Cantor calls for increasing federal employee retirement contributions

February 21, 2013
House Majority Leader Eric Cantor (R-Va.)
House Majority Leader Eric Cantor (R-Va.)

House Majority Leader Eric Cantor (R-Va.) on Thursday repeated his call to replace sequestration with changes including revisions to the federal employee retirement program.

“Rather than take border patrol agents off the job, the President should instead choose to reform the federal employee retirement system so it matches what people get in the private sector,” Cantor said in a statement.

Cantor was referring to increasing the employee share toward their civil service annuity benefits, Rory Cooper, a spokesman for Cantor, said in an e-mail.

“Virtually no one has both a defined benefit and a defined contribution retirement system in the private sector,” Cooper said. “We wouldn’t eliminate it, but we would make the employer (taxpayer) subsidy less generous.”

Numerous proposals to increase employee contributions toward retirement — while lowering the government share by an equal amount — have circulated in recent years. President Obama recommended an increase 1.2 percentage points over three years in a fall 2011 proposal to the budgetary “supercommittee.” That special committee’s failure to reach an agreement left automatic budget cutting as the default way to achieve deficit reduction required by a law that raised the debt ceiling.

The White House included that recommendation in early 2012 in its fiscal 2013 budget proposal. It estimated that the change would cost employees $21 billion over 10 years. Congress did not enact a 2013 budget. Instead, it generally extended spending at 2012 levels through a temporary measure set to expire next month, when a series of sharp automatic sharp cuts in spending on defense and other agencies and programs is set to go into effect.

The House last spring passed a bill designed to offset part of the sequester that included a 5 percentage point increase in employee contributions to be phased in over five years. The Congressional Budget Office estimated that increase – along with several more minor retirement-related provisions — as costing employees $79 billion over 10 years.

Cantor sponsored a sequester replacement bill that passed the House in December that included the same increase, among other provisions. The Senate did not take up either bill.

Said Cantor’s spokesman: “The President proposed reforming the federal pension system to the Joint Committee, it is in his budget and it was in our sequester replacement bill. Instead of raising taxes, this is the type of spending reform we should all be able to find agreement on, in order to avoid the negative effects of the sequester.”

Cantor’s statement also called for cutting waste and tightening government spending controls.

Many agencies, including Customs and Border Protection and the Pentagon,

have said that if sequestration hits they would have to take numerous cost-saving steps, including putting employees on unpaid furloughs.

Nearly nine-tenths of federal employees are under the Federal Employees Retirement System, for which they pay the standard Social Security payroll tax of 6.2 percent of salary. Those first hired before this year pay an additional 0.8 percent of salary toward a civil service annuity; under a law enacted early in 2012, those first hired this year and after must pay an additional 2.3 percentage points.

Most other federal employees are under the Civil Service Retirement System, which requires a 7 percent of salary contribution for a civil service annuity that on average is worth nearly twice what a similarly situated FERS employee would receive. CSRS employees do not pay into Social Security, nor do they receive a benefit from that system for their federal employment years.

Federal employees are also eligible to save in the defined contribution Thrift Savings Plan, which operates much like a private-sector 401(k) program.

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