Obama to propose $35 billion in federal retirement program savings

President Obama is expected to propose $35 billion in federal retirement program savings in the fiscal year 2014 budget plan he will release Wednesday.

(Charles Dharapak/AP)
(Charles Dharapak/AP)

In a briefing with White House reporters, a senior administration official indicated the budget savings would come through increased charges to federal employees for their retirement benefits. The savings figure was not included in new documents provided to reporters, but the White House indicated the budget will incorporate savings outlined in an administration’s previously released plan to reduce the deficit.

That plan calls for saving $35 billion through “reform federal retirement programs.”

Already, the federal workforce is contributing more toward retirement. Employees hired this year and later, except those with five years of previous federal service, will pay 3.1 percent of their salaries toward their pensions. Most employees currently contribute 0.8 percent.

While the details of the $35 billion in federal retirement savings for FY 2014 were not specified, in September 2011, the White House proposed saving $21 billion, from 2013 through 2021, by increasing employee defined benefit contributions and another $16 billion, from 2014 through 2021, through other federal retirement cuts. The White House, in 2011, recommended increasing the employee contribution to their retirement by 1.2 percentage points over three years, while cutting the government’s share by an equal amount.

The National Active and Retired Federal Employees Association criticized one part of the plan using a less-generous index to increase benefits in retirement programs including Social Security and federal retirement.

“We are disappointed to learn the president’s first proposed budget since his reelection will embrace a policy designed to balance the budget by cutting the earned benefits of America’s seniors, veterans and those with disabilities,” NARFE President Joseph A. Beaudoin said in a statement. “If President Obama endorses the chained CPI inflation formula to calculate the cost-of-living adjustments for Americans, as has been reported, he will be turning his back on the populations most in need of assistance.”

American Federation of Government Employees National President J. David Cox Sr. called the retirement proposals a “betrayal” by the administration on the heels of the already enacted contributions increase, the salary rate freeze and sequestration cuts that threaten unpaid furloughs starting soon.

“We cannot understand how an administration that claims to stand up for working and middle-class Americans can simultaneously push policies that would impose such enormous pain on its own workforce,” he said in a statement. “This proposal is as unnecessary as it is cruel, and we urge lawmakers to reject it entirely.”

National Treasury Employees Union President Colleen M. Kelley also weighed in: “Federal employees chose to serve our country through public service but they did not sign up to single-handedly offset a budget deficit they did not cause. While some administration officials are donating back some of their salary in solidarity with federal employees, it seems to me that a better approach would be to recognize the value of federal employees, understand that that they have given enough from their own pockets and not ask them to give any more.”

Eric Yoder contributed to this report.

This post has been updated.

federaldiay@washpost.com
Twitter: @JoeDavidsonWP

Joe Davidson writes the Federal Diary, a column about the federal workplace that celebrated its 80th birthday in November 2012.
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Eric Yoder | April 5, 2013