.

Making sure that the Senate’s version that includes the pay increase makes it into the conferenced version of the appropriations bill was also urged in the letter.

Last Thursday, President Trump said that federal employees should not get a raise in 2019. He called unto lawmakers to freeze the salaries of over 2million federal employees next year.

The House passed the legislation without mentioning any raise. They endorsed Trump’s proposal from February to freeze the salaries. The Senate passed a competing measure authorizing a 1.9% increase. This dispute adds yet another sticking point to already delicate budget talks on Capitol Hill.

Now the House and the Senate are at variance over funding the border wall proposed by the president, reductions to social programs and overall spending levels. The conflicts threaten to shut down the government unless they can reach an understanding before the expiry of the current spending legislation at the end of September.

What happened on Thursday means that the federal pay rates will remain just as they were unless Congress passes the bill and the president signs it.

Without Trump’s intervention, a 1990 federal pay law would automatically give federal employees a 30% raise if Congress failed to reach a decision before the end of the year. In a letter to Congress, Trump mentioned that the government could not afford the increase.

Trump’s spending proposal goes back on the promise to “balance the budget,” lower the deficit and keep Medicare and Medicaid spending without cuts.

Lawmakers who represent the Washington area publicly denounced the presidential statement on Thursday. If the raise is paid, this region would stand to receive one of the largest amounts.

“I strongly oppose eliminating the pay raise for civilian federal employees and will work with my colleagues to have the pay raise included in our appropriations,” Rep. Barbara Comstock remarked.

“Today’s announcement has nothing to do with making government more cost-efficient — it’s just the latest attack in the Trump Administration’s war on federal employees,” said Sen. Mark R. Warner.

Administrators from federal unions also argue that the decision by the president was one of his latest strings of shots against federal workers. Other shots include directives to restrict bargaining with federal unions and make it easy to fire poor performers.

Tony Reardon, the National Treasury Employees Union President said in a statement that the decision was deeply disappointing and indicated that the administration did not respect its workforce.

Every year since the 3-year freeze on salary rates, Congress takes no position on federal worker raise, allowing the annual “alternative” raise specified in similar letters to take effect. This was already experienced with President Barack Obama.

The congressional strategy of action by inaction has resulted in raises in the 1-2% range every year for employees in the General Schedule; this pay system covers most white-collar employees below the execution levels. While blue-collar employees receive similar equivalent raises, high-level employees are linked to performance ratings.

In August, the House passed a spending bill that continued the recent pattern of them remaining silent on the issue. Soon after, the Senate passed its own version of that bill that contained a 1.9% raise. The Senate advocated paying a 1.4% across-the-board raise for General Schedule employees and parceling out the remaining 0.5% points in differing amounts, varying by locality.

The House and the Senate need to resolve these differences before the upcoming budget conference

Under the defense bill that has already been signed into law, uniformed military personnel are set to receive a 2.6% rise in January.

In Trump’s letter, he repeated the argument that federal employees’ pay ought to be performance-based.

The federal paid sick leave law covers certain employees who are federal contractors. The law requires that eligible employees be provided with sick and safe leave for qualified reasons. Sick leave is earned in hours. For every 30 hours worked under a covered contract, the employee accrues a minimum of 1 hour paid sick leave. Any unused paid leave can be carried over to the next year.

The Federal Employee Sick Leave can be used for various reasons such as:

–  The employee’s health care for any medical condition, preventive care, injury or to obtain a diagnosis

– A family member health care for any of the reasons listed above

– Mental illness for the employee or their family member

– Other needs related to domestic violence or sexual assault

Credit for Sick Leave

Both CSRS and FERS employees are eligible to receive full credit towards retirement for their unused sick leave days. Employees with 30 or more years of service can accrue 2087 hours of sick leave in excess of one year. These hours will result in a 2% increase in your annuity.

There’s really no limit on the number of unused sick days that can be credited. The maximum annuity is produced by working a total of 41years and 11 months without using up your sick leave.

Calculating Unused Sick Leave

Employees under FERS and CSRS who die and leave behind a spouse who is entitled to a survivor annuity as well as those employees who retire on an immediate annuity get an increased service depending on the number of days of unused sick leave to their credit.

The added days are used to calculate the number of full years and months of an employee’s service for the sole purpose of annuity computation.

Basically, your unused sick leave days are turned into full years and months on the basis of a 2087 hour work year. Sick leave hours are deemed to represent portions of a 360-day work year that’s then divided into 12 30-day work months.

To calculate the additional credit for retirement, the sick leave days are added to the actual days of service as shown below:

If person X served for a total of 30 years, 4 months and 16 days then at retirement they have accumulated a total of 4 months and 24 days, their total credit will be as follows:

Total Credit =

– 20 years, 4 months, 13 days

– 00 years, 6 months, 27 days

– 20 years, 11 months, 10 days

Only full years and full months (in our case, 20 years and 11 months) are used to calculate annuity. The leftover days (in the case above, 10 days) are dropped. Enter the total number of years and full months into the conversion table to find out your unused sick leave days.

The sick leave calculator is available in the FERS and CSRS Benefits Calculator Software that is free to download.

Unused Sick Leave and Retirement

Unused sick leave credit does not apply to deferred retirements. Also, unused sick leave days cannot be used to determine one’s eligibility to retire. These days are only added after you have met the minimum age retirement.

Those who leave the government before they’re eligible to retire do not get any credit for unused sick leave. However, your unused hours can be restored in full to your credit is you go back to working for the government.

According to news reports, Jeff Pon, OPM Director tends to believe that a controversial proposal to cut federal employees’ retirement benefits does not stand much chance of becoming law.

On Monday the 10th September, Mr. Pon spoke at the annual conference of the National Active and Retired Federal Employees Association

As published in the Federal Times, Pon remarked that a proposal that he sent at the beginning of the year to House Speaker Paul Ryan to significantly cut several federal retirement programs was “highly unlikely to happen.”

Pon sent out a letter in May to Ryan proposing legislation to make a number of changes to federal employee retirement programs. The reforms were initially proposed last year as part of President Trump’s fiscal 2018 budget. The plan was to eliminate FERS supplements for employees who retire before Social Security kicks in at 62. The changes were meant to alter the basis of a retiree’s defined benefit annuity payments from their highest 3years of salary to their highest 5years. It also intends to increase the amount that the employees contribute to FERS by 1% annually until their share matches the government contribution.

Pon also suggests that cost-of-living adjustments for FERS retirees be eliminated and that Civil Service Retirement System COLAs be reduced by 0.5%

At the annual conference, Pon suggested that although he failed the first time, he still believes that changes need to be made to make federal retirement more affordable. The cost of federal health insurance notably increases each year by 6­7%.

“I want to make sure that for the next generation we’re taking a look at a different compensation plan,” Pon remarked, according to Federal Times. He felt that most of the federal employees do not see a 30-year career or a 20-year career, so the government needs to adapt to that.

Last week, the Consumer Financial Protection Bureau warned members of the military that they need to be attentive to monitoring their finances and credit score. “The Department of Defense will now continuously monitor the financial status of service members with security clearances,” CFPB wrote on its website.

CFPB said that at any time going forward, the federal employees, as well as the military members , could have their background reviewed to see if they have, in the past, failed to meet financial obligations. They will also check to see if there is an excessive accrual of debt or a high debt-to-income ratio. Any of these things could jeopardize someone’s security clearance.

The agency commented that it is really necessary for people to frequently check their credit report, and to set up fraud alerts as well as security freezes. In the event of any arising issues, one should file a complaint to CFPD.

Acting Director at CFPD, Mick Mulvaney, is considering quite a few changes to roll back enforcement of provisions of the Military Lending Act. Some of the proposed changes include stopping proactive monitoring of payday lenders to prevent them from violating the Military Lending Act and stopping auto lenders from adding overpriced gap insurance onto auto loans.

According to Henry Manning one of the smarter financial decisions a soldier can make is to opt in for the Thrift Savings Plan program.

Manning, the operations officer for the assistant secretary of the Army for Manpower and Reserve Affairs said that TSP is similar the well-liked 401K plans offered to employees at many civilian jobs, but is, in fact, much more beneficial.

The TSP, like the 401k, is a way for income to be tax-deferred. What sets the TSP apart from some other plans, is the benefit that there are no added on management fees and TSP has held a solid performance record over the years.

Possibly the greatest benefit of TSP is that the government will match a soldier’s contribution, up to five percent, said Manning.

TSP can also be modified according to the soldier’s individual needs. This could be a specified blend of stocks, bonds or the more conservative savings fund. Manning also noted that the customization could be changed without penalty at any time.

According to Manning, the disadvantage of not opting for TSP is that after separating from the Army, soldiers will not have those retirement savings to rely on and no money to show for their valued service.

Manning divulged that he has also had a TSP account for a number of years and that many other Army personnel he knows to take advantage of it as well.

Speaking with a financial counselor from Army Community Service who can help soldiers customize how and where their TSP funds are directed is suggested by Manning. Because of this beginning, the process now is imperative to more quickly take advantage of this.

He pointed out that opting into TSP does not happen automatically. Each soldier needs to individually enroll and specify the percentage of contribution.

Soldiers who joined the United States Army January 1, 2018, or after, will be matched by the government at one percent of contributions after sixty days of service. After two years, the government will match up to five percent of contributions, said Manning, noting that soldiers who entered the Army before this year can immediately get up to five percent matching after they have enrolled in TSP.

Sgt. Laura Martin has a TSP account and illustrated just how simple enrollment is. She pulled up her MyPay account,  found in the TSP option, to select with instructions on enrolling either in a traditional tax-deferred TSP, or a Roth TSP, which is not tax-deferred. Also, a soldier, Martin’s husband, has a TSP account too. She said they both took out a TSP loan, interest-free, to pay cash for a house where they will live once they have retired.

In conclusion, Manning said that the greater part of soldiers do not stay in service for twenty years to take advantage of a traditional retirement pension, which makes enrolling in TSP make perfect sense.

As a federal employee late in your career, it is likely that you are contemplating retirement. This may be the opportunity to pick up new hobbies and pursue passions you may not have had time for while you were actively working. But, for some, it is a different kind of opportunity, one where they will finally be able to relax after a long career in the federal government

Whichever category you may fall into, there are some big choices to make over the span of your retirement years. Some of these decisions are more pressing and must be made as soon as possible, while others won’t need your attention for a while

Here we will look over what are possibly the five biggest decisions an employee of the federal government must make for their retirement.

When You Will Retire

When will you be ready to retire is the first decision to make. This question has multiple layers:

The first obstacle to overcome is eligibility. Based on the year you were born, there is a sliding scale which dictates your minimum age of retirement with the federal government. You are entitled to an immediate retirement, starting within thirty days of when you stop actively working.

Along with the Minimum Retirement Age, there is also a Years of Service requirement:

Eligibility Information

Age    Years of Service

62                  5

60                  20

MRA             30

After you have calculated your age of eligibility, you have to establish if you are ready both financially and emotionally for retirement.

Some people have their entire identity consumed in their careers because they have spent years developing and cultivating their careers. They may find that they are not prepared for such a large part of their lives to change. They will have a void in the place of their work that they will need to fill with other activities.

Potential retirees have to weigh their financial preparation for parting with the workforce.  Will they be able to meet their expenses through annuity, social security (or FERS supplement), and withdrawals from the TSP or other investment accounts?

When to Start Social Security

The Federal Employee Retirement System (FERS) supplement, a financial stopgap that covers retirees until they are eligible for Social Security, stops at age sixty-two. It is then that retirees will have to make the important decision as to whether or not they will draw reduced early Social Security benefits (age sixty-two), at their full retirement age (sixty-seven if born in 1960 or later), or at the age of seventy, the maximum benefit.

The answer is different for everyone, and as such, there is no one right answer. It is a personal choice made generally considering ones estimated life expectancy, economics, and political beliefs. Some would feel it best to wait and not claim early and receive the reduced benefit rate, instead, choosing to wait until their full age of retirement for a higher payout. Others would rather defer benefits even longer, as a means to maximize their payment. The longer the wait, the higher the payout. After age seventy your payment does not increase.  Your payout is higher, but remember, you have plenty of payments to make up if you declined to receive lower payouts in earlier years.

It is also believed by some that the current social security benefits system requires modification and is unsustainable since the Social Security Trust Fund is set to be depleted by the year 2033 if changes are not made. Their strategy is then to claim as early as possible to avoid facing dwindling benefits.

When Should You Start Withdrawing From TSP

When you retire you do not have to begin withdrawing from your TSP.  when you do, however, you have to be strategic in the way you start pulling out your money as well as the amount.

As of the date of this article, plans are being crafted to adjust the current methods that are available, which are slightly restrictive. You can, at present,  choose to pull the entire amount out, select an annuity in exchange for the complete value of the TSP, or select monthly payments that can be adjusted once a year.

There is also a one-time opportunity to make a partial withdrawal from your TSP before selecting one of the three methods outlined above.  Be vigilant and take care in considering your choices. You likely do not want to outlive your TSP fund.

Should You Enroll in Medicare Part B?

One of the paramount benefits of retirement available to federal retirees is the ability to enroll in the Federal Employee Health Benefits (FEHB) program. It allows retirees to continue to take part in the same health insurance program they participated in as employees after they retire. It is an excellent program for the cost, even though the premiums are not paid with pre-tax money as it was when they were employed.

The fees for Medicare Part B are based on a sliding scale based on income. It is not free.

Do you prefer to pay premiums and limit co-pays and out of pocket medical expenses? Or would you rather not pay premiums monthly and cover the out of pocket costs?

To Stay in Your Home, Move, or Downsize

Possibly the most powerful thing you can do for your finances as a retiree is to retain control over your expenses. For instance, there are Postal workers that can retire on time and highly paid government executives that have to work an extra year or two in excess of their minimum retirement age, because one could control their retirement expenses while the other would prefer to live a more lavish lifestyle after leaving their government job.

Consider the option of controlling your expenses by moving or downsizing. You can downsize in your current area, or move to a location where housing is more affordable. This may reduce your monthly housing expense and possibly put more money back in your pocket.

If you make the choice to move, consider what relationships you may be leaving behind, like family. Consider the possibility of moving to be closer to family. Will there be people with whom you have relationships where you are moving?

A reverse mortgage, a first mortgage or home equity line of credit may be some other options if you decide to stay in your home and your home is paid off, and you need money for daily expenses.

Federal officials have been crying out in alarm for years about a “retirement wave” on its way as their baby boomer employees reach pension eligibility. We’ve gotten so used to it that is has become easy to drown out.

The issue is coming to a head within some agencies. Over the last decade, voluntary retirement has spiked eighteen percent across the federal government. It is estimated that currently one in seven federal employees are eligible for retirement. Within a few agencies, the rate jumps to one in five and nearly half of their workforces in 5 years.

Almost a quarter of employees at the Housing and Urban Development Department are eligible to retire currently, the highest rate of any large agency in government. According to Suzanne Tufts, the department’s assistant secretary of administration, HUD has been considering and preparing for it “for quite some time.”

HUD’s secretary, Ben Carson, has “directed everyone [in leadership] to make the vibrancy and the succession planning of their workforce not only top of mind, but to start really thinking and cooperating together and working very carefully together to make that a reality,” Tufts said.

Efforts include weekly meetings attended by Tufts, Deputy Secretary Pam Patenaude, Chief Human Capital Officer Towanda Brooks, and their respective staffs to hold a discussion about the new vacancies and efforts for recruitment. To assist hiring managers with position management and organizational design, HUD has assigned human resources business partners to each of its program offices. Detailed information has been gathered by officials on both the department’s mission-critical and high-risk operations to form a hiring strategy.

“We have very good data on where are people in terms of tenure,” Tufts said. “Each regional office and each program office can overlay that data to see where are the highest risks of potentially losing to retirement a mission-critical person so we can think about where to backfill that.”

Changing the way it markets its positions, HUD is working closely with “mission people” and “not just HR people.” HUD has been utilizing LinkedIn, sending regional directors to college campuses, recruiting spouses on military bases and generally trying to boost media and technology savviness of employees.

Twenty-one percent of NASA’s employees are eligible to retire. That percentage will jump to forty-four percent in five years. Though, agency officials are not concerned with any coming wave. Spokeswoman Katherine Brown has said that the agency’s work is so interesting that the employees like sticking around.

“NASA is consistently ranked the best place to work in the federal government, and employees are highly committed to the mission, and because of this, we have some of the lowest attrition rates in the federal government,” said Brown.

To help plan for workforce needs in the future, the agency engages in attrition forecasting but is not anticipating any acute cause for concern.

“We do expect attrition rates to gradually increase over the next decade due to a higher proportion of retirement-eligible employees,” Brown said, “but do not anticipate that we will experience a sudden retirement wave.”

Environmental Protection Agency employees are also eligible to retire at a rate of 1 in 5. Employees’ dedication to mission as responsible for the higher rate was pointed to by a spokesperson but said the agency is beginning to take action.

“EPA is aware of its workforce demographics and their potential impacts on the agency in the near future,” the spokesperson said. “The agency is taking this significant challenge seriously and is launching agency-wide initiatives focused on workforce planning and succession management. We appreciate the contributions of our career employees and look forward to welcoming a new generation of talented and dedicated environmental professionals.”

Officials at HUD are not just focusing on recruiting new employees but urging the current workforce to stick around. HUD is expanding its mentoring program as a means to help junior employees learn from more senior colleagues as well as engaging in other “knowledge transfer and capture” initiatives. The department is using its increasing role as a disaster response agency, Tufts said, as a new means to motivate employees and spread expertise.

Tufts finds encouragement in the feedback HUD officials have received at universities, where studies pertaining to the department’s mission are expanding.

“There’s so many people on college campuses and so many good programs in urban policy, urban planning, even rural issues,” she said. “The whole issue of disasters and disaster management which wasn’t a form of study in the past is there now. There is a passion.”

Since 2009, HUD’s workforce has shrunk by more than twenty percent. Tufts said this is actually making it more difficult to prepare for upcoming retirements. Strategic planning “does require resources, [both] people and financial,” she noted.
The staffing shortage is also having an effect on HUD in a broader sense. The department’s programmatic funding has increased, she said, pointing to a $28 billion emergency spending surge Congress awarded to HUD in response to Hurricane Maria’s damage in Puerto Rico and other disasters around the country.

“You can’t have good programs without good people and without an adequate number of people,” Tufts said. “We don’t deliver our services with robots, and good people don’t fall out of the trees.”
She stressed that “the passion for housing and housing fairness is out there,” and it was up to herself as well as her team to draw people to the department. Still, she said she could use a little help from Congress.

“We need money and people, in a nutshell,” Tufts said.

Besides their home, the Thrift Savings Plan (TSP) is quite often the most significant investment for federal employees under the Federal Employee Retirement System (FERS). The TSP gives opportunities for loan programs allowing employees to borrow money from their accounts if needed.

For someone in need of cash or looking to make a large purchase (like a home that they need a down payment for), or someone needing to cover some general expenses or pay down some credit card debt this can seem pretty enticing at first.

After contributing for years through payroll deductions, they can dip into what they have built up in their TSP. However, that may not always be the best option, but before we get into that let’s look at the types of loan programs available.

Loan Programs

The residential loan and the general-purpose loan are two loan programs offered through the Thrift Savings Plan:

The Residential Loan Program: This loan program is available for federal employees looking to gather the funds needed for a down payment (or for closing costs) when purchasing a house. Over the course of 15 years, these loans can be paid back, and documentation on the property is required.

The General-Purpose Loan Program: This loan program can be paid back over the course of up to 5 years. There is no documentation required as this loan can be used for any purpose. Typically, paying the loan back consists of regular payroll deductions. However, you can send in a direct payment if you wish to pay off the loan in full, or even to reduce the balance.

Reasons Not to Take a TSP Loan

There are some important reasons to consider if you’re thinking about a TSP loan. These loans aren’t always as attractive as they may seem.

Opportunity cost

The first and most apparent reason TSP loans may not always be the best choice is that you lose gains that the money would have generated. Interest can be compelling over time when it comes to savings growth.

At the time of your loan, which remains fixed, the TSP charges the G Fund rate, and you pay this rate back to yourself.  Earnings that could have been made are sacrificed as they could have been invested somewhere other than the G Fund had the money stayed in the account.

Immediate taxation

It is essential to keep in mind that the money you’re paying back through payroll deductions is after-tax money. When paying back your loan, you must return every dollar you withdrew plus the effective tax rate.

Double taxation

At retirement when it’s time to make withdrawals from your TSP, the money will be taxed at standard income tax rates. The funds that you paid back with after-tax funds will still be taxed at that standard income rate because there is no distinction.

Because of this, part of your TSP will be taxed twice:

1. During loan repayment
2. During withdrawal of funds

Stopping contributions

There can be the risk of voluntarily reducing regular TSP contributions once the TSP has been borrowed against. If the loan payback schedule is no longer affordable on top of the continuing regular TSP payroll deductions then cutting back on the TSP contributions, in general, may be a fallback option. If this occurs, then the loan could cause them even to reduce their overall retirement savings and long-term plan. As a result, the ability to retire on time may be compromised.

Overall, the TSP loan program does offer some limited access to your funds before you separate from the government or retire. Even so, those that are not fully informed on both the hidden and apparent costs could potentially suffer and pay the steep price.

From the White House and some in Congress’ perspective, the government is overloaded with employees who should be moving toward retirement. Generally, the idea of getting a mule to move is dangling a carrot in front and simultaneously giving a good whack to the hindquarters. As entertaining as this depiction may be, that is how many older federal employees are currently being viewed.

Dating back to the Clinton administration’s government “reinvention” program up until the current administration’s President’s Management Agenda (attempting to pave the way and restructure for the fresh new future of the government), this has been a common premise behind management reforms.

There have been high hopes that such a restructure could be possible, leaving out the government’s RIF process (where older employees would still be protected regardless). The theory of the “retirement wave” was that the together the baby boomers would wash out of the government.

However, this “retirement wave” never arrived and it doesn’t appear that it will any time soon. Annual retirements have remained in the 60,000-70,000 range for a little over a decade, with the exception of the Postal Service and intelligence agencies. Nearly 15% of the federal workforce is currently eligible to retire for the same years.

This leads us back to the new focus paired with carrots and sticks.
One carrot-like incentive the government is offering is phased retirement. This is meant for those who aren’t ready to go into full retirement, but also who are ready to cut their hours and work less. At least a fifth of their working hours are to be spent as mentors to younger federal workers. It has now been six years since this went into effect and it isn’t showing much of an impact as the number of employees in this status still remains under 1,000.

Another carrot is incentive payments. This idea originated at the time of the Clinton administration and offers buyout payments (of up to $25,000) to go into retirement. Many who go this route view it as a retirement present to themselves.

For two decades the amount stayed the same, but political leaders eventually realized that the value of the incentive over time was no longer desirable. As a result, it was raised to $40,000 at the Defense Department. It appears that this higher amount could soon be offered government-wide and moving forward could be indexed for inflation.

According to recent research, date shoes that in fiscal 2015-2017 the buyout offers have fallen between 2,7000-3,900 per year, and this is out of roughly 2.1 million (still excluding the Postal Service and intelligence agencies). That averages to a little more than 1 in 1,000 employees per year.

What’s a mule rider to do if the carrot isn’t effective?

Some long-standing proposals are being pushed by the administration that could potentially encourage federal workers to leave quicker. The first one applies to workers who retired after a specific date (to be determined) whose annuities would be based on the highest consecutive five salaries rather than the high-3. The other would apply to future retirees who are retiring under FERS. It would eliminate the “special retirement supplement” that is typically paid to those retiring before age 62 and up to that age when they’re permitted to draw from Social Security.

As in the past, the chances of these ideas becoming law are slim. However, if they do come to fruition, then a rush to exit can be expected by retirement-eligible workers.

Is it possible for federal employees to retire on full salary even after only working for 20 years? It seems that this has become an especially persistent urban myth.

The basis of civil service annuities relies on the high-3 (or the average of that employees three highest consecutive salary years) as well as a multiplier that reflects their years of federal employment.

Covering about 95 percent of feds, The Federal Employees Retirement System (FERS), permits retirement when an employee reaches the age of 56 with 30 years of service (or 60 with 20, or 62 with five). These retirees can receive 1 percent of their “high-3” average per year of service, rising to 1.1 percent for employees who retire at age 62 (or later) with at least 20 years under their belts. To further explain, an example of this could be an employee who has 20 years of federal service as well as a high-3 average of $80,000. If retiring at age 60 they could receive an annual annuity of $16,000, or if retiring at 62 (or later), they could receive $17,600.

The federal employees beneath the Civil Service Retirement System (CSRS), which is a much smaller number compared to FERS, don’t get those same benefits. However, their annuity multiplier is around 2 percent per year of service. Looking back at FERS, those employees do receive Social Security benefits as well as up to 5 percent of employer contributions that go into their Thrift Savings Plan (TSP).

These are the basics of annuity calculations for federal employees, but there are various special provisions that can apply to either FERS or CSRS. If you have additional questions on your own annuity calculations, then it’s best to reach out to a financial advisor who can help you by providing additional information specific to your own unique situation.

Participants in the Federal Employee Health Benefits Plan (FEHBP) could soon have a few more choices when it comes to plan options, according to the Office of Personnel Management.

The decision to allow FEHB carriers to offer the same type and number of insurance plan options has been finalized by OPM.

Previously, there were minimum standards set by OPM that permitted certain plans to offer two options and one high deductible health plan, but other carriers were permitted to offer three options of any kind or two options and a high deductible plan.  OPM’s final rule opens up just a few more options to FEHB plan participants by allowing all FEHB carriers offer the same type and number of plans.

Even though it’s unlikely that FEHB participants will recognize much of a difference in their options, there will be more options available thanks to OPM regulations. Currently, FEHBP contracts with about 83 health plan carriers that offer around 262 various plan options.

The agency wrote in the final rule:

“OPM expects that this regulatory change allowing an increase in the number of plan options will have a positive effect on the market dynamics in the FEHB program by potentially increasing competition between health plans.”

Health plans could be allowed to offer a greater variety of lower cost, higher quality options to better serve FEHB program enrollee interests due to this regulatory change. OPM will ensure that any new options are distinct and meet enrollee interests and that enrollees have access to adequate information to understand the available plan options.”

By having more insurance plan options, OPM feels that this could potentially boost competition among carriers in the FEHBP. This could, in turn, lower health care costs overall.

OPM has strived for the ability to add more plans to the FEHBP for quite some time. Even though OPM can make certain changes, such as this recent one, but many other changes would require congressional action.

OPM receive comments from individuals and FEHB carriers, some expressing concern, regarding this change. The main concern is that this new OPM regulation could increase the competition.

The agency wrote in the final rule:

“OPM considers a competitive environment as one in which all carriers conduct business under the same set of rules, meaning no carrier has the advantage of offering products that another carrier cannot,” the agency wrote in the final rule. “While plan benefits vary, OPM wants all carriers to be able to offer the same number and types of plan options.”

It still isn’t certain, said The Government Accountability Office, if giving this greater authority to OPM will actually have a positive change on the program.

During any given year, few participants generally change insurance plans. This includes about 5 to 7 percent (or 18,000 according to OPM). GAO isn’t sure if participants would attempt to take advantage of their new options.

FEHB enrollees, in nearly all parts of the country, were given more plan options in the year 2015 compared to 2007. Regardless of this, the top three FEHBP carriers still hold a large share of the health market by far, and that share continues to grow.

Including more options and increasing affordability is a priority for OPM as they continue to try to improve the program’s competition.

OPM requested, in its most recent letter to FEHB carriers, that plan providers consider how they could change current plans or how they could introduce new ones in an attempt to cut future costs in upcoming years.

According to recent statistics from OPM, nearly 47 percent of the workforce is around 50 years of age (or older). Cost-savings from FEHB carriers has long been sought after by OPM, especially as the enrolled population ages.

In the past several years, FEHB premiums seem to have been consistently rising. On average this year, non-postal employees and annuitants enrolled in the FEHB Program are paying around 6.1 percent more toward their premiums, while premiums increased an average of 6.2 percent for 2017 participants and in 2016 enrollees also experienced a 6.4 percent increase.

For more information on FEHB options, reach out to a professional advisor.

At the age of 65, federal employees are eligible to enroll in Medicare. In most cases, feds don’t express as much interest in Medicare as they are happy enough with their Federal Employee Health Benefits (FEHB) coverage. However, Medicare requires enrollment and slaps those who don’t subscribe with penalties. Unfortunately, this means that feds must decide if they want to enroll in Medicare just to avoid penalty fees.

But, are Medicare penalties really that scary?

If you are still covered by “active employment coverage” then Medicare penalties do not apply. While still employed by the federal government, FEHB is considered active employment coverage. At retirement, FEHB is then considered “annuitant coverage.”

This point has a few essential branches:

• Federal employees who are still at work at age 65 and covered by FEHB would not receive penalty fees for refusing Medicare, so there is no threat while still covered by active employment coverage.

• For those who are retired and still covered under FEHB, or other employer plans from their working spouse, would still be considered as “covered by active employment coverage,” and therefore would not receive penalties for refusing Medicare.
There is not a late penalty Medicare Part A (even if you enroll late) and for most Americans, Part A is free.

That inspires the question “If Part A is free, why not enroll immediately?” Even though “free” sounds great, there are potential drawbacks.

Enrollees contributing to a Health Savings Account, or HSA, are precluded in Part A. HSA is similar to a flexible spending account, but offers more desirable benefits, including:

• Higher contributions limits:
o $3,450 for self-only health plan enrollees
o $6,900 for Self Plus One or Family Plans (2018 limits) enrollees.

• For anyone over age 55, $1,000 additional “catch-up” contribution is allowed.

• No “use or lose”

• No limits on account

• Account can be invested

• A broader range of qualified expenses can be paid for with HSA money. This can include long-term care insurance premiums, premiums for Medicare Part B, and non-prescription drugs/services.

• HSA money can be accessed in retirement.

These benefits of an HSA can be translated into thousands of dollars of annual savings. Because enrollment in Medicare (Part A or B) precludes participation in HSA, there necessarily be a rush to enroll in the Part A coverage even though it’s free. This is especially true because, again, there is no late penalty for Part A enrollment.

There are only penalties for LATE enrollment in Medicare as opposed to non-enrollment. The penalty wouldn’t have to be paid if you don’t enroll!

So herein lies the issue: Do you need both Medicare and FEHB?

There are a few ways to approach this:

Answer #1 —You don’t necessarily need both. Just like there are differences between each plan in FEHB, there are also some differences between FEHB and Medicare. OPM says, “generally, plans under the FEHB program help pay for the same kinds of expenses as Medicare.”

FEHB proves to be, in many cases, more comprehensive. It often includes dental and vision as well as emergency international (outside the U.S.) care, which you will not find with Medicare. Since FEHB offers a wide variety of plans, you have the option of switching to a “better” plan, if you find you are unhappy with yours, during Open Season whether you’re still an employee or a retiree.
Why should you pay for both if the coverage of FEHB and Medicare is typically the same?

Answer #2 —There are benefits that can be found to having both, even though the previous answer suggests that both are not required. Many plans under FEHB have a “coordination of benefits” to work with Medicare. This means that these select FEHB plans can waive their deductibles, co-pays, and co-insurance and, in a sense, pick up the secondary tab from Medicare. The result could potentially mean no out of pocket costs!

In this case, an FEHB enrollee who pays for both FEHB and Medicare could end up with no out of pocket expenses.
Is that the wisest choice? If you weren’t enrolled in Medicare what would those out of pocket expenses be?

Overall, the comparison between Medicare costs as well as the out of pocket costs you would face without is what would form the ultimate decision.

Here are some examples:

Example #1: The maximum out-of-pocket expenses of A FEHB Self-Plus-One Plan would be $6,500. The premiums of Medicare Part B for a couple, based on joint income, also costs roughly $6,500. So, in this case, would it be worth spending $6,500 in Part B premiums in an attempt to avoid a potential $6,500 loss in the event of a tragedy? Probably not.

Example #2: The maximum out-of-pocket expenses of An FEHB Self-Plus-One-Plan would be $12,000. The premiums of Medicare Part B for a couple, based on their joint income, costs about $3,000. So, in this case, is it worth spending $3,000 in Part B premiums to avoid a potential $12,000 loss in the event of a tragedy? This example demonstrates how each person could have different thoughts about assuming the risk of their out-pocket-expenses. While some may not feel comfortable with such expenses like this, others may feel that if there are no tragic events for four years then ultimately they will have saved $12,000 of Part B premiums since $3,000 x 4 years = $12,000.

Considering all these points, we may find that our FEHB coverage can provide protection from the cost of illness as well as protect us from threats from Medicare!

It’s important to understand employer health coverage rules as well as how they interact with Medicare, especially for employees (and maybe even more so for their spouses) who continue to work after the age of 65.

Typically, most employer plans including more than 20 employees are required to continue offering health coverage to their active employees, as well as their spouses, in the event that an employee chooses to continue working once they turn 65. The employee usually has the option to get Medicare in this case, and it can either be used in conjunction with the employer plan, or it can replace it.

On the other hand, smaller employer plans (fewer than 20 employees) generally requires active workers to get Medicare at the age of 65. Once this happens then the employer plan can then be moved from primary to a secondary insurer, leaving Medicare as the primary.

Once moved to secondary insurance, the employer plan offers the kind of supplemental coverage that those with original Medicare expect Medigap plans to provide. If an employee at a larger employer plan opts to keep this plan as well as get Medicare, then Medicare can still provide secondary coverage to help with payment of large deductibles, which are usually required by most employer plans.

It is essential to understand “how” and “if” employer plans offer continued coverage of things like prescriptions as well as if a Medicare Part D plan is required.

Many questions may arise from a lack of employer-plan knowledge. It should be easy to find answers to questions like these through an employer’s benefits department or even by the health insurer that oversees the employer plan.

In many cases, employees fail to get useful information from their employer plans or fail to seek help from their employer plans altogether, without even thinking to inquire to potential interactions with Medicare.

One example that demonstrates what happens when there is a miscommunication between employers and their employer insurance plan is a story from a woman in Oklahoma named Cathy.

Her husband is still working at full retirement age and his covered by a Federal Employee Health Benefits (FEHB) plan through his employment at the Post Office. She is covered by his health plan, is not currently working, and will turn 65 this summer. She expected that at his retirement they would keep his current insurance which they thought would function as their Medicare supplement along with Part A of Medicare.

She had been told by many insurance agents that offered Medigap supplement plans that keeping his FEHB plan would be more expensive than to purchase a plan from an external, commercial insurer. She and her husband believed that between Medicare Part A and their postal plan that they would owe nothing out of pocket (besides a deductible and the current insurance premiums) for his upcoming outpatient procedure and the hysterectomy she waited to schedule until after she turned 65.

Unfortunately, it turns out that as long as her husband is still working, then his postal insurance must remain as the primary insurance for both of them regardless of the fact that he has Medicare Part A and she is currently applying for it. She was also told that Part A only covers inpatient care (only if the patient is hospitalized for at least 48 hours) and does not cover hospital expenses for outpatient procedures. They always thought to turn “Medicare age” meant paying nothing out of pocket for health care except for Medicare deductibles plus the premium for his postal insurance.

At this point, Cathy wondered if it would be beneficial to shop for a Medigap plan and then as soon as she has her Part A coverage walk away from the postal insurance coverage as well as its high premiums. However, with the legislative uproar against entitlement programs like Medicare and Social Security, there is the valid concern that despite the higher costs it may be better to keep the FEHB coverage because once discontinued there is the requirement of continuous five-year coverage before it can be picked up again.

For the most part, Cathy’s understanding of Part A is typically correct. Under Part B of Medicare outpatient medical expenses are covered. Whether a hospital stay is covered under Part A or B is not reliant on the duration of the stay. It depends on how the hospital admits someone, as inpatient or outpatient, for an observation stay. The Medicare coverage is different regardless of whether inpatient or outpatient care is identical or not.

Supplemental Medicare insurance may not be the way to go though. In order to get a Medigap plan, one must first get original Medicare. This means that if Cathy’s husband lets go of his FEHB plan he would still be required to pay monthly premiums for Part B on top of any premiums for Medigap as well as premiums for a Part D prescription drug program.

Cathy needs to find out what her husband’s FEHB plan doesn’t cover so she can make an educated decision on whether Medicare is the best choice. Generally, this would be in addition to the FEHB plan. While many federal retirees choose to rely on just FEHB coverage, some have opted to add Medicare. Ditching FEHB coverage usually isn’t the wisest choice.

Overall, the most important thing is that people must find the information they need regarding the specifics of what is covered by employer plans versus Medicare coverage. From there they can make decisions based on that information when it comes to the best course of action as they approach the age of 65. While it could be overwhelming and may be difficult to extract details from employer insurers, the frustration in that experience is usually much better (and can save a lot of money down the road) if it happens before getting trapped in expensive health-insurance mistakes.

When working, your Federal Employees Health Benefits (FEHB) is important. As long as you meet the eligibility rules then for the rest of your life in retirement, you and your spouse can keep these benefits, and the share of cost also remains the same.

Continuing FEHB coverage into retirement comes with a perk: more flexibility in selecting your retirement date! In this case, you won’t be forced to wait until you turn 65 and become eligible for Medicare or pay the typically higher rates of private health insurance.

When it comes to exactly how FEHB works in retirement, there are some common misconceptions, which can make it difficult to plan for a future that is financially secure.

Two Eligibility Requirements to Get Right

If, and only if, you meet these two eligibility requirements you could potentially continue FEHB coverage into retirement:

• You can’t just quit. You are required to retire on an immediate pension under FERS or CSRS.

• Also, as the employee, you are required to have been continuously enrolled in any FEHB plan for the five years of service immediately before your retirement date. Or you must have been continuously enrolled for the full period(s) of service since your first chance to sign up if less than five years.

The 5-year rule: What Type of Coverage Counts?

• FEHB coverage that is your own.
• Family member coverage, such as when you’re covered under an FEHB plan of your spouse’s.
• TRICARE coverage, provided you were covered under an FEHB plan when you retire.

FEHB Coverage Change During Open Season

Let’s say an employee (we’ll call her Sarah) plans to retire this year. Then let’s say she changed her FEHB coverage from one insurance plan to another one during the last Open Season, and she has had coverage for the last 20 years. The question stands: will she lose FEHB coverage upon retirement as a result of this change?
The simple answer is no. Sarah will have the opportunity to continue her coverage upon retirement since she meets both of the following requirements:

• She’s retiring.
• For the five years immediately before her retirement date, she had FEHB coverage.

But What About FEHB Coverage for Your Spouse?

Your spouse is not required to meet to the prior enrollment requirement as long as you meet the FEHB eligibility requirements.

In That Case, is There a Catch for my Spouse’s FEHB coverage?

Understanding the role that a FERS or CSRS Survivor Benefit plays when it comes to continuing FEHB if the retiree passes away first is essential.

In retirement, if you pass away before your spouse, they are only permitted to continue FEHB coverage is they chose to receive a Survivor Benefit. This of course is unless your spouse is also a retiree of FERS or CSRS. The spouse could potentially lose FEHB coverage 31 days after the death of the retiree if a survivor benefit had not been elected.

What this means is that at retirement, both you and your spouse face an important decision regarding survivor benefits. With a Survivor Benefit, your spouse can receive a monthly pension check as well as continued FEHB coverage for the rest of their life as long as they do not remarry before age 55. However, the exception to that rule is if you and your spouse were both married for 30 years or more. In that case, they could receive continued coverage even if they marry again before age 55.

What Happens to FEHB Coverage During Postponed FERS Retirement?

If you qualify for a FERS pension under the Minimum Retirement Age (MRA) + 10 rule and you separate from service, then it is possible to continue your FEHB coverage at the time that your FERS pension begins. This is as long as you meet all FEHB eligibility requirements at the time of separation.

Will You Pay More in Retirement?

In retirement, the share of cost remains the same regarding your FEHB coverage. FEHB premiums would not be paid pre-tax anymore, but that is the only change during retirement.

Although, there may be a provision that could allow you to continue payment pre-tax if you’re a retired FERS or CSRS Public Safety Officer.

Does Retirement Work the Same Way in Open Season?

It does! Changes can be made to FEHB coverage at Open Season, which is the same time for both employees and retirees.

What About Dental and Vision Coverage in Retirement?

FEDVIP (Federal Employees Dental and Vision Insurance Program) coverage is an option that is available to both retirees and employees as well as their spouses and (eligible) dependents.

There are a few requirements to continue coverage:

1. You can’t just quit. You are required to retire on an immediate pension under FERS or CSRS.

2. You must pay premiums during the period of finalization of your pension by OPM. If you receive bills from BENEFEDS during this time, then you must pay these on time. Once OPM finalizes your pension, premiums are automatically deducted from your pension every month. You can contact BENEFEDS at 1-877-888-3337 with further questions.

There is no requirement for 5-year continuous enrollment for FEDVIP. During the annual Open Season, you can elect or cancel coverage.

It’s possible to have a financially secure retirement with lifetime coverage thanks to your FERS health insurance benefits. You just need to ensure that you meet all eligibility requirements and take the monthly costs of FEHB and/or Vision and Dental coverage into consideration when preparing your retirement plan. Also, if you’re married, it’s wise to discuss the options of survivor benefits and FEHB.

A final rule was published by The Office of Personnel Management in the Federal Register in which, what it called an ”asymmetry in the insurance market for Federal employees and annuitants,” had been corrected.

The rule impacts the Federal Employee Health Benefits Program (FEHB) and was published and made effective on April 27, 2018.

What Changes are to be Expected?

OPM regulations currently have varying options when it comes to minimum standards for FEHB health plans. On one hand, some plans include two options along with a high deductible health plan. However, other plans could have three options of any kind or two options with a high deductible health plan, creating an asymmetry between the health benefits plans potential offerings.

The regulations are being changed by OPM so that all health benefit plans can potentially offer three options or two options and a high deductible health plan.

What Could This Mean for Participants of FEHB?

Federal employees that participate in FEHB could potentially see two new plan options as a result of this change, according to OPM. This regulatory change is expected by OPM to have a positive effect on the market dynamics in the FEHB program as it could increase the competition between health plans, potentially resulting in the offering of a larger variety of low-cost/high-quality options.

OPM’s goal is to make sure that the new options meet enrollee interests, and also to ensure that these enrollees have the necessary access to the information needed to understand the plan options that are available so that they can make the best decision.

If you have any questions regarding your FEHB coverage, then it would be wise to reach out to an advisor that can explain and clarify everything and help you make the best-educated decision possible.

When it comes to traditional, individual health insurance, the insurer usually requires detailed information about the insured(s) past and present health history, thereby issuing health insurance plans on a personal basis. The process (also known as underwriting), consists of gathering and evaluating this detailed information and determining the premium.

The process is quite different in the Federal Employees Health Benefits (FEHB) program. The actuaries at each approved insurance carrier use the “single risk pool” method and their previous experience to estimate the cost of health expenses for the covered group. From there they divide that number by the number of insureds resulting in the single risk, per-person premium.

The health expenses are underwritten with FEHB, not the health histories. A pool member cannot be denied individual coverage nor can they be charged a different premium; the insurance company is not permitted to ask about individual health. Everybody pays the same per person.

However, in the 2015 FEHB open season, there was a new billing option introduced called self + 1. Couples without children were billed for just two persons for the first time, instead of three or more, no limit (“family”). For these couples without children (or for single parents with one child), these premiums had to drop.

Portions of the pool are underwritten in FEHB by the insurance carriers based on how many persons are to be insured for each enrollee. The name of this practice of underwriting the pool as a whole and then evaluating a sub-group is called “segmenting.”

Even though most premiums did drop, it wasn’t by much. In some cases, the premiums for self + 1 were, in fact, much higher than family. There was really no credible explanations besides these outliers, and instead, it just came down to “it is what it is.”

Segmentation

HHS has a rule for single risk pools:

Final Rule Released by HHS on Single Risk Pool

June 24, 2013

The Department of Health and Human Services (HHS) issued a final rule to implement the Affordable Care Act’s (ACA) single risk pool provisions on Feb. 22.

The final rule amends the proposed rule from Nov. 26, 2012. The provisions of the final rule apply to plan years that begin on or after the date of Jan. 1, 2014.

Single Risk Pool

Insurers are prevented from segmenting enrollees into separate rating pools with the intent to increase premiums at a quicker rate for individuals that are considered higher-risk, thanks to the single risk pool provision. Instead, annual rate changes and premiums are to be based on the health risk of the entire pool as a whole.

Regardless of this rule, a layer of granularity is added to the underwriting process by FEHB carriers. The carriers consider the claims experience of the self + 1 cohort separately from self only, meaning the self + 1 per person premiums would be set much higher.

The resulting national, fee-for-service premiums for self + 1 (In 13 of 15 cases) are substantially more than double the self only premiums.

Self only, self + 1, and family codes for FEHB enrollment are not meant to be used as separate rating polls, but in most cases they are.

An Example of Segmentation

Single feds, John and Mary, carry the same FEHB insurance. Each of them pays around $145 a month. Once they marry they change over to self + 1 while keeping the same carrier with the same exact benefits, meaning the only difference is two insured persons instead of 1. Their new premium then becomes $335 (2.3 times higher) a month instead of doubling to $290, and many people may wonder why that is.

The simple answer is that their insurer rated the self + 1 group separately. This increased their per-person increment and increased the premium for this couples as well as all other couples in the same self + 1 group.

If you have additional questions regarding segmentation or FEHB insurance, it is recommended that you reach out to an advisor for further clarification.

According to Henry Manning, operations officer for the assistant secretary of the Army for Manpower and Reserve Affairs, opting in to the Thrift Savings Plan is one of the wisest decisions that a soldier can make on a financial level.

Manning also said that while the TSP is similar to the well-known 401K civilian plans, the TSP is much better.

The TSP (like the 401K) is a way for income to be tax-deferred, Manning said. One of the great things about the TSP is that there are no management fees and it has maintained a strong record of performance over the years, unlike some other plans.

“Perhaps the biggest advantage of TSP is that the government will match a Soldier’s contribution, up to 5 percent,” Manning said.

Furthermore, each soldier has the option to customize the TSP to meet their individual needs, which ranges anywhere from a specified mix of stocks, bonds, and/or the more conservative savings fund.

Manning also noted that the customization can be altered at any time without penalty.

“The drawback of not opting for TSP is that after separating from the Army, Soldiers will not have those retirement savings to fall back on and no money to show for their valued service,” he said.

Manning also shared that he has had a TSP account of his own for many years and he knows of other Army personnel that have also chosen to take advantage of their plans as well.

Consulting with a financial counselor at Army Community Services is highly recommended by Manning. They can help Soldiers with their customization needs when it comes to where TSP funds are directed.

Beginning the process now is very important to quickly and efficiently take advantage of this. Manning emphasized that TSP enrollment is not automatic. Individual enrollment is required by each soldier and contribution percentage must be specified.

Soldiers who joined the Army January 1, 2018 (or after) can get government matched contributions after 60 days of service (of up to 1 percent). The government matched up to 5 percent of contributions after 2 years of service. Soldiers who joined the Army prior to this year can become eligible to get up to 5 percent matching as soon as they complete TSP enrollment.

Sgt. Laura Martin pulled up her MyPay account to show just how easy TSP enrollment is. Her account has a TSP option to select enrollment in either a traditional (tax-deferred) TSP or a Roth TSP (not tax-deferred).  Martin’s husband is also a TSP enrolled soldier. She said they both took out an interest free TSP loan to pay cash for a home they wish to retire in.

The vast majority of soldiers do not stay in for 20 years, Manning concluded, meaning that they are unable to take advantage of a traditional retirement pension, which is exactly why TSP enrollment can be a very wise decision.