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Pension costs for new feds would increase under budget deal

Dec. 10, 2013 - 06:00AM   |  
By SEAN REILLY   |   Comments
House And Senate Budget Chairs Unveil New Governme
Senate Budget Committee Chairman Patty Murray, D-Wash., and House Budget Committee Chairman Paul Ryan, R-Wis., announce a bipartisan budget deal, the Bipartisan Budget Act of 2013, on Dec. 10 at the U.S. Capitol. (T.J. Kirkpatrick / Getty Images)


New federal employees would pay more for their pensions under a two-year budget deal announced late Tuesday that would also avert the threat of a partial government shutdown next month and give agencies some relief from a new round of sequester-related budget cuts.

For workers hired after Dec. 31, the deal would set their contributions into the Federal Employees Retirement System at 4.4 percent of salary, well above the 0.8 percent rate that most federal employees pay, according to a summary of the bill released by the House Budget Committee. Current federal employees would not be affected, the summary indicates.

While federal workers are dedicated and hard-working, “we think it’s only right and fair that they pay something more toward their pensions, just like the hard-working taxpayer that pays for those pensions in the first place,” the committee’s chairman, Rep. Paul Ryan, R-Wis., said at a news conference at the Capitol.

The deal represents a partial victory for federal employee unions and Democratic lawmakers who had strongly opposed hiking pension contributions for current workers. In a statement, Sen. Mark Warner, D-Va., said he had some concerns about the impact on the federal workforce, but called the overall agreement “a productive step foward.”

To Colleen Kelley, president of the National Treasury Employees Union, the proposed pension increases are a disappointment. In a news release, however, Kelley added that she was glad they would not affect workers already on the payroll.

But the head of the American Federation of Government Employees, the largest federal union, decried the deal. “AFGE rejects the notion that there should be a trade-off between the programs to which federal employees have devoted their lives, and their own livelihoods,” President J. David Cox said in a separate release.

The House and Senate could vote on the agreement in the next few days. If approved, the new framework is supposed to lead to replacement of a stop-gap continuing resolution set to expire Jan. 15.

It would also spare the Defense Department from much — albeit not all — of the sequester scheduled to cut about another $20 billion from its current budget starting next month. Cumulatively, the deal would provide a similar amount of relief to non-defense agencies this year, along with more modest help for both defense and non-defense agencies in 2015.

But to find the money to partially repeal the sequester, congressional negotiators have tapped some 20 different sources for savings or additional revenue, according to the summary.

Besides hiking pension contributions for new federal hires, the bill would change the formula for calculating cost-of-living adjustments for working-age military retirees by making those adjustments equal to the inflation rate minus one percent. The change would be phased in, would not reduce benefits from one year to the next and would not apply to service members who retire because of disability or injury, the summary states.

The measure would also:

■ Incorporate an Obama administration proposal to allow the Office of Personnel Management to offer a “self plus one” option under the Federal Employees Health Benefits Program, along with the standard family plan.

■ Slash the cap on reimbursable executive compensation for contractors to $487,000, or barely half of the $952,000 threshold that the White House budget office announced last week for fiscal 2012.

The agreement marks the second time in two years that lawmakers have turned to new federal hires to shoulder what are in effect benefit cuts.

Last year, Congress and the White House agreed to boost the FERS contribution rate from the traditional 0.8 percent of salary to 3.1 percent for federal workers who came on board starting this year. If approved, the new agreement will add a third 4.4 percent contribution tier for workers with less than five years federal service hired in 2014 and thereafter.

For some federal workforce advocates, the agreement is welcome in so far that it spares current employees from cuts, but worrisome because it prolongs the trend of seeking savings in federal pay and benefits.

Federal workers may have to accept the deal, even if they aren’t happy with it, Joseph Beaudoin, president of the National Active and Retired Federal Employees Association, said in a statement.

“Unfortunately, this deal continues with the dangerous precedent set by Congress last year in taking from future federal employees to pay for bad policies and deficit reduction now,’ Beaudoin said. “In two years, when this funding runs out, will future federal employees have to worry about paying more in the next budget deal?”

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