Bill Introduced to Reduce Federal Workers' Pensions

By on January 25, 2012 in News

Rep. Dennis Ross (R-FL) has introduced legislation that would increase the amount federal employees would be required to pay towards their retirement plans. HR 3813, Securing Annuities for Federal Employees Act of 2012, would also reduce pensions for new employees.

The language of the bill is, as is frequently the case, written in obtuse language incomprehensible to native speakers of the English language. Interpreting the language of our laws now requires an in-depth expertise in how the current system works. No doubt, if the public cannot understand what is being foisted on them, it is harder to protest the changes being proposed.

Keep in mind: if this bill should pass both Houses of Congress and get signed by the president, which is unlikely, the Office of Personnel Management would then write and propose regulations giving its interpretation of how the new system would be implemented.

That is a roundabout way of saying: don’t get too upset over this initial proposal. It isn’t likely to pass in anything like its current form and, if it should pass, we won’t know all of the details until much later.

With this caveat, here is what we think this new bill would do if it were to become law as written.

The bill would increase contributions for current federal employees by 0.5 percentage points per year for three years beginning next year. This would apply to both CSRS and FERS employees. The required contribution amounts would start to increase by 0.5% per year in 2013. The result is that this would mean a contribution of 2.3% for FERS employees and 8.5% for CSRS.

Many readers have previously contacted us about the FERS annuity supplement. To prevent confusion, the annuity supplement is still in existence. This new bill would also eliminate the FERS annuity supplement for new federal retirees starting in 2013. The only exceptions would be for employees required to retire early.  Some categories of federal employees that fall into this category include some law enforcement personnel and air traffic controllers.

Under the current system, FERS employees who retire before they are 62 receive a supplement using a formula that gives a person a portion of their age 62 Social Security benefit.  (See FERS and the Special Retirement Supplement)

The bill would create a new category of federal employee referred to in the bill as “secure annuity employees.” This new category would consist of new employees hired starting in 2013 and who have less than five years of previous federal service. They would receive a smaller pension when they retire.

This would come about by using a “high five” calculation instead of a “high three” calculation. These future feds would also have their pensions calculated at a rate of 0.7 percent. According to the bill: “in the case of an employee who is a secure annuity employee, 0.7 percent of that individual’s average pay multiplied by such individual’s total service.” The current rate for most FERS employees under 62 is now 1 percent and for employees over 62 it is 1.1 percent.

If you are still reading this, it gets even more complex.  There are also changes that would apply to several other categories of employees.

In the case of a secure annuity employee who is a law enforcement officer, firefighter, member of the Capitol Police, member of the Supreme Court Police, air traffic controller, nuclear materials courier, or customs and border protection officer, the contributions of these employees to their future pension will “be equal to 10.7 percent.” Their rate of contributions would be higher because their pension amounts are higher. If you happen to fall into these categories and are a “secure annuity employee,” you would receive a pension rate of 1.4 percent for your first 20 years of service and 0.7 percent for subsequent years.

No doubt, there will be many questions that will arise as a result of this new bill. We will leave it up to retirement experts who may wish to calculate the actual “dollars and cents” impact on employees. But, in the interests of trying to satisfy the curiosity of our readers who are wondering how their future retirement will be impacted by new legislation, this is an initial summary we hope you will find useful.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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  1. Hose3711 says:

    Dump on the federal employees, their’re the ones that got us into this mess, by passing all those laws that favor us. And our unions, that have us strike so as to hold the government up against the wall. HEY Wait A MINUTE. We Can,t Make Laws Or Strike. Oh well, we still have our TSP with that one interfund transfer. Big Deal. Give us two interfund transfer and see if Federal employees don’t make more in our TSP accounts to not need our annuities to retire on.

  2. Rjlsteve says:

    Are pensions and benefits being cut for the Senators and Congressmen?

  3. keiko says:

    That includes Congressman and Congresswoman’s pensions, correct?

  4. Fedup says:

    Mr Ross needs to be replaced ASAP and his retirement cut.    Congress needs to start all cuts with their retirement packages.    Lets vote everyone of them out of office.

  5. RicknATL says:

    It is pathetic that the scum sucking, draft dodging idiots are attacking the federal employees while at the same time, the rich are enjoying low tax rates and record prosperity.  Their actions are nothing short of a breach of trust to the federal employees.  Then again, a trustworthy politician is fairly rare. When are the rich going to share the pain?

  6. Concerned citizen says:

    This is just not right..Federal employees like I did for a very long time have the loyalty to their country!
    I had to take a disability retirement but I had to leave when the time came.  If anyone has any doubts to what your retirement options are..get out while you can…  

  7. soontoberetiredfed says:

    10.7 percent, are you nuts!  Who are these people, which country are they working for, and this is how they treat the very people who put them into office so they can collect $170,000 for life after one term. Disgusting and mind boggling.

  8. Watertheficus(WTF) says:

    If the government is going to change the rules at least use the money to pay off the debt.

  9. Dwestmor says:

    I am retired CRS. When FERs was passed it was to reduce retirement costs. This has not happened because of shameless manipulation by both parties. If all of us hogs don’t back off the trough — its gonna be gone. A 5 year freeze is in order and the FERS folk should work till age 62 as was origionally planned. Government employees are pigs at work and for life.  Why do people only want to see the six inches in front of their nose? Greese we will be—

    • g3 says:

      Sorry, but are you referring to geese or the country of Greece?

    • Thoroughly Disgusted!! says:

      Destmor – Please don’t appear to take a position of “I got mine” (and you’re keeping it) and current employees should now sacrifice!  While you have worked to earn your CSRS retirement, which incidentally is much more expensive to fund than the FERS retirement, I don’t see any CSRS retirees (including yourself) offering to relinquish your high percentage retirement pension.  For you and others to suggest FERS employees should continue to work to fund your retirement pension is arrogant!   Unlike FERS retirees who will never have the opportunity to earn more than 45 to 50% of their high-3 (or high-5, if changed), most CSRS retirees can indeed live on 70 to 80% of their high-3 salary. 
       
      Further, to suggest “(g)overnment employees are pigs at work and for life” is a gross generalization, and actually suggests you are counted in this lot. 
       
      While some may believe it was intended that “the FERS folks should work till age 62 as originally planned,” your information is not accurate.  Were it so, the FERS Supplemental Annuity would not have been enacted as part of the FERS retirement system.  Actually the annuity was intended to serve as a “stop-gap” for those who have served at least 30 years until (or beyond) their MRA.  Obviously, this opportunity was to provide an incentive to potential retirees who met the criteria to retire.  You should also note that the MRA increases by birth year, thus phasing out the FERS Supplementary Annuity as time passes.
       
      Personally, I have worked for the federal government since age 18 and have diligently worked my way upward by taking calculated risks that included taking several “undesirable” jobs that others would not, and completed graduate school and beyond, often on my own dime, at night and on weekends.
       
      To change retirement system components for those currently in the system represents a “bait and switch,” especially for those of us who are nearing retirement.  My, and likely others’, entire retirement financial retirement portfolio is based on the retirement plan presented (and continued).  The proposed changes will effect irreversible changes to the retirement benefit we have *-earned-* and cannot be overcome. 
       
      P.S. I have always paid my bills on time and lived within my means, which in the latter incidence meant my family and I doing without wants and often needs. 

  10. Cannotdomath says:

    FERS Annuity bridge would be $14,000 a year for me starting at age 56.  If I can’t get that then I will not retire until 62.  The difference between my recieving my pensoin and bridge payment and current salary would be about $60,000.  So congress would rather pay me $60,000 a year for six more years rather than letting me retire and pay me my retirement and $14,000.  Multiply that by the thousands that are in the same boat as me.  Only our congress can do math that shows that is saving our government money. 

    • RicknATL says:

      For sure, they are doing GOP math that doesn’t add up. Their actions will prevent hundreds of thousands of feds from retiring.  Rather stupid in my opinion. But that is congresss these days.

  11. RicknATL says:

    If you vote for the GOP and are not a millionaire, you are an idiot. They do nothing but cater to the rich/special interests at the expense of the middle class/federal employees.

    • g3 says:

      Well they could be like the president and spend the country bankrupt.  As long as the dollar is the premier method of world exchange there is no limit to debt—  why not 100 trillion or maybe 500 trillion?  Even the current 15 trillion can never be paid off, except by default.  The money paid to federal employees and retirees doesn’t come from a savings account, it’s yearly appropriated money.

    • Proud Veteran says:

      Grow up.

  12. Scutter5151 says:

    i follow fed news and try to stay abreast of fed workers news:observation i have made,it seems to me that the attack on federal workers come’s primarily from the republicans 100%,the deficit reduction
     committee   has targeted low hanging fruit and proposed attacking us in all area’s, actual reduction in wages all the way to retirement,i am only a wage grade 8 and i will be retiring this year,i feel sorry for the folks coming on board,i feel the vast talent in the work force will be affected by the drastic cutting IMO. 

  13. Jengman says:

    Just a constant barrage to enhance the federal governments “coffers” at the expense of the federal employee. I wonder how these politicians would feel if all the federal employees took a day or week off from work so they could see what kind of mess there is to clean up. This includes the politicians staffers. Federal workers are no different than private sector workers, they don’t want uninformed people (politicians) abusing their power to make decisions on their pay, benefits or pension. The more the politicians take away from federal employees, the harder it will be to get qualified employees to work for the federal government, and those who are already work for the federal government will continue to keep “falling through the cracks”, until they are submitted to living off the government once they retire.

  14. RicknATL says:

    The GOP is intent on destroying the federal government as a functioning entity. If you take away the incentives for professionals, you will end up with a dysfunctional third world government.  If they think government is bad now, just wait. Clean water, clean air? Don’t count on it. Waiting for your government check?  It’s in the mail..what mail? No post office anymore. etc, etc.

  15. Jose A Gabino says:

    Why those who are proposing the extension of pay freeze do it to theirself, and see how the lower pay labor force are making the end meet.

  16. Afltcol says:

    I retired from the air force after 30 years and then later retired from the federal government (FERS) after 15 years.  The combined retirements equals 90% of my total lieutenant colonel active duty pay.  Of course our home is paid for and we live very well off my $93K a year retirement.  Planning is the key to any successful retirement. 

    • Ned2 says:

      Nice for you. Under FERS alone you would only have to work ~83 years to get 90%.

      My home was paid off shortly after i came back from my Iraq deployment in 2005. 

      The problem with planning is when some a-hole changes the rules on you 28 years into the
      game.

      • Interestedreader says:

        Don’t get upset, I just want to make sure I am reading this correctly.

        The article says current employees would see a contribution increase of 1.5% over 3 years  to 2.3% for FERS employees and 8.5% for CSRS.  This is for our pension.

        The SS annuity supplement would only go away for new employees according to this statement: “This new bill would also eliminate the FERS annuity supplement for new federal retirees starting in 2013.”

        Is this correct?

        • Thoroughly Disgusted!! says:

          In answer to your question – “for new federal *-RETIREES-*” (emphasis added) – not new federal *-employees-*

        • ned says:

          It applies to ANY FERS employee who retires after 01 Jan ’13.

          Never mind what you were promised decades ago.

  17. TiredofBeingaPawn says:

    All Changes should be grand-fathered in as they were when the Reagan Administration introduced FERS as a cost-saving measure.  Instead of making these changes for current CSRS/FERS employees ALL & ANY changes should be made to new hires after a specific date.  The new hires will have a lifetime to adjust to the changes and the current employees will continue on with the plan that they have worked under for up to 30+ years.  GRAND-FATHER IN RETIREMENT CHANGES.  If you want to evoke Reagan’s speach about the shinning city on the hill, then do what Reagan did, make the changes effective for new hires only.

    • FederalEmployee says:

      Tell your elected officials this, as I have done numerous times already.ALL Federal employees should be contacting their elected officials NOW.

  18. Edmcktax says:

    Will these changes also apply to the lawmakers???

  19. Jgfoss says:

    It is good to know this, but not pleasant. They are gunning for us, thats for sure.

  20. Polish translation services says:

    Good news to me 🙂

  21. lazycs says:

    There is absolutely no reason for a SS supplement for FERS workers and pensions should be based on total years of employment

    • Idonthavetimeforthis says:

      Most union pensions also supplement Social Security. Federal pensions ARE based on years of service. By the way, I have my suspicions, but what does cs stand for? (Civil Servant would be my SECOND guess.)

    • ned says:

      It’s not an “SS supplement”. It’s a “Special Supplement” and we signed up for it decades ago.

      And why shouldn’t our pensions be based on total years of employment as they are everywhere else?

      Strange comment from someone who’s pension is 100% funded by the taxpayers.

  22. FEDSHAVERECOURSE says:

    Someone needs to begin laying the groundwork for, or begin examining the feasibility of filing a class action lawsuit in response to this continued nonsense.

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