A group of Republican senators has introduced a bill to slash retirement pensions for new federal employees, saying the current system unfairly compensates public-sector workers as compared to their private-sector counterparts.
The Public-Private Employees Retirement Parity Act, introduced by Sens. Richard Burr, R-N.C.; Saxby Chambliss, R-Ga.; and Tom Coburn, R-Okla., would eliminate the defined benefit portion of the Federal Employees Retirement System for all new government workers hired six months after its enactment. New employees would still receive matching agency contributions into their Thrift Savings Plan of up to 5 percent.
“Right now, federal government workers receive far more generous retirement benefits than private-sector employees,” said Burr, who sponsored a similar bill in 2011 that never made it out of committee. “The cost to taxpayers of these benefits is unsustainable and we simply cannot afford it. We cannot ask taxpayers to continue to foot the bill for public employee benefits that are far more generous than their own.”
The bill would also apply to lawmakers.
“Generous pension plans for members of Congress have helped turn congressional service into a career rather than a calling,” Coburn said. “At the same time, federal workers enjoy a better benefits package and higher overall pay than most taxpayers -- even at a time when many Americans are still simply looking for a job. This status quo is unsustainable and needs to be reformed.”
Current federal employees, who would not be affected by the bill, receive 1.1 percent of their “high-three” -- the average salary of the employee’s highest paid three consecutive years of service -- multiplied by the number of years the employee served. The Republican lawmakers said the current FERS liability is underfunded by $20.1 billion, and it is likely to “skyrocket” in the years to come.
Federal workers hired prior to 2012 contribute 0.8 percent of their salary to their future annuity, though President Obama has proposed increasing that to 2 percent. Feds hired after 2012 must contribute 3.1 percent of their salaries toward their pensions.
Agency contributions into their employees’ TSP accounts are dollar-for-dollar up to 3 percent, and 50 cents on the dollar up to 5 percent.
A budget conference committee seeking to strike a deal to fund government past Jan. 15 could consider asking federal employees to pay more toward their pensions as a deficit reduction measure. The Congressional Budget Office recently spelled out two ways to reduce spending on employees’ pensions. The first was Obama’s approach -- which would save $19 billion over 10 years -- and the second would switch from a high-three to a high-five average salary in calculating employees’ annuity -- which would save $6 billion over 10 years.
The Burr-Chambliss-Coburn bill would save hundreds of billions of dollars over the next several decades, the lawmakers said.