Ryan plan again seeks higher retirement contributions by federal workers

April 1

Rep. Paul Ryan (R-Wis.), House budget committee chair, released a spending plan on Tuesday. (AP Photo/J. Scott Applewhite)

The House budget plan released Tuesday repeats a proposal to increase the amount that federal employees must pay toward their retirement benefits, with the government’s share being reduced proportionately.

The plan from Budget Committee Chairman Paul Ryan (R-Wis.) does not specify how large the increase would be, but a committee spokesman said the intent, as in past plans from the panel, would be to make the two shares equal. In that case, the employee share in most cases would increase by nearly 6 percent of salary.

“This would achieve significant budgetary savings and also help facilitate a transition to a defined-contribution system for new federal employees that would give them more control over their own retirement security. This option would save an estimated $125 billion over ten years,” the plan says.

Increases have been enacted in the last two years, but they have come in smaller amounts and have affected only those joining the government after a future date. That has created a three-level system of contributions under the Federal Employees Retirement System, with different amounts required of those hired before 2013, those hired during that year, and those hired after. The increases did not affect anyone in the separate Civil Service Retirement System because no new hires are put into that system.

The document also seeks “reform” of a supplemental benefit for FERS employees who retire before age 62 when eligibility for Social Security benefits begins. Past plans have called for abolishing that supplement, which duplicates the value of a Social Security benefit earned while a federal employee.

The plan further assumes “a reduction federal civilian workforce through attrition, whereby the administration would be permitted to hire one employee for every three who leave government service. National-security positions would be subject to exemption.” A committee spokesman said the workforce reduction goal is 10 percent, which would come to about 200,000 jobs. Many agencies already have partial hiring freezes in place due to budgetary limits imposed last year.

“Chairman Ryan’s proposal to squeeze another $125 billion through increased retirement contributions is nothing more than a thinly veiled pay cut and would exacerbate a growing problem,” Joseph A. Beaudoin, president of the National Active and Retired Federal Employees Association, said in a statement. “Furthermore, arbitrary reductions in the size of the federal workforce would diminish the government’s capacity to perform essential functions and would likely fail to save much money, as work would simply be shifted to contractors.”

Also repeated is a proposal from last year’s plan to end the program of student loan reimbursements as a recruitment and retention incentive. About 10,500 federal employees received such payments totaling about $70 million in 2012, the most recent year for which figures are available.

The budget does not contain a specific recommendation regarding a January 2015 federal employee pay raise. Last year, by remaining silent on a raise, Congress in effect allowed President Obama’s recommendation for a 1 percent increase for 2014 to take effect by default. The White House’s recently released budget plan recommended a 1 percent raise again for 2015.

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