The House passed a Republican bill sponsored by Rep. Paul Ryan, R-Wisc., to hike federal employees' pension contributions by 5 percent of their pay. (Win McNamee / Getty Images)
The House Thursday passed a Republican budget bill that would hike federal employees' pension contributions by 5 percent of their pay.
The 2012 Sequester Replacement Reconciliation Act proposed by Rep. Paul Ryan, R-Wis., seeks to shift $98 billion in sequestration budget cuts scheduled to take effect in January away from defense and other social 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 House approved the bill 218-199. The American Federation of Government Employees and the National Active and Retired Federal Employees Association on Tuesday denounced the bill and pressed lawmakers to reject it.
NARFE said voting to cut federal employees pay during Public Service Recognition Week is offensive and angering. 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 military.
"Look, we all believe in a strong federal workforce," Ryan said in his opening remarks before the bill's markup May 7. "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."
Rep. Steny Hoyer, D-Md., denounced the bill before the full House vote, and said it would make federal employees "second-class citizens." He said Republicans are wrong to keep cutting federal employees' pay and benefits while refusing to raise taxes on the wealthy or cut agriculture subsidies.
"Federal employees are ready to participate in helping to bring down this deficit, but don't ask them to do it alone," Hoyer said. "Federal employees have already contributed $75 billion to deficit reduction [through a pay freeze and previous pension contribution increases for future employees]. No other working American has been asked to do that."
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, Hoyer fears the proposals could be revived in the coming months and attached to a bill Democrats can't refuse.