White House Proposal Would Increase Employee Pension Contributions by 150 PercentTuesday, September 20, 2011
(National Federation of Federal Employees)
As part of its comprehensive plan to reduce the federal budget issued yesterday, the White House proposed to increase federal employees’ pension contributions. The proposal seeks to increase worker-financed contributions by 150 percent over the next three years.
Federal workers currently contribute 0.8% of their paychecks to their pensions every pay period. Should this proposal become law, workers would be obligated to pay an additional 1.2% for a total employee contribution of 2%. Though the percentage figure may seem small at first blush, this change would cost federal workers tens of thousands of dollars over the span of their careers.
“We understand that savings need to come from somewhere, and there are some tough decisions to be made, but reducing the modest retirement benefit for VA nurses, federal firefighters, border patrol officers, and other federal workers is the wrong approach to doing it,” said NFFE National President Dougan in a statement following the plan’s release. “Federal workers earn every penny they receive in their retirement, and they should not have that cornerstone of their retirement security whittled away.”
Furthermore, the proposed increase in employee contributions will not result in a corresponding increase in pension benefits, meaning that federal workers are simply going to have to pay more to get the same modest benefit they now receive.
“We are not pleased to see federal workers’ retirement put on the block for cuts,” said Dougan. “Federal employees’ pensions are half what they used to be under the previous retirement system, and now they are proposing even greater cuts. It’s just not right.”
According to data from the National Active and Retired Federal Employees Association, the average Federal Employees Retirement System (FERS) retiree receives just $12,780 per year in their retirement annuity. By most objective standards, that is not a pension one can retire on. It is just a small fraction of what a retiree needs to cover living expenses. Nonetheless, the government seems determined to squeeze more savings out of the already overburdened federal workforce.
“Federal workers are seeing this proposed cut to their retirement security on top of a two year pay freeze and almost $1 trillion in cuts to federal agency budgets over the next ten years,” said Dougan. “Federal agencies are going to have to make serious changes to achieve that level of savings. The attacks on the federal workforce are coming from all angles.”
“The White House is mistaken if they think additional cuts to the federal workforce will not impact the ability of federal agencies to recruit and retain a qualified workforce. Cutting pay and benefits year after year makes a big difference in recruiting. With every cut that’s made, federal jobs cease to be good jobs. One decision at a time, the federal government is losing its reputation for being a good employer.”