With Democratic control of the House starting next year, a bid is planned to reverse the increases in retirement contributions for FERS employees that were enacted in 2012 and 2013.
Because of those laws, FERS employees pay different levels of contributions toward the civil service portion of their annuities depending on when they were hired. Those hired before 2013—or after, if they were returning from a break in service having worked at least five years previously—pay 0.8 percent. Those hired in 2013 pay 3.1 percent and those hired in 2014 and after pay 4.4 percent. Those contributions are separate from the 6.2 percent Social Security deduction under FERS.
Regardless of their contribution level, the benefit formula works the same (law enforcement officers, firefighters and air traffic controllers pay a half-percentage point more in each case but receive enhanced benefits).
The increases came at the initiative of Republicans in Congress, who have argued that the employee share of financing federal retirement benefits should be increased, and the government share decreased, until the two are equal. Since those two changes, Republicans have continued to press for further increases in the enrollee share but without success despite their continued control of Congress and, for the last two years, of the White House as well.
Before the election, federal employee unions—seeing that Democrats could win one or both chambers of Congress—met with Congressional Democrats and pushed for a rollback of those increases as a priority for the next Congress. Rep. Elijah Cummings, D-Md., in line to take over the Oversight and Government Reform Committee, has since mentioned that a legislative goal.
There is precedent for reversing course on retirement contributions. Late in the Clinton administration—with Republicans also controlling Congress at the time—a law was enacted to require a half-percentage point boost in contributions for all employees, both FERS and CSRS, phased in over three years. The first two segments of the increase did occur but rather than carry out the third step, the entire increase was repealed and contribution levels returned to their traditional level.
However, that repeal occurred at a time when the government’s financial picture was much better—a small surplus compared with projected annual deficits in upcoming years approaching $1 trillion.
