Five Percent Increase in Employee Pension Contributions Passes House


Thursday, a bill containing a five percent increase in federal worker pension contributions passed the House of Representatives, bringing with it considerable risk for already cash-strapped federal families.

Introduced by Republican Budget Committee Chairman Paul Ryan (R-WI), the Sequester Replacement Reconciliation Act seeks to increase current federal workers’ retirement contributions for FERS employees from 0.8% to 5.8%, and from 7% to 12% for those enrolled in CSRS. The proposed pension hike would be phased in over five years, though new hires with less than five years of federal experience would be required to pay the full 5.8% immediately.

In short, if this bill becomes law, it will effectively cut your take-home pay by 5%, without receiving a dime in return.

“These cuts are unacceptable,” said NFFE National President William R. Dougan. “A five percent decrease in take home pay will cost federal workers tens of thousands over the course of their careers. More critically, it would take much needed cash out of their pockets and their communities. In an economy like this, we can’t afford to play political games with these workers’ livelihoods.”

Beginning in 2013, the measure would also abolish the FERS Annuity Supplement for new hires, burning a critical bridge between a federal career and a secure retirement. This, in addition to the immediate contribution increase, would make retirement for these employees a distant and uncertain dream.

According to Ryan, the bill was designed to avoid sequestration cuts which are scheduled to hit the Department of Defense next year. Cuts to Defense and other federal programs are required since the Congressional Super Committee failed to secure enough cuts to avoid the sequestration trigger. Now, Ryan is asking for federal employees to pick up the tab for lawmakers’ mistakes.

“We can’t keep treating federal employees like a piggy bank,” said Dougan. “No group of individuals have sacrificed more to pay down the federal deficit than federal workers over the past two years. They have rent to pay, gas to buy, and kids to send to college, just like everyone else. Certain members of Congress think you can get blood from a stone, but the fact is that federal workers have given all they can, and they will not take it anymore.”

Luckily for federal workers, many in the Democrat-controlled Senate agree, and have pledged to kill this bill once it arrives. NFFE will be joining them on Capitol Hill every step of the way to make sure this bill never becomes a law.