Congress approves pension hike for new feds

“Our federal employees are not a piggybank," Rep. Elijah Cummings, D-Md., said Friday in opposition to the measure. “Our federal employees are not a piggybank," Rep. Elijah Cummings, D-Md., said Friday in opposition to the measure. Lawrence Jackson/AP

New federal hires will have to pay 2.3 percent more toward their government pensions under a deal Congress approved Friday to extend the payroll tax holiday.

Federal employees hired after Dec. 31, 2012, and those with less than five years of federal service must contribute an additional 2.3 percent for a total of 3.1 percent to their defined benefit plan to help pay for a yearlong extension of unemployment benefits. The measure also applies to new congressional employees and newly elected members of Congress. Under the plan, current employees -- most of whom contribute 0.8 percent now to their defined benefits under the Federal Employees Retirement System -- would not see their contribution rate rise.

The pension hike is a permanent change; the legislation funds the payroll tax cut extension and unemployment benefits just through 2012.

The House voted 293-132 to approve the conference report containing the federal pension provision; the Senate approved it in a vote of 60-36. In addition to extending unemployment benefits, the legislation also extends the payroll tax cut and averts cuts in Medicare reimbursement fees to physicians through 2012. President Obama is expected to sign the bill into law.

Many Washington-area lawmakers who represent hundreds of thousands of federal employees voted against the legislation because of the provision increasing the amount that new hires have to contribute to their pensions. The measure will pay for half -- $15 billion -- the cost of extending unemployment benefits.

“I am sick and tired of some members of Congress badmouthing and belittling federal employees,” said Rep. Chris Van Hollen, D-Md., who was a member of the House-Senate payroll conference committee. Van Hollen, who said he supported extending the payroll tax holiday and unemployment benefits, nevertheless voted against the legislation. Others voting against the bill included Democratic Reps. Gerry Connolly of Virginia, Elijah Cummings of Maryland, Donna Edwards of Maryland, Steny Hoyer of Maryland, Jim Moran of Virginia, and Republican Frank Wolf of Virginia. “This bill sends a signal to our federal workforce that we do not appreciate their hard work,” said Moran. On the Senate side, Democratic Sens. Ben Cardin of Maryland, Barbara Mikulski of Maryland, and Mark Warner of Virginia opposed the bill.

Several lawmakers in both chambers spoke out against the federal pension provision in the payroll tax cut extension bill. “Our federal employees are not a piggybank. We should not reach into their pockets every time we have to pay for something,” said Cummings.

“While there are many federal employees in the capital region, it is worth noting that more than 85 percent of the workforce is outside of Washington,” said Wolf. “Eighty-five percent. More than 65 percent of all federal employees work in agencies that support our national defense capabilities as we continue to fight the war on terror.”

Federal employee advocates also criticized the changes to the federal pension system. “This legislation sets a dangerous precedent by sending the message that future civil servants can serve as the downpayment for legislation needing funding,” said Patricia Niehaus, president of the Federal Managers Association. “Federal employees are not only being targeted in the name of deficit reduction, but now it seems Congress is willing to use them as a means to pay for any [emphasis in original] legislation.”

Gregory Junemann, president of the International Federation of Professional and Technical Engineers, said the pension provision pits younger federal workers against those already working for the government. He also cautioned that while the measure in the payroll tax cut extension agreement targets new hires, it doesn’t bode well for existing federal employees. “For those not immediately affected, we would remind them that once a third-tier retirement plan is established, it will become the new baseline and will fuel future calls for additional punitive payroll deductions or cuts for all federal workers.”

There are still several other separate legislative efforts pending that would affect federal pay and benefits. President Obama’s fiscal 2013 budget proposal recommends increasing the amount federal employees contribute to their government pensions by a total of 1.2 percent over three years beginning in 2013. The administration estimates the increase would save the government $27 billion over the next decade.

The GOP House leadership inserted stand-alone legislation (H.R. 3813) modifying the federal pension system into the massive transportation funding bill. Introduced by Rep. Dennis Ross, R-Fla., H.R. 3813 would require federal workers and members of Congress to contribute a total of 1.5 percent more over three years beginning in 2013 to their defined retirement benefits, among other provisions. Earlier this week, the House Rules Committee decided to break out H.R. 3813 into a separate piece of legislation again to be considered along with other measures related to energy and natural resources issues. Rules Committee Ranking Member Louise Slaughter, D-N.Y., called the highway bill a “Frankenstein piece of legislation.”

It’s unclear what will become of H.R. 3813 now that the federal pension-related provisions were approved in the payroll tax cut deal.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.


When you download a report, your information may be shared with the underwriters of that document.