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House Passes Bill Increasing Retirement Contributions by 5%

by Ian Smith |

The House narrowly passed the defense sequester replacement bill tonight, also known as the Spending Reduction Act, by a vote of 215-209.

The bill would increase federal employees’ contributions to their pension plans 5% over five years beginning with a 1.5% increase in 2013. The language in the legislation outlines a percentage increase schedule for both FERS and CSRS employees as follows:

  • 2013: 1.5%
  • 2014: 0.5%
  • 2015-2017: 1% per year

The legislation text also addresses the unfunded liability of CSRS, stating, “Any contributions under this subsection in excess of the amounts which (but for clause (i)) would otherwise have been payable shall be applied toward reducing the unfunded liability of the Civil Service Retirement System.”

The bill would also end the Social Security supplement at retirement for federal employees hired beginning in 2013.

It may be somewhat comforting to know that the bill also increases pension contributions for members of Congress and Congressional employees; the language dictates a total increase in Member contributions of 8.5% over five years starting in 2013.

The House passed a version of this bill back in May by a vote of 218-199, but Democrats in the Senate refused to consider it.

Federal employee advocacy groups have been loudly decrying the bill leading up to its vote today.

NTEU President Colleen M. Kelley said, “Make no mistake, an increased contribution toward one’s pension, with no corresponding increase in benefits, is a pay cut.”

NARFE National President Joseph A. Beaudoin said in a letter to House members, “All told, this proposal will cost federal employees $83 billion over 10 years without any corresponding increase in retirement benefits. Over the last two years, federal employees have already contributed $103 billion towards deficit reduction.”

The White House also spoke out against the bill in a blog post on its web site, saying it would hurt middle class families, but it made no reference to the impact it would have on the federal workforce, perhaps because the White House has also proposed raising pension contributions in its 2013 budget proposal.

There is at least one individual who likes the idea of the Spending Reduction Act: Congressman Dennis Ross (R-FL) said in a statement, “Our country has a spending problem. I am pleased to support this common-sense legislation that funds our troops and saves hard-earned taxpayer money.”

Passage of the bill in the House is a largely symbolic gesture as the Senate is unlikely to consider it, especially noting that the one in May was ignored.

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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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April 17, 2014

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