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Panel chair introduces bill to reduce pensions

Jan. 25, 2012 - 06:00AM   |  
By STEPHEN LOSEY   |   Comments
Rep. Dennis Ross, R-Fla., has introduced a bill to increase how much federal employees pay toward their retirement and reduce pensions for new employees.
Rep. Dennis Ross, R-Fla., has introduced a bill to increase how much federal employees pay toward their retirement and reduce pensions for new employees. (Rep. Dennis Ross)

Rep. Dennis Ross, R-Fla., on Wednesday introduced a bill that would increase how much federal employees pay toward their retirement and steeply reduce pensions for new employees.

HR 3813, the Securing Annuities for Federal Employees Act, would raise contributions for current Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS) employees by 0.5 percentage points per year for three years, beginning in 2013. This would make FERS employees contribute 2.3 percent of each paycheck toward their pensions, and require an 8.5 percent contribution from CSRS employees.

The bill would eliminate the so-called FERS annuity supplement for new retirees beginning in 2013, except for employees facing mandatory retirement such as air traffic controllers. Today, FERS employees who retire before reaching age 62 receive a supplement equal to the Social Security benefit they will be eligible for once they reach age 62.

The bill would create a new category of employee called "secure annuity employees" new employees hired beginning in 2013 with less than five years of previous federal service who would receive much-reduced pensions.

Secure annuity employees would have their pensions calculated based on the average of their five highest salaries instead of their three highest salaries, as is the current method. Those employees would also have their pensions calculated at a lower 0.7 percent rate, instead of the 1 percent most FERS employees under 62, and the 1.1 percent that over-62 FERS employees, receive.

Ross said defined benefit pensions such as those paid out to FERS and CSRS employees are unaffordable and are vanishing in the private sector. But federal employee groups denounced Ross' plans at a House hearing Jan. 25, and said the proposals would deeply harm the government's ability to attract and retain talented workers.

"Shared sacrifice is fair, but singling out federal employees and retirees for disparate treatment threatens to do permanent harm to a federal civil service critical to meeting the increasingly complex and deeply important tasks of government," Dave Snell, director of retirement benefits services at the National Active and Retired Federal Employees Association, told the House Oversight and Government Reform subcommittee on the federal workforce.

Ross also said members of Congress should be treated no better than oteveryday federal employees, and he called for eliminating the generous pensions enjoyed by lawmakers and their staffs their pensions are now calculated at 1.7 percent. New members of Congress and staffers who fall into the secure annuity category would receive a 0.7 percent pension, like all other new federal employees, under Ross' plan.

"What's good for the goose is good for the gander," Ross said. "Taxpayers have had enough of, ‘Do what I say, not what I do' from Washington."

The Office of Personnel Management said that the 1.5 million CSRS retirees have an average annual pension of $35,000, and that 361,000 FERS retirees receive an average pension of $12,780. But the Congressional Research Service said last January that 275 lawmakers who retired under CSRS received an average pension of $69,012, and another 180 lawmakers who retired under FERS or partly under both programs were receiving an average pension of $40,140 far higher than average federal employees.

Most secure annuity employees including lawmakers and congressional staffers would have to contribute 4 percent of their paychecks toward their FERS pensions.

But firefighters, air traffic controllers, nuclear materials couriers, and law enforcement officers including Customs and Border Protection officers, Capitol Police and Supreme Court Police under the secure annuity plan would have to contribute more 4.5 percent because they receive a higher pension rate. Secure annuity employees in those jobs would receive a pension rate of 1.4 percent for their first 20 years, and 0.7 percent for all subsequent years.

Non-secure annuity employees in those special occupations would get a pension rate of 1.7 percent for their first 20 years, and 1 percent for all subsequent years.

Ross said a markup for his bill has not yet been scheduled.

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