Thinking About Funding Federal Retirement Plans

Most U.S. Federal retirement plans are now fully funded, but since plan assets must legally be invested in Federal securities, fund surpluses are used to reduce overall Federal budget deficits. As a result, current taxpayers are not charged with the cost of future Federal retirement obligations. Nevertheless, Federal rules do require the employing Federal agency to budget for current personnel’s accruing liability of retirement promises. Therefore policy decisions regarding the number of Federal civilian and military personnel and the design of their retirement benefits may be made with a better understanding of the costs