All government workers, including members of Congress, would contribute more toward their defined benefit pension plans under a proposal approved by the House Oversight and Government Reform Committee.
The bill would change the formula for calculating pension benefits to an average of five years of salary from three years and require new hires to contribute 4% of their salary into the Federal Employees Retirement System.
The Federal Employees Retirement System had $376.7 billion in assets as of Sept. 30, 2010, the latest data available.
Current employees, who now contribute 0.8% of pay into the DB plan, would pay 2.3% under the proposal, while members of Congress, who now contribute 1.3%, would pay 2.8%.
The bill, introduced by Rep. Dennis Ross, R-Fla., was approved Tuesday by 22 Republicans, with 16 Democrats voting against it. The increased contributions are also part of a House bill extending the payroll tax cut, which has not been scheduled for a full House vote.
President Barack Obama proposed increasing the employee contribution for current employees to FERS to 1.2% over three years last fall, during federal budget deficit negotiations that collapsed. The prospect for contribution increases in an election year is considered even dimmer.
“I don't see this getting any political traction, and I don't see the president signing it,” said one congressional observer who asked not to be identified.
Committee Chairman Darrell Issa, R-Calif., has criticized Congress for lagging behind state and local governments on pension reform. Mr. Issa's committee estimates that state and local government employees now contribute an average of 5% into their DB plans.
Colleen M. Kelley, president of the National Treasury Employees Union, which represents 150,000 federal workers in 31 agencies, argued in a statement that higher contributions on top of two years of pay freezes amount to “a steep pay cut.” Reducing the federal deficit, Ms. Kelley said, will take “shared sacrifice, particularly from the wealthiest Americans.”