Federal pay and benefits remain at risk as Congress returns

Carolyn Kaster/AP

Government employee advocates remain concerned over possible cuts to federal pay and benefits, as the debate over financing the yearlong payroll tax holiday resumes next week on Capitol Hill.

House and Senate conferees are scheduled to begin discussions soon over how to finance a 12-month payroll tax cut extension past February, and those talks likely will include proposals to prolong the federal pay freeze and reduce the retirement benefits of government employees and lawmakers. Congress agreed to a two-month extension before it left for recess in December.

That deal did not include any provisions affecting federal workers' compensation, but the House-passed bill contains several such measures and some or all of them could find their way into the conference committee's final deal. Among the provisions under consideration:

  • A one-year extension of the current two-year pay freeze for federal civilian workers and lawmakers.
  • An increase in the amount federal employees and members of Congress contribute to their pensions. The increase would total 1.5 percent and be phased in over three years beginning in 2013.
  • Elimination of the Federal Employees Retirement System minimum supplement for individuals not subject to mandatory retirement starting in 2013. Individuals subject to mandatory retirement include certain categories of employees such as law enforcement, firefighters, air traffic controllers and nuclear materials couriers. Under current law, the FERS minimum supplement is paid to these employees and to federal employees who retire before age 62. The FERS minimum supplement represents the amount employees would have received from Social Security if they were 62 years old on the day they retired, and is paid until they reach age 62 and begin receiving Social Security payments.
  • Changes in the retirement structure for new federal employees hired after 2012 and with fewer than five years of creditable service for retirement purposes. Federal workers in that group would contribute 4 percent to their pensions, an increase of 3.2 percent from the current 0.8 percent level. The employee contribution for special occupational groups and lawmakers would increase by a total of 3.2 percent, from 1.3 percent to 4.5 percent.
  • A high-five average salary calculation for annuities for new hires rather than the current high-three average pay calculation. Existing Civil Service Retirement System and FERS employees still would operate under the high-three calculation.

The House bill estimates the proposals reducing federal pay and benefits would save about $65 billion.

The National Treasury Employees Union is reaching out to its membership as well as urging conferees to oppose the measures affecting federal workers. "There is a very real threat as we speak with respect to the 2013 pay raise," union president Colleen Kelley told Federal News Radio, referring to the debate over financing the yearlong payroll tax cut extension and outlining the other provisions in the House-approved legislation. The National Active and Retired Federal Employees Association also is focusing its energies on House and Senate payroll conferees, said Julie Tagen, the group's legislative director. The group met last week with staffers in some of the conferees' offices. Tagen said, "no one had anything specific," to say on provisions affecting federal workers, but she believes everything included in the House bill remains on the table as negotiations resume. The Senate's payroll tax holiday legislation did not include cuts in federal pay or benefits.

Maryland Democratic Sen. Ben Cardin and Rep. Chris Van Hollen, D-Md., are conferees, and the two represent a large federal employee constituency. "The office we really want to meet with is Cardin," Tagen said.

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