Federal employees would have to pay more toward their retirement benefits under a spending plan that the House Budget Committee expects to approve this week and send to a full House vote next week.
The budget “resolution” orders some congressional committees to find savings of certain amounts in their areas. For the Oversight and Government Reform Committee, that is $32 billion over 10 years.
A summary from the Budget Committee says the plan “calls for federal employees, including Members of Congress and their staffs, to make greater contributions to their own defined benefit retirement plans. It would also end the “special retirement supplement,” which pays federal employees the equivalent of their Social Security benefit at an earlier age. 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.”
However, the measure does not provide specifics on a contributions increase, which has been proposed in many forms over the years. The most recent proposal, from the Trump administration, would apply only to employees under FERS and in most cases would require them to pay about 6 percent of salary more into the retirement fund, phased in as 1 percentage point increments each year. Those hired after 2012 already pay in at a higher rate and thus the increase for them would not be as steep.
The White House budget also had proposed eliminating, for future retirees, the “special retirement supplement” that is paid to FERS retirees up to age 62 when Social Security kicks in. The new House plan does not mention an effective date for that idea, which also has become a budgetary perennial.
The administration’s budget plan further proposed changing to a high-five salary base to calculate benefits of future retirees; and, for both current and future retirees, reducing the annual COLA for CSRS retirees while eliminating the COLA on the civil service portion of a FERS annuity. The Budget Committee document does not mention them, but they would be among the options available to the Oversight Committee.
The budget “resolution” is an outline for appropriations bills that follow. Due to the late start in the budget process this year—the White House did not release a full budget plan until May, three months later than usual—it had been uncertain whether Congress would produce such an outline. Most of the dozen annual appropriations bills already have advanced partially in the House, and several in the Senate.
However, House leaders decided to push for a budget resolution even this late in the budget cycle because such a measure is needed for the Senate to approve certain legislation—a planned revamp of tax policy, in this case—with a simple majority vote.
Passage by the House is not guaranteed. Democrats likely will be united in opposition—as are federal employee and retiree organizations—and there are divisions among Republicans that could block its passage. If the plan does pass there, it’s questionable whether the Senate would produce a counterpart. In most recent years only the House has passed a spending blueprint and the two chambers have used that as a template for further budget actions.