The House Budget Committee released its 2018 budget proposal this week. Just like the White House’s 2018 budget blueprint, it contains suggested reforms that would impact federal employees.
Reforming Civil Service Pensions
The budget recommends reforming civil service pensions “to put them on a better fiscal path.”
While the section in the House budget document lacks specifics, it calls on federal employees to pay a greater portion of their salaries towards their defined benefit plans. This would include Members of Congress and their staffs.
Additionally, the House proposes ending the “special retirement supplement” which pays federal employees the equivalent of their Social Security benefit at an earlier age.
The budget proposal says of its recommendations:
This would achieve significant savings while recognizing the need for new federal employees to transition to a defined contribution retirement system. The vast majority of private sector employees participate in defined contribution retirement plans. These plans put the ownership, flexibility, and portfolio risk on the employee as opposed to the employer. Similarly, federal employees would have more control over their own retirement security under this option.
Past House budget proposals have offered larger and more detailed proposed cuts to federal employee pay and benefits. See, for example, House Budget Blueprint Proposes Attrition Cuts for Federal Workforce and Ryan Budget Calls for Hike in Federal Employee Retirement Contributions.
White House Budget Proposal
The Trump Administration’s 2018 budget proposal offered similar cuts to federal employee pay and benefits, however, it contained potentially greater cutbacks and more specifics than the House Republicans’ version.
The White House proposed eliminating COLAs for current and future federal retirees under the Federal Employees Retirement System (FERS). For retired federal employees under the Civil Service Retirement System (CSRS), COLAs would be reduced by 0.5%.
For annuities, the amount FERS employees contribute to their annuities would increase by 1% each year for six years at which point the government and employee contributions would be equal.