Ryan Budget Calls for Hike in Federal Employee Retirement Contributions

By on April 1, 2014 in Current Events, Retirement with 348 Comments

House Budget Committee Chairman Paul Ryan (R-WI) released the 2015 House Republican budget today which contains some proposals that would directly impact the federal workforce should they be implemented.

One of the proposals calls for federal employees, including members of Congress, to contribute more to their retirement programs, although a specific amount is not specified in the budget.

This proposal would also reform the ability for individuals to receive a ‘‘special retirement supplement,’’ which pays federal employees the equivalent of their Social Security benefit at an earlier age. The budget says that this would help facilitate a transition to a defined-contribution system for new federal employees that would give them more control over their own retirement security. Making these changes would save an estimated $125 billion over ten years according to the budget draft.

The budget also assumes discretionary savings via a reduction in the federal civilian workforce through attrition, whereby the administration would be permitted to hire one employee for every three who leave government service. National-security positions would be subject to exemption.

If some of these proposals sound familiar, it is because they are. The National Commission on Fiscal Responsibility has pitched the idea of increased pension contributions before, and past House budget proposals have had these same suggestions as well.

Increased retirement contributions have been put in place for new federal employees who join the government after a future date as a result of some of these past proposals. For more on this, see Two Significant Changes to FERS and Budget Agreement To Increase Pension Contributions for New Employees.

Social Security Reform

The budget notes that Social Security currently pays out more in benefits than it collects in taxes, an obviously unsustainable course for the future fiscal health of the program. In order to address the issue, the budget puts forth a suggestion which it says will “start the process” towards fixing the situation by amending a current law trigger that, in the event that the Social Security program is not sustainable, requires the President, in conjunction with the Social Security Board of Trustees, to submit a plan for restoring balance to the fund.

This plan would require that:

  • If in any year the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, in its annual Trustees’ Report, determines that the 75- year actuarial balance of the Social Security Trust Funds is in deficit, and the annual balance of the Social Security Trust Funds in the 75th year is in deficit, the Board of Trustees should, no later than the 30th of September of the same calendar year, submit to the President recommendations for statutory reforms necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th year.
  • No later than the 1st of December of the same calendar year in which the Board of Trustees submits its recommendations, the President shall promptly submit implementing legislation to both Houses of Congress including recommendations necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th year.
  • Within 60 days of the President’s submitting legislation, the committees of jurisdiction to which the legislation has been referred shall report the bill, which shall be considered by the full House or Senate under expedited procedures.

Federal employee unions were quick to decry the budget blueprint. NTEU president Colleen M. Kelley said, “This budget piles even more burdens on the federal workforce. Employees are already juggling higher workloads with fewer resources and shrinking compensation. Congress needs to reject this budget, restore desperately-needed funding to federal agencies and stop the attacks on federal employees.”

National Active and Retired Federal Employees Association president Joseph A. Beaudoin added, “Chairman Ryan’s proposal to squeeze another $125 billion through increased retirement contributions is nothing more than a thinly veiled pay cut and would exacerbate a growing problem.”

Speaking about the budget, Paul Ryan said, “This is a plan to balance the budget and create jobs, and it builds off a simple fact: We can’t keep spending money we don’t have. Too many Americans struggle to make ends meet, while Washington continues to live beyond its means. It’s irresponsible to take more from hardworking families to spend more in Washington.”

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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