The House Oversight and Government Reform Committee on April 30 advanced a legislative package to raise the retirement contribution rates for federal civilian employees and reduce their eventual benefits by adjusting the way annuity payments are calculated.
The committee approved the package in a 22-21 vote with all Democrats and one Republican, Rep. Mike Turner of Ohio, voting no.
Included in the bill, which will now head to the House Budget Committee for consideration as part the massive tax bill Republicans aim to pass this year, is a provision to raise the premium that many long-time federal and postal employees pay out of their salaries in the Federal Employee Retirement System.
Under the current system, contribution rates are determined by the year an employee started: 0.8% in 2012 and earlier; 3.1% if hired in 2013, and 4.4% if hired in 2014 and afterward.
But the package advanced April 30 would have all employees pay 4.4%, which Committee Chair James Comer, R-Ky., said would ask workers to pay more and increase government revenue by $30.7 billion over a decade.
The Federal Employee Retirement System, or FERS, is a retirement plan that provides benefits from three different sources: a Basic Benefit Plan, Social Security and the $937 billion defined contribution Thrift Savings Plan. Employees are required to contribute to the Basic Benefit and Social Security parts of FERS in order to receive monthly annuity payments upon retirement.
The package would also base retiree benefits on the highest five years of salary rather than the current three highest years. Those benefits are calculated based on top salary received and number of years of service in the U.S. workforce. The change would result in a savings of $4.8 billion over a decade, according to Comer.
Moreover, the package would eliminate supplemental retirement benefits for those who retire before age 62 and are unable to yet collect Social Security, and give new federal employees the option of serving “at-will” — a designation that makes them easier to fire — or contribute an additional mandatory 5% to FERS.
“The budget legislation the committee passed today is a key part of the president’s vision to enact his America First agenda and deliver significant savings for hardworking taxpayers,” Comer said in a statement. “The House Oversight Committee recognizes that this is a once-in-a-generation moment and is taking action to ensure the federal government is more effective, efficient, and fiscally responsible.”
Turner, the lone Republican who opposed the package, said it’s unfair to federal workers.
“I understand the need for reform and certainly we can have changes that occur in benefits for new hires…but I do think for current employees, to change the rules for people in the middle of the game is wrong,” he said.
Democrats on the committee denounced the FERS changes and offered a slew of amendments opposing them, but each was defeated.
Rep. Stephen Lynch, D-Mass., the top Democrat on the committee during the markup, called the package “an outright theft of earned benefits that would cost each federal employee thousands of dollars per year.”
Unions representing federal workers have also denounced the package.
“The House GOP is making a frontal assault on civil servants’ hard-earned pension benefits, including those nearing retirement, all to make a modest down payment on more tax cuts for billionaires,” said Everett Kelley, national president of the American Federation of Government Employees, in a statement prior to the vote.
