Only Some New Hires Are Contributing the Full Amount to Their Pensions

In December, Congress agreed to raise the rate federal employees hired after Dec. 31, 2013, must contribute toward their pensions to 4.4 percent.

Most feds hired in 2014, however, are contributing 3.1 percent of their salaries to their pensions, as they wait for their payroll providers to update their software to accommodate the new three-tier system. These employees will go into debt to the federal government to make up for the difference between what they are paying and what they actually owe.

But at least one shared services payroll provider -- the Interior Business Center -- has already begun charging the new rate. That means no debts for the new hires receiving paychecks through IBC, which administers pay for 300,000 total federal employees. 

The Pentagon’s Defense Finance and Accounting Service and the Agriculture Department’s National Finance Center are currently updating their programming -- DFAS estimated it will complete this process July 27. The American Federation of Government Employees has complained it is unfair to require employees to owe back payments because agencies were not prepared for the change. AFGE asked the Obama administration to delay the implementation of the new rate until all processors are able to comply with the law, thereby absolving new hires of any debts. 

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