Federal workers could pay more for retirement benefits

Joe Davidson
Columnist December 9, 2013

Much to the consternation of federal employees, the question has quickly moved from “if” to “how much.”

The subject is the hit on federal retirement benefits that could emerge from budget talks on Capitol Hill.

Joe Davidson writes the Federal Diary, a column about the federal workplace that celebrated its 80th birthday in November 2012. View Archive

House and Senate negotiators on the Budget Conference Committee are working to resolve differences in their two spending plans by the end of the week. An announcement could come as early as Tuesday.

Federal employees and their supporters on the Hill hope the workers won’t be made to sacrifice more toward government savings — but hope is not the same as expectation.

“That’s really demoralizing for the federal workforce, who have done nothing to cause the financial mess we’re in,” said Jessica Klement, legislative director of the National Active and Retired Federal Employees Association.

Reports on how much will be sought have included workers paying an additional 5.5 percent of pay toward their retirement, saving the government $130 billion over 10 years. That’s been proposed by Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee. Another proposal calls for the 1.2 percent increase in pension payments proposed by President Obama, for a savings of about $20 billion over 10 years. My colleague Lori Montgomery reports that Ryan and Sen. Patty Murray (D-Wash.), chairwoman of the Senate Budget Committee, are considering another option, one that would require federal workers to come up with less than $17 billion.

Changing the formula for calculating annuities from the highest three years of pay to the highest five reportedly also is under consideration. The 2010 Simpson-Bowles deficit-reduction report estimated that change would save $5 billion over 10 years.

Any amount is too much for federal employees.

“NTEU strongly opposes any further cuts in federal compensation, including what would be a pay cut resulting from an increase in pension contributions, and will continue its efforts to see that no further cuts are made,” said Colleen M. Kelley, president of theNational Treasury Employees Union.

“Going after federal employee wages yet again is insulting, demeaning and downright criminal,” said J. David Cox Sr., head of the American Federation of Government Employees. “It is disgraceful for elected officials to think that they can raid a fully funded retirement system to pay down a deficit that federal employees did not create.”

Proposals discussed so far would not take from current annuitants but would hit current employees — the same workers who have already contributed billions to help close the government’s deficit. Employees hired after 2012, however, would not pay more toward retirement under the president’s plan because they already pay its higher rate.

Along with federal employee organizations, members of the regional congressional delegation have been vigorous in their opposition to greater worker sacrifices.

“Over the last several years, federal employees — VA doctors and nurses, CIA, FBI and DEA agents and NIH researchers; and let’s not forget the victims of the recent shootings at the Navy Yard — have repeatedly been used as pawns in negotiations,” Rep. Frank R. Wolf (R-Va.) complained in a letter last week to leaders of the budget committees. “To date, changes to pay and pensions for the federal workforce have already generated $113 billion in savings.”

The changes in pay, including the three-year freeze on federal employees’ basic pay rates, have led to the purchasing power of their pay falling by about 7 percent since 2010, according to the Congressional Budget Office.

Murray does not favor an additional hit on federal workers, and Ryan’s office would not comment on why he thinks that’s okay.

Opposition to employees paying more has not been helped by the president. Obama’s plan to increase their out-of-pocket retirement contributions makes it more difficult for their supporters to argue for no increase.

In part because of that, and Ryan’s push to hit government employees again, there’s little reason for them to be optimistic about the budget process. They face the possibility of additional employee sacrifices through greater retirement contributions with no increase in benefits or continued sequestration budget cuts that could lead to layoffs.

Or “it could be both,” Klement said. “This is unacceptable to us.”

The truth is that many federal employees probably won’t have any choice but to accept what amounts to give-backs. In one form or another, and maybe in more ways than one, the budget agreement likely will make them give back money to their employer. Others, particularly the highly skilled and the highly talented, might choose to leave government, especially if they are eligible to retire.

In January, federal employees are scheduled to get a 1 percent raise. They should not make plans for that money, because an increase in retirement contributions could wipe it out.

Saying it is “dismayed” at the prospect of Congress increasing employee retirement contributions, the Federal-Postal Coalition, a group of more than 30 federal employee organizations, said Monday in a letter to the conference committee that “no other group of Americans has contributed to deficit reduction the way federal employees have.”

It’s a good argument, but it probably won’t stop Congress from telling feds they have to give and give again.

Twitter: @JoeDavidsonWP

Previous columns by Joe Davidson are available at wapo.st/JoeDavidson.

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