House Committee Votes to Triple Pension Contributions for Current Employees; Slash Benefits for New Hires


The House Committee on Oversight and Government Reform voted this week to advance a bill that would mandate FERS and CSRS employees increase their pension contributions and create a new federal retirement tier with even less affordable benefits.

H.R. 3813 – also known as the “Securing Annuities for Federal Employees Act – was introduced by Republican lawmaker Dennis Ross of Florida, who chairs a house subcommittee that handles legislation impacting the federal workforce. Under the legislation, current FERS employees would nearly triple their contribution rate toward their pensions – from 0.8% today to 2.3% by 2015. CSRS employees would also see a 1.5% increase, taking their weekly contribution to 8.5% each paycheck. Despite the large increase in employee contributions, there will be no corresponding increase in benefits.

“It is laughable to suggest that this legislation is about securing annuities for federal retirees,” said NFFE National President William R. Dougan. “Nothing about this helps federal workers – in fact it’s just the opposite. If this bill becomes law, federal employees would be forced to pay more today to get less tomorrow.”

The deepest cuts in the measure were reserved for future federal employees, who under the law would be enrolled in a new retirement system and called “Secure Annuity Employees.” Under this third tier, new hires would be required to pay 4% of each paycheck to their pension, have their annuity multiplier reduced from 1 or 1.1% (depending on their retirement age) to 0.7%, and have their years of service annuity factor reduced from the current “high 3” years of service to a “high 5.” Combined, the changes made under a new retirement system would result in a 36% reduction in retirement benefits.

The foundation of this legislation, politics aside, is based on the misguided concept that federal workers receive “gold-plated” and “bloated” pension benefits. This is simply not true. The average annuity for a retired FERS employee is just $12,780 per year. Another misconception about the program is that it lacks funding, necessitating reductions in cost so that the benefit will be there for future retirees. This, unsurprisingly, is also a fabrication. When the FERS system was developed in the early 1980’s it was designed and mandated to be fully funded. It remains fully funded to this day, and serves as a model of an efficient, sustainable, and reliable retirement system.

“Federal employees are not getting rich off of their pensions like many would like us to believe,” said Dougan. “Congress already slashed federal pension benefits in half in the 1980’s when it moved from the CSRS to the FERS system. Now Congress is looking to cut it by nearly half again? It is clear to everyone but Congress that FERS is a fully funded and modest retirement benefit that does not need reform.”