The House Committee on Oversight and Government Reform advanced a legislative package on Wednesday as part of the broader 2025 budget legislation process that includes various cuts to benefits for federal employees.
Among the cuts in the legislation are raising the FERS contribution rate to 4.4% for all federal employees, eliminating the FERS annuity supplement and switching from a high-3 average salary to high-5.
There also is a provision that would give newly hired federal employees the option to elect to serve as at-will employees in exchange for higher take home pay with a lower FERS contribution rate. Accepting the at-will status option would keep the FERS contribution rate at 4.4%, but retaining civil service protections would add 5% to the retirement contribution (9.4% total).
Another provision would require federal employees to pay a $350 fee to reduce frivolous employee appeals to the Merit Systems Protection Board (MSPB) regarding agency disciplinary adverse actions.
The proposed cuts were being considered as the House Oversight Committee looked to slash $50 billion from the overall federal budget as it debated its portion of the larger overall FY 2025 spending bill.
In remarks he made at Wednesday’s markup session, Oversight Committee Chairman James Comer (R-KY) said:
World-class employment benefits provided to federal employees are well-known, which can include eleven paid holidays; various incentives and awards; health, life, and long-term care insurance; flexible spending accounts; student loan repayment and forgiveness plans; generous leave and workplace flexibilities; and childcare, professional development, and commuter subsidies.
The simple truth is that a significant amount of the costs associated with all of these benefits are funded by hardworking taxpayers in the private sector and increasingly now federal government borrowing.
The legislation before us today advances important budgetary reforms that will save taxpayers money.
Democrats as well as one Republican voted against the legislation in Wednesday’s markup session. Congressman Mike Turner (R-OH) opposed cutting pensions for federal employees as part of the deficit reduction, and he had said prior to the markup session that he would be voting against the bill. He wrote in a statement on X:
The goal of reconciliation should be to reduce overall government spending by eliminating waste, fraud, and abuse and reducing needless and unnecessary spending.
I oppose any and all efforts to reduce federal spending by taking money from the hard-earned pensions of federal workers.
Employee benefits are not a gift. They are earned.
I will not support and will not vote for the Oversight Committee’s current budget reconciliation proposal reducing earned pension benefits for current federal employees.
In remarks he made at the markup session, Congressman Stephen Lynch (D-MA) said:
This partisan bill threatens to further undermine the federal workforce, by reducing the take-home pay, benefits, and workforce protections of 2.4 million federal employees, most of whom are middle-class American workers and a third of whom are military veterans. This is more of the same; an unprecedented assault and political purge of the civil service.
The legislative package now advances to the House Budget Committee.
Turner also said he thinks that changes are likely to be made to the legislation as it progresses through the legislative process, namely that the cuts to federal employee pensions to which he was opposed would ultimately be eliminated.
During Wednesday’s markup session, he reiterated his opposition to the legislation, saying, “I believe that making changes to pension retirement benefits in the middle of someone’s employment is wrong. Changing the rules, especially when someone’s already been vested, is wrong.”
He also added, “I have talked to enough people on the House floor that I do think that this [pension cuts] will not be included in the final bill, and that this bill ultimately will have to be changed if it’s going to be included in the ultimate budget reconciliation.”
Whether any of these proposed cuts become reality will be determined by what makes it into the final budget legislation if and when it becomes law. As Congressman Turner noted, changes are likely to be made as it goes through the legislative process. FedSmith will continue to provide any updates as they become available.
