What You Should Know About The 2022 Federal Employee Pay Raise
The new year just keeps getting on happier for federal employees! A federal pay raise for civilian employees ranging by locality from 2.42 to 3.21 percent was enacted by President Biden earlier this month. The exciting news will impact several employee benefit programs ranging from TSP to FEGLI. Federal Educators has some tips on what you should know about this pay raise.
The pay raise took effect January 1st but was expected to impact pay distributions in the first full pay period of the new year that ended on the 15th. In most cases, employees received a pay distribution later in the week following the end of a pay period per their payroll provider. After the distribution is made, employees should double-check that the amount reflects the raise paid in their locality as opposed to their place of residence, if the two differ. On average, employees can expect a 2.7% figure, but it is worth repeating that the figure depends on where the employee works, due to locality pay. This formula stems from the Federal Employee Pay Comparability Act that was designed to ensure federal employees living in specific parts of the country were paid competitively to their private sector employee counterparts.
This pay raise will affect several benefits programs as well. For those with FEGLI program life insurance, this raise could increase the amount of coverage and premiums under Basic and Option B coverage. A pay increase also boosts the value of payments for unused annual leave for new retirees. Additionally, through the Thrift Savings Plan (TSP), employees that invest a percentage of their salary will automatically increase with this raise. Similarly, any FERS employees that make investments based on a dollar amount per pay period should review their contributions to take advantage of any additional matching opportunities. Lastly, this is important news for retirement planning! A raise will increase benefit calculations of the “high-3” salary figure for those retiring in the future. However, it should be noted that the projection is based on the highest 36 consecutive months of salary, not the salary rate paid in the last three years worked.
If this new raise has you feeling overwhelmed rather than excited, let the knowledgeable team at Federal Educators help you wade through the jargon so you can enjoy your hard-earned benefits. Schedule your complimentary virtual meeting here or give our St. Petersburg office a call at 813-536-6955 to get started today.
