Many federal employee critics are quick to suggest that federal retirement benefits are bloated, overly generous, and unnecessary. Others are calling for their immediate repeal, and instead replacing them with defined contribution 401(k) plans. On Monday, however, the anti-federal retirement crowd received a rude awakening.
According to a recent report by the Office of Personnel Management (OPM) the Federal Employee Retirement System (FERS) was not only fully funded – it was running a $12.2 billion surplus in 2010 (the latest year which information is available).
You read that correctly: that’s billion with a “B.”
This report comes as attacks on federal retirement benefits have reached a fever pitch in both Congress and the media. Today there are scores of legislative proposals moving through Congress advocating everything from increasing pension contributions, to watering-down the FERS annuity formula, to eliminating the defined benefit system altogether. With this latest revelation making headlines, however, critics can no longer hide behind misleading talking points.
“It’s time for those seeking to water down federal retirement to acknowledge the truth,” said NFFE National President William R. Dougan. “The Federal Employees Retirement System is fully funded. It was designed from day one to be fully funded, and it will continue to be so long as the law remains intact.”
Indeed, realizing an annual surplus is nothing new for the nearly 30-year old retirement system. According to a recent article from Stephen Losey at the Federal Times, FERS ran surpluses every single year from 1994-2006, ranging as high as $14.9 billion. Though relatively small deficits were run from 2007-2009, 2010’s $12.2 billion surplus more than makes up for the previous shortfalls.
It’s worth stating here that the Civil Service Retirement System (CSRS), did not fare as well as its younger sibling FERS in the report. According to OPM, the system ran a $634.5 billion dollar deficit in 2010. Still, those who seek to use this deficit against federal workers should know by now that FERS was specifically designed from its inception to avoid the same funding issues that plagued CSRS. Judging by FERS’ $12.2 billion annual surplus, it seems to be meeting that goal with flying colors.