House Subcommittee Debates Federal Retirement Benefit Cuts
Last Wednesday, the House Oversight and Government Reform Subcommittee continued to discuss proposals to cut the Federal Employees Retirement System (FERS) defined pension plan in a hearing on federal retirement reform.
"It is clear that the federal taxpayer cannot afford the current federal pension cost structure in the long term," said Rep. Dennis Ross, R-Fla., chairman of the Federal Workforce Subcommittee that held the hearing.
During the hearing, Ross introduced his own legislative proposal to makes changes to both the FERS system and the Civil Service Retirement System (CSRS). Ross' plan would decrease the variable pension accrual rate for FERS employees from 1.1 percent to 0.7 percent and would base federal employees' annuities on their average salary over a five year period instead of the current three years. Currently, the FERS defined pension plan is calculated by taking the employee's three highest years of salary and dividing it by years of service and multiplying it by the variable pension accrual rate.
The proposal would also require employee contributions to FERS/CSRS to increase by .5 percent over three years and would end the FERS annuity supplement for those federal employees that take early retirement, unless the employee is covered by a mandatory retirement age requirement.
The National Active and Retired Federal Employees Association (NARFE) testified at the hearing on behalf of the Federal Postal Coalition, a group representing federal and postal labor and management organizations.
"Cuts to federal retirement benefits and further pay freezes harm hardworking federal employees and their families, who are struggling with these challenges just like their private sector counterparts," said David Snell, director of Retirement Benefits Services at NARFE.
The proposal angered several federal employee labor unions, who argued that the proposals mainly shielded the wealthiest Americans at federal employees' expense.
"Congressman Ross is right about one thing," John Gage, president of the American Federation of Government Employees, said in a statement, "the public is outraged."
Gage argued that FERS is fully funded and does not pose an additional tax burden on the public.
National Treasury Employees Union President Colleen Kelley said that to increase pension contributions for the federal workforce would defeat the purpose of the benefits generated by the payroll tax holiday.
"Before other groups have even contributed a dime to deficit reduction efforts, some in Congress have returned to attack the federal pension system and attempt to squeeze an additional $65 billion in cuts from this middle-class group of taxpayers," Kelley said in a statement.
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With all the talk on the Hill and at the Office of Personnel Management on federal workers’ insurance and retirement benefits options, it could be hard to understand how the different initiatives or legislative proposals will affect federal employees.