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House committee approves 5% increase in pension contributions

May. 8, 2012 - 06:00AM   |  
By STEPHEN LOSEY   |   Comments
The 2012 Sequester Replacement Reconciliation Act proposed by House Budget Committe Chairman Paul Ryan, R-Wis., would raise federal employees' pension contributions by 5 percent.
The 2012 Sequester Replacement Reconciliation Act proposed by House Budget Committe Chairman Paul Ryan, R-Wis., would raise federal employees' pension contributions by 5 percent. (T.J. Kirkpatrick / Getty Images)

The House Budget Committee on Monday passed a Republican budget bill that would hike federal employees' pension contributions by 5 percent.

The 2012 Sequester Replacement Reconciliation Act proposed by Rep. Paul Ryan, R-Wis., seeks to shift $109 billion in sequestration budget cuts scheduled to take effect in January away from defense and other programs. As part of the plan to avoid those cuts, including about $55 billion in defense cuts, Ryan's bill would phase in the 5 percent contribution hikes to both the Federal Employees Retirement System and the Civil Service Retirement System over five years.

The bill would effectively cut federal employees' pay by 5 percent, and leave FERS employees contributing 5.8 percent of each paycheck toward their pensions and CSRS employees contributing 12 percent.

The full House is expected to vote on the bill Thursday.

The American Federation of Government Employees and the National Active and Retired Federal Employees Association on Tuesday denounced the bill and sent letters to House lawmakers urging them to reject it.

NARFE said voting to cut federal employees pay during Public Service Recognition Week is offensive and angering. And AFGE legislative and political director Beth Moten told House lawmakers the bill is "unconscionable."

But Ryan said the cuts are vital to avoid hollowing out the nation's defense.

"Look, we all believe in a strong federal workforce," Ryan said in his opening remarks before the bill's markup. "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."

The bill would also require new federal employees who are hired after 2012 with fewer than five years of previous federal service to immediately pay 5.8 percent to the FERS plan, with no phase-in.

And for new employees hired beginning in 2013, Ryan's bill would eliminate the FERS Social Security supplement, which is now paid to FERS employees who voluntarily retire before reaching age 62.

Republicans on the House Oversight and Government Reform Committee said the pension changes would save or redirect $82 billion over a decade.

Democratic lawmakers oppose the cuts, and say the bill will die in the Senate. But even if it does, Rep. Steny Hoyer, D-Md., fears the proposals could be revived in the coming months and attached to a bill Democrats can't refuse.

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