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Federal Eye
Posted at 10:50 AM ET, 04/26/2012

House committee approves measure upping federal employee contributions to retirement plan

Over the objections of its Democratic members, a House committee on Thursday approved a bill to require federal employees as well as members of Congress to contribute more toward their federal retirement benefits.

The Oversight and Government Reform Committee’s bill would phase in an increase of 5 percent of salary over five years, starting with a 1.5 percentage point increase in 2013.

Most federal employees are covered by the Federal Employees Retirement System, which requires them to pay the standard Social Security payroll tax — typically 6.2 percent but 4.2 percent this year — plus 0.8 percent of salary toward their civil service benefit. Employees under the Civil Service Retirement System, who generally were hired before 1984, don’t participate in Social Security but instead pay 7 percent of their salary toward their civil service benefit, which is more generous than that paid under FERS.

Members of Congress pay slightly more toward their retirement and receive enhanced benefits. Under the bill, the required contribution for them would increase by 8.5 percentage points over five years. Further, federal employees who are hired starting in 2013 and later with less than five years of prior federal service will have to pay the entire increase from the outset; since they will be under FERS, that would mean an immediate 5.8 percent required contribution from these employees.

The oversight committee, along with several other House committees, was ordered by the House-passed budget to find savings in order to prevent automatic cuts called sequestration, set to begin in January under terms of last year’s debt ceiling deal. The Defense Department and other agencies have warned of potential serious disruptions in their operations from such cuts. “Sequestration will occur unless we act,” committee Chairman Rep. Darrell Issa (R-Calif.) said during debate Thursday morning.

However, several Democratic committee members spoke out against the plan, with ranking member Elijah Cummings (Md.) saying it “would effectively create a pay cut for federal employees,” and Rep. Gerald E. Connolly (Va.) calling it “odious to federal workers”and saying it would make federal jobs “much less attractive.”

“I believe this reconciliation [bill] will die a deserved death when and if it gets to the Senate,” Connolly said.

The measure, which was approved on a voice vote, could become part of a larger package to be brought before the House. However, the Senate has not started a parallel process.

During voting, the panel approved an amendment to allow federal employees to invest in the Thrift Savings Plan the value of accumulated annual leave to their credit when they leave for retirement or other reasons. The committee had attached similar language to a separate bill it approved last week.

Meanwhile, Democrats raised but ultimately withdrew amendments seeking to centralize prescription drug purchasing in the Federal Employees Health Benefits Program and seeking to delete tax breaks for high-income individuals under the House budget plan.

The bill also would end, for most of those hired into federal jobs starting next year with less than five years of prior service, a supplement paid to those under FERS who retire before age 62. Law enforcement officers and others subject to mandatory retirement still would be eligible for the benefit, which is paid until Social Security begins.

This post has been updated since it was first published.

By  |  10:50 AM ET, 04/26/2012

 
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