New bill would repeal hike in retirement contributions

Legislators last week introduced a bill that would roll back increases in the amount of money federal employees must contribute to their retirement funds.

Rep. Thomas M. Davis, R-Va., introduced H.R. 2631 to prevent rate increases in contributions to the Civil Service Retirement and Disability Fund that are required by the Balanced Budget Agreement of 1997.

Sen. Paul Sarbanes, D-Md., introduced a similiar bill, S. 1441.

"As the Congress continues to work on an almost $800 billion tax cut, federal managers applaud Sen. Sarbanes and Congressman Davis for drawing attention to the sacrifices that the federal community has made toward balancing the budget," said Michael B. Styles, president of the Federal Managers Association, said.

Under the 1997 law, the percentage of salary employees under the Civil Service Retirement System contribute to their retirement is supposed to increase from 7 percent to 7.5 percent by 2002. Under the Federal Employees Retirement System, rates are to go up from 0.8 percent to 1.3 percent. Rates are to return to 7 percent and 0.8 percent respectively in 2003.

This year, employee contributions are to increase by .25 percent, and are required to increase slightly until 2002- by .15 percent in 2000 and .1 percent in 2002.

Both bills would repeal this year's rate hike as well as future increases, restoring contributions to their 1998 rates as of January 1, 2000, instead of 2003.

"With budget surpluses projected for the near future, the rationale for increasing federal employees' retirement contributions is no longer valid," Sarbanes said.

The Civil Service Retirement and Disability Fund invests federal retirement receipts in government securities.