Democratic Senators Demand OPM Reverse Course on Proposed Retirement Cuts

A group of 26 Democratic senators penned a letter Wednesday to Office of Personnel Management Director Jeff Pon urging him not to move forward with his request to Congress for a slew of cuts to federal employee retirement programs.

Last month, Pon asked House Speaker Paul Ryan to introduce legislation that would “bring federal benefits more in line with the private sector.” Proposed changes included eliminating Federal Employees Retirement System supplements for federal employees who retire before Social Security kicks in at age 62; changing the basis of retirees' defined benefit annuity payments from their highest three years of salary to their highest five years; and increasing the amount federal employees contribute to FERS by 1 percentage point each year until they reach an overall contribution level of 7.25 percent, matching the government’s contribution.

The proposal also would eliminate cost-of-living adjustments for FERS retirees—both current and future—and reduce Civil Service Retirement System COLAs by 0.5 percent. Pon estimated these changes would total $143.5 billion in savings over the next decade.

In their letter the Senate Democrats, led by Virginia Sens. Mark Warner and Tim Kaine, argued that any efforts to reduce government spending should not rest on the backs of federal workers. In addition to Pon’s legislative proposal, the White House has proposed a pay freeze for all civilian federal employees in 2019.

The senators criticized Pon’s reliance “solely” on a controversial 2017 Congressional Budget Office report comparing the compensation of federal and private sector workers in justifying the cuts to retirement programs.

“This is a gross oversimplification of the findings and implications of that report,” the lawmakers wrote. “The report concludes that total compensation costs among workers with a professional degree or doctorate were actually 18 percent lower for federal employees than for similar private-sector employees. To further increase this differential would hamper our ability to hire experts in mission-critical areas.”

Democrats argued that further cuts to compensation and retirement could exacerbate federal agencies’ difficulty recruiting the next generation of civil servants at a time when more and more feds near retirement age.

“As you know, just 17 percent of federal workers are under 35 years old, and nearly one-third of permanent federal employees will be eligible to retire next year,” they wrote. “At the same time, the 2017 Federal Employee Viewpoint Survey . . . found that only 42 percent of federal employees feel they can recruit people with the right skills. In the face of a brain drain from our federal agencies, and in a time where top talent has a wide variety of options for global employment, we feel strongly that the impact of across-the-board pay freezes and continued threats to earned benefits will be devastating to retention and recruitment.”

The senators urged Pon to pull back from a cuts-only approach to civil service reform, and instead work on holistic compensation reform in a bipartisan way.

“As you continue to develop legislative proposals related to the compensation of federal employees, we urge you to move past draconian cuts that harm the financial security of federal employees in every state across the country, and instead commit to comprehensive reforms that modernize our government’s compensation system in a way that encourages the best and brightest to join the ranks of our dedicated civil servants,” they wrote. “We would welcome the opportunity to work with you in accomplishing that important goal.”