May 10, 2012
Federal employees would have to contribute more to their government pensions under a bill approved by the House Thursday.
The House voted 218-199 with one Republican voting present for legislation (H.R. 5652) that requires current federal workers to pay 5 percent more toward their retirement, with the increase introduced incrementally over the next five years, beginning in 2013. Members of Congress enrolled in the Federal Employees Retirement System would have to contribute an additional 8.5 percent to their defined benefit plan, with the hike added during the same time period. Federal employees hired after 2012 would begin contributing the additional 5 percent immediately.
The Democratic-led Senate is expected to reject the legislation. President Obama will veto the bill if it reaches him, the White House said in a statement opposing H.R. 5652.
Under the legislation, current workers would pay an extra 1.5 percent in 2013; 0.5 percent more in 2014; and an additional 1 percent in 2015, 2016 and 2017. Federal employees currently contribute 0.8 percent of each paycheck to their pensions. That figure does not include their contributions to Social Security or to their Thrift Savings Plan accounts. The bill would result in employees under the Federal Employees Retirement System paying 5.8 percent of their salaries by 2017, plus contributions to Social Security and TSP accounts. Government workers enrolled in the Civil Service Retirement System -- who currently contribute 7 percent of each paycheck to their defined benefit plan -- would give 12 percent by 2017 under the legislation.
In addition, the bill eliminates a current supplement to benefits of feds who are not subject to mandatory retirement and are covered under the Federal Employees Retirement System and retire before age 62, or the age at which their Social Security benefits can kick in. The change would apply to those employees hired after Dec. 31, 2012. One bright spot for federal employees was a provision in the bill allowing retiring federal and U.S. Postal Service employees to deposit lump sums from their unused annual leave into their Thrift Savings Plan accounts to boost their savings.
The federal retirement provisions are part of the 2012 Sequester Replacement Reconciliation Act, shepherded by Rep. Paul Ryan, R-Wis. The bill includes more than $300 billion in spending cuts during the next decade identified by six authorizing committees, including the House Oversight and Government Reform Committee. In late April, the oversight panel approved the changes to federal pensions -- which would yield $83 billion in savings -- and sent the measure to the Budget Committee to incorporate into the reconciliation package. The spending cuts in the reconciliation bill are intended to relieve the Defense Department from significant budget reductions resulting from sequestration, which is set to take effect starting in 2013. Defense is on the hook for $600 billion in automatic spending cuts under the 2011 Budget Control Act, which calls for $1.2 trillion in reductions governmentwide during the next decade.
Democrats, led by Rep. Chris Van Hollen, D-Md., failed in their efforts to put forward for consideration an alternative to the Ryan bill.
The Ryan bill is the latest congressional effort to reduce federal pay and benefits. New federal hires have to contribute 2.3 percent more toward their government pensions under a deal Congress approved in February to extend the payroll tax holiday.
Rep. Darrell Issa, R-Calif., defended the changes to federal employees’ defined benefit plan, pointing out that the bipartisan fiscal commission known as Simpson-Bowles and the Obama administration both have recommended feds contribute more to their pensions. Issa, chairman of House Oversight and Government Reform Committee, called the spending cuts related to federal retirement benefits “a reasonable sacrifice” to ask of the federal workforce. He also praised federal employees, acknowledging it won’t be easy for government workers to pay more for their pensions.
“Many people will talk about public servants in a less than kind way,” Issa said. “I am not one of them.”
Maryland Democrats Van Hollen, Minority Whip Steny Hoyer and Elijah Cummings, criticized the measures related to federal pensions. Hoyer pointed out that federal employees already have contributed $75 billion in the name of deficit reduction through the pay freeze. “You treat federal employees in this House as second-class working people,” Hoyer said, speaking to his Republican colleagues. “That’s wrong.”
Cummings, who noted it is Public Service Recognition Week, listed the achievements of some finalists for the Service to America medals, annual awards that honor the top federal employees for their work.
Federal employee advocates this week have sent letters to House lawmakers urging them to reject the measures related to pay and benefits, likening the change to a 5 percent payroll tax increase on government employees. “Singling out federal employees for disparate treatment threatens to do permanent harm to a federal civil service critical to meeting the increasingly complex and deeply important tasks of government,” Joseph Beaudoin, president of the National Active and Retired Federal Employees Association, said in a May 8 letter to House members.
May 10, 2012