2023 Federal Pay Raise is Largest in 20 Years
Federal employees are getting the largest pay raise in about 20 years in 2023. Many were anxious to find out what the pay raise in 2023 would be in light of rampant inflation in 2022 and a sharp increase in 2023 FEHB premiums.
Many workers have expressed frustration that the pay raise was not larger given the decline in our quality of life the country has seen this year with rapidly rising costs on everything from food to electricity, but the reality is that the pay raise is technically not based on inflation since the federal pay raise each year is determined by a political process.
2022 Inflation and the 2023 COLA
Although many federal employees are not thrilled with the 2023 pay raise, federal retirees probably feel better about the raise they will get in their annuity payments next year. The cost of living adjustment (COLA) in 2023 will be the largest in over 40 years as the 2023 COLA came in at 8.7%.
Unlike the pay raise for current federal employees, the COLA is determined by an automatic formula and is tied to inflation. Since inflation has been rising rapidly for the past couple of years, this pushed the COLA higher. 2022 inflation came in at 7.1% for the last 12 months, although it has been much higher at certain times throughout the past year, especially in some categories (i.e. food, gasoline).
2023 FEHB Premiums Rising 8.7%
Even though 2022 saw a more modest increase in FEHB premiums of 3.8%, 2023 is another story. The share of premiums paid by federal employees and retirees in 2023 is increasing by an average of 8.7%.
According to OPM, the increase is due to largely to COVID-19. There are ways that federal employees can save on their health insurance premiums though; these are some ideas.
2023 Medicare Part B Premiums Falling
You read that right: Medicare Part B premiums are actually going down next year. This came as good news for federal retirees when it was announced in October.
2022 Stock Market Not Kind to TSP Investors
Adding to the pain of inflation in 2022 has been a falling stock market. Although the year is not yet finished as of the time of this writing, there is no doubt that the TSP stock funds will be down for the year, and probably way down in some cases, such as the S Fund.
Inflation, a recession, and a war between Russia and Ukraine are just some of the things that have soured investor sentiment this year and driven down stock prices. However, bear markets are a normal part of investing and investors who remain patient have always been rewarded based on past history of the markets. This too shall pass.
Court Halts Enforcement of Federal Employee Vaccine Mandate
In 2021, President Biden gave federal employees a COVID vaccine mandate, but in 2022 we saw a federal court block enforcement of the mandate. The case is still being litigated in the courts, but as of the time of this writing, the federal government is not taking any action to implement or enforce President Biden’s federal employee vaccine mandate.
Agencies Collecting Federal Employees’ Religious Data
Right around the time that the injunction was issued for the federal employee vaccine mandate, lawmakers were raising concerns about federal agencies collecting data on personal religious information of federal employees who had requested exemptions to the vaccine mandate for religious reasons.
A group of Republican lawmakers sent a letter to President Biden in which they called it “inexcusable” that the federal government was gathering the personal data on federal employees.
The letter was sent in response to news that as many as 19 federal agencies had established databases to maintain personal religious information in response to vaccine mandate exemption requests.
TSP Mutual Fund Window and Website Problems
The Thrift Savings Plan rolled out major changes to its online systems over the summer, and many federal employees and retirees were not pleased with the changes.
One of the most notable changes was establishing a mutual fund window to allow TSP funds to be invested in mutual funds outside of the traditional TSP funds. The changes also included the rollout of a mobile app for the TSP.
But unfortunately, the new system was not without problems when it launched. Among the difficulties were a surge of calls to the TSP’s customer support line resulting in extremely long hold times and difficulties that many participants encountered with establishing their new online accounts. The problems were so pervasive that members of Congress got involved and asked the Government Accountability Office to investigate.
Since the initial rollout of the new TSP website, the problems have largely been rectified with call hold times down and millions of new account logins established.