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Feds Would Pay More for Pensions Under House Bill Feds Would Pay More for Pensions Under House Bill

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BUDGET

Feds Would Pay More for Pensions Under House Bill

The House Budget Committee on Monday approved a measure on a party-line vote that would increase the amount government employees contribute to their pensions.

The legislation, shepherded by Budget Committee Chairman Paul Ryan, R-Wis., incorporates measures approved by the House Oversight and Government Reform Committee in late April requiring current federal employees to pay 5 percent more toward their retirement over the next five years, beginning in 2013. Members of Congress would have to contribute an additional 8.5 percent to their defined-benefit plan during the same time period. Employees hired after 2012 would begin contributing the additional 5 percent immediately.

 

In addition, the bill eliminates a current provision in the law that supplements the benefits of feds not subject to mandatory retirement who 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. It 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 legislation, known as the 2012 Sequester Replacement Reconciliation Act, includes $261 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. At the time, Rep. Gerald Connolly, D-Va., called the bill “odious” to the federal workforce.

 

The spending cuts in the reconciliation legislation are intended to relieve the Defense Department from significant budget cuts resulting from sequestration, which takes 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.

The Budget Committee also on Monday approved the 2012 Sequester Replacement Act, which eliminates the legislative language in the 2011 Budget Control Act mandating next year's automatic defense-spending cuts. Both bills will head to the Rules Committee, which will combine them into one package that the House plans to vote on this week.

The changes to federal employees’ retirement benefits in the reconciliation package are necessary to reduce the deficit and put the government’s defined-benefit plan more in line with private-sector retirement benefits, Republicans argued.

“Look, we all believe in a strong federal workforce,” Ryan said in his opening statement. “But workers in the private sector are being asked to share more equitably in the cost of their retirement benefits, and federal workers need to do the same.”

 

House Budget Committee Ranking Member Chris Van Hollen, D-Md., released a report last week criticizing the Republicans’ approach to spending cuts in lieu of sequestration. “This unbalanced approach to deficit reduction -- focused only on cutting investments rather than also closing tax loopholes -- is the wrong choice for America,” the report said.

Federal employee advocates were not happy with the reconciliation bill the Budget Committee advanced. “This House reconciliation package essentially doubles down on the federal employee pension contributions proposed in the last two Ryan budgets, without any corresponding benefit,” said Matt Biggs, legislative and political director of the International Federation of Professional and Technical Engineers. “The real impact of this is a 5 percent pay cut for federal employees, or, as IFPTE likes to view it, a tax specifically targeted at federal employees.”

Colleen Kelley, president of the National Treasury Employees Union, said that the reconciliation package would have an adverse impact on the government workforce in the long run. “Ultimately, this would undercut the ability to recruit and retain the talented people that the federal government needs,” she said in a statement.

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