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Gage: Cuts to federal pay seen as likely

Jul. 20, 2011 - 04:53PM   |  
By STEPHEN LOSEY   |   Comments
American Federation of Government Employees President John Gage.
American Federation of Government Employees President John Gage. (M. Scott Mahaskey / Staff file photo)

House lawmakers are zeroing in on a series of steep cuts to federal employees' retirement benefits as part of a deficit reduction deal, American Federation of Government Employees President John Gage said Wednesday.

"I've abandoned all hope," Gage said. "I know we're gonna get crushed. It doesn't seem we can do anything about it."

Gage told reporters that under the House plan to raise the debt ceiling, new federal employees would pay vastly more for their Federal Employees Retirement System defined benefit pension. Those new employees would contribute about 6 percent of their salaries, as opposed to the 0.8 percent FERS employees pay now, Gage said.

Current FERS employees would see a gradual increase in their contributions once the current pay scale freeze expires, Gage said. They would contribute an additional 0.5 percent of their salary each year for three years, he said. This would bring their contributions to 2.3 percent each pay period.

AFGE said Civil Service Retirement System employees would also see identical changes, bringing their contribution rates to 8.5 percent.

And federal employees' pensions could also be set based on the average of their five highest annual salaries, instead of the current high-three system, Gage said.

Gage said the House also may back a reduced formula for calculating cost-of-living adjustments for federal retirees.

The changes would be especially devastating for future federal employees coming in at the lower end of the pay scale, Gage said.

"New FERS employees would get hammered," Gage said. "I don't see how they're going to pay full Social Security and another 6 percent for their pension, with no pay raises."

Gage said Rep. Chris Van Hollen, D-Md., has been keeping AFGE informed about debt ceiling negotiations in the House and how they would affect federal employees. In a briefing with reporters Tuesday, Van Hollen said he opposes requiring federal employees to pay vastly more for their pensions, which amounts to a serious pay cut.

"We think that that's a terrible signal to send to federal employees," Van Hollen said of himself and House Minority Whip Steny Hoyer, D-Md. "It's like saying to the guys who helped track down Osama bin Laden, thank you very much, here's your 5 percent pay cut."

But with the House occupied Tuesday with a vote on a balanced budget amendment which President Obama has pledged to veto hopes for a debt ceiling deal shifted to the Senate with the release of a $3.7 trillion deficit reduction plan from the bipartisan Gang of Six. A fact sheet outlining that deal proposed lowered COLAs for federal and military pensions.

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