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Ryan Budget Blueprint Raises Pension Contributions

by Ian Smith |

In addition to freezing pay through 2015 and cutting the size of the federal workforce, the budget released yesterday by the House Budget Committee would also require federal workers to pay more towards their pensions.

In a press conference yesterday discussing the budget blueprint (see video below), Rep. Paul Ryan (R-WI) said, “We think that federal workers should have to pay half of their pensions themselves instead of having the private sector taxpayers pay for all of it.”

What exactly might that mean? Taken at face value and based on the limited information we currently have, federal employees under FERS currently pay 0.8% of their salaries towards their pensions, and the agency contributes 13.8%. That totals 14.6%; if the employee paid half, that would be roughly 7.3%.

Another reform plan suggested earlier this year was under Congressman Dennis Ross’ (R-FL) bill. While it seems unlikely this bill will advance past the house, its plan would increase employee contributions for current employees under both CSRS and FERS by 0.5% per year for three years starting in 2013. This would ultimately result in a contribution of 2.3% for FERS employees and 8.5% for CSRS.

Pension reform has already taken place to some extent. Under the payroll tax deal that was recently implemented, future federal workers will see increased pension contributions to help offset the cost of unemployment benefits. Federal workers hired beginning in 2013 will have to pay 3.1% towards their pensions instead of the current 0.8%.

Ryan’s budget proposal would take the above suggestions further, however, in terms of employees’ contribution amounts.

As more information becomes available, we will advise readers of any changes in this plan or other significant proposals impacting federal pay and benefits.

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About the Author

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Ian Smith

Ian Smith is one of the founders of FedSmith.com. He writes about current topics that impact federal employees.

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