Newly Hired Federal Employees Must Contribute More to Retirement

Congress finally came together on a budget deal without resorting to shutdown threats again. Federal retirement benefits have increased by 1.5 percent for those retired under CSRS and those under FERS who are eligible for COLAS. The increase also applies to Social Security, military retirement and survivor benefits.

However, the budget deal also imposed a different kind of increase. Starting January 1, new federal employees’ mandatory retirement contributions have risen an additional 1.3 percent of salary bringing the total for them to 4.4 percent–unless they are being rehired after a break in service with at least five years of prior service. As with the increase that took effect with 2013, the higher contribution rate does not apply to those switching from one government job to another with no break in service, even if they have fewer than five years of service.

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