Groups Fear Federal Pensions Are At Risk in Budget Talks

Lawmakers tasked with reaching a budget deal before mid-January are likely to consider increasing the amount federal workers contribute to their pensions, according to federal employee and retiree advocates.

Similar proposals have come up during previous budget and deficit discussions over the last few years, and this time won’t be any different, say representatives from the Federal-Postal Coalition and the National Active and Retired Federal Employees Association. “Common knowledge would certainly put this on the table,” said Jessica Klement, NARFE legislative director. “I don’t see how something like this isn’t part of the conference unless we have some very, very vocal opponents,” she said, adding, “At this point in time we have no reason to believe that cuts to the federal community are off the table.”

The groups’ fears are well-founded because it’s an area of savings Republicans and the Democratic White House agree on. House Budget Committee Chairman Paul Ryan, R-Wis., in his fiscal 2014 budget plan, wants feds to pay 5.5 percent more of their salaries toward their defined benefit; he would also eliminate an additional benefit -- what’s known as the Federal Employees Retirement System Annuity Supplement -- for those government workers who retire before the age of 62 and who are not eligible for mandatory retirement. President Obama in his fiscal 2014 budget blueprint recommended that federal employees contribute 1.2 percent more of their pay, phased in at 0.4 percent over the next three years, toward their pensions. The White House estimated that the change would save the government $20 billion during the next decade. Obama also supports eliminating the FERS Annuity Supplement.

However, the Senate budget plan opposes further tinkering with federal employees’ pay and benefits. “Federal workers play a key role in running a smart and efficient government,” said the budget resolution crafted by Senate Budget Committee Chairwoman Patty Murray, D-Wash, also a budget conferee. “These workers have borne the brunt of recent deficit reduction efforts, with years of pay freezes and many workers facing furloughs in the coming months caused by the indiscriminate and untargeted sequestration cuts.” The document noted that the Republican budget would “further harm these workers by significantly increasing their contributions to the Federal Employees Retirement System, effectively cutting their take-home pay in every paycheck.”

The House and Senate budget conferees, including Ryan, are supposed to reconcile differences in the next month between the House and Senate fiscal 2014 budget plans -- currently about $91 billion apart. The lawmakers also are discussing how to deal with the next round of 10-year automatic spending cuts scheduled to take place on Jan. 15, 2014, when the current continuing resolution expires. The government will have to cut $109.3 billion from the budget under sequestration -- half from defense and half from non-defense -- in fiscal 2014 unless Congress agrees on an alternative. The committee must submit its recommendations by Dec. 13, 2013.

“There’s considerable concern that once again, the federal retirement account continues to be an ATM to solve the nation’s fiscal problems,” said Bruce Moyer, chairman of the Federal-Postal Coalition, a group of 31 national organizations that represents millions of federal and postal employees and retirees. Moyer’s group, along with NARFE and the National Treasury Employees Union, has sent letters to the budget conferees urging them not to include any recommendations that would reduce federal employee or retiree pay and benefits in their final report. NTEU estimates that federal employees already have contributed $114 billion in deficit reduction as a result of the three-year pay freeze and a 2012 law that requires feds hired after 2012 or those with fewer than five years of previous federal service to contribute 3.1 percent toward their pensions – 2.3 percentage points more than the 0.8 percent most feds put in per paycheck for their defined benefit plan.

“In addition to the $141 billion from a three-year pay freeze and increased pension contributions for new hires, federal employees have faced unpaid furloughs due to sequestration, expanded workloads due to little hiring because of sequestration and a 16-day government shutdown, which could be repeated if Congress again does not do its job by Jan. 15,” NTEU President Colleen Kelley said.

The conference committee, which held its first public meeting last week, hasn’t delved into budget-cutting specifics yet. But negotiators are under pressure to find common ground, so it makes sense that they will seriously consider proposals that have support on both sides of the aisle. “I think that there are significant motivations on both sides of the aisle to reach a deal that tempers, if not eliminates sequestration in 2014,” Moyer said. “For Republicans, the extra hit that defense will take in 2014 motivates them to reduce sequestration; for Democrats, the compounding problems of sequestration on domestic spending will continue to motivate them to find a solution.”