FEDweek

Proposed Cuts to Retirement Benefits Could Stir Anew

A package of potential cuts to federal retirement benefits that has been dormant for several months after passing the House may gain new life soon, although the outcome is far from certain.

The House in July passed a budget outline that assumes $32 billion in savings over 10 years through requiring higher contributions from federal employees toward their retirement and ending the “special retirement supplement” paid to those who retire under FERS before age 62. However, specifics would be up to the House Oversight and Government Reform Committee. Issues there would include whether to end the supplement only for future retirees and if so when; and how much to raise the required contribution, over how long a period; and whether it would apply to all employees or just to those under FERS.

The committee also could choose an alternative approach, such as adopting the White House proposals to base future annuities on the highest five consecutive salary years rather than the current three; and to eliminate the COLA on the FERS civil service annuity and reduce it for CSRS retirees, provisions that would apply to both current and future retirees.

That measure has made no progress since reaching the Senate, but that chamber could draft a counterpart soon because such a “reconciliation” measure allows passage of certain spending-related proposals with only a majority there rather than the 60 votes needed there for most legislation. Senate Republican leaders want that authority–essentially allowing for passage of a bill without any Democratic support–in place for fiscal 2018 for voting on planned tax reform legislation this fall; similar authority that had been invoked for a simple majority vote on health insurance reform proposals expires Saturday at the end of fiscal 2017.

However, it is uncertain whether the Senate will focus solely on creating authority to pass tax reform with just a majority or whether such authority would also cover other changes such as cuts to spending on federal retirement.