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House Passes Bipartisan Budget Deal

Legislation requires new federal employees and working-age military retirees to contribute more to their pensions.

The House on Thursday evening passed a two-year budget agreement that requires new federal workers and military retirees to contribute $12 billion in a bipartisan deal to partially repeal some spending cuts under the sequester.

The $85 billion savings package announced by Sen. Patty Murray, D-Wash., and Rep. Paul Ryan, R-Wis., on Tuesday would fund the government past Jan. 15, 2014, averting another shutdown and setting spending levels through fiscal 2015. As part of the deal, federal employees hired on or after Jan. 1, 2014, with less than five years of service would have to pay 4.4 percent toward their pensions -- 1.3 percent more than employees hired after 2012 contribute to their defined retirement benefit, and 3.6 percent more than most workers hired before 2012 contribute.

In addition, working-age military retirees younger than 62 would receive less generous pensions under the legislation. They would see a decrease, phased in over the next two years, to the calculation of their cost-of-living adjustment, equal to inflation minus 1 percent. The change would not affect service members who retired because of injury or disability.

Military personnel who serve less than 20 years -- about 83 percent -- do not receive a retirement benefit. Those who do spend a career in the military can hit the 20-year mark relatively early, retire from service in their 40s or 50s, draw a pension and work elsewhere. About 17 percent serve 20 years or more in the military.

The budget deal requires new civilian federal workers and military retirees to contribute $12 billion in savings overall -- $6 billion from each group -- to help partially repeal the sequester for fiscal 2014 and fiscal 2015. That $12 billion figure is part of a proposed $63 billion in savings found in various programs to offset the cost of rolling back some of the automatic spending cuts for two years. Other savings in the package include higher airline fees for travelers, crackdowns on federal benefit waste and fraud, and increased premiums on companies that pay the federal government to guarantee their pension benefits.

Current federal employees managed to emerge unscathed in this latest round of budget proposals. Initial reports of the deal said current federal workers would have to contribute $20 billion overall to the budget savings, prompting federal employee unions and other advocacy organizations, as well as the Washington-area congressional delegation, to push back hard against such a proposal.

“If Chairman Ryan and I did not reach an agreement, we would be at sequester level very shortly, and many of these same people [federal employees] would be facing furloughs, layoffs and uncertainty,” Murray said on Tuesday. “We have brought certainty back to all those people.”

(Image via Orhan Cam/Shutterstock.com)