At a House hearing, several Republican members expressed interest in a proposal detailed there by a conservative think tank to create a multi-level retirement program for federal employees, under which many of them would gain choices in how they prefer their retirement benefits to accumulate.

The proposal from the Heritage Foundation would be a variant on prior ideas raised on Capitol Hill–although not distilled into a firm plan–to end the defined benefit portion of the FERS program for newly hired employees while giving them an enhanced TSP employer contribution instead.


The proposal envisions that for future hirees, as well as for current employees with fewer than five years of service as of enactment, there would be an automatic 4 percent government contribution toward their TSP accounts with matching contributions of up to another 8 percent–up from 1 and 4 percent, respectively. Employees with between five and 24 years of service could choose to join that system while keeping their FERS benefits accumulated to that point; remain under the current system; or leave FERS by transferring the money they and their agencies have contributed toward their FERS benefit into the TSP, with higher employer contributions from that point. Those with 25 or more years of service would continue under current law.

Several Republicans at a House Oversight and Government Reform Committee hearing backed the idea of allowing more choice. They also suggested that employees might come out ahead by in effect investing the money the government now contributes toward their FERS benefit; they cited a witness from the AFGE union who said that the government’s retirement benefits appear to be more generous than private sector pensions because the government can put the money only in Treasury securities while other employers can gain higher returns by investing in stocks and elsewhere.

However, the witness said that the union would recommend its members against giving up their FERS defined benefit.