CBO Asked to Analyze Retirement Options

In a request widely seen as potentially paving the way for legislative efforts next year to cut back on the value of federal retirement benefits, two leading members of Congress have asked the Congressional Budget Office to look into the long-term effect of various options. CBO’s opinion of the cost implications of legislation is very important on Capitol Hill under congressional budgetary rules because it provides the official word on what various proposals would cost or save. The letter to CBO originated from the chairs of the House Budget Committee and Oversight and Government Reform Committee, Reps. Paul Ryan, R-Wis., and Darrell Issa, R-Calif. It cited two separate moves of recent years requiring increases in the amount newly hired employees must pay toward their FERS defined benefits, saying that while 10-year projections were made at the time, Congress “has little information concerning the manner in which statutory changes to federal retirement systems affect the long-term federal budget outlook.” The letter tasked CBO with developing a model to project long-term impacts of “different options for reforming FERS, based on changes made in recent years to other large pension plans, both public and private.” It asked for a close look at the impact of increasing retirement contributions, reducing the payout formula and “expanding the defined contribution component” – that is, the TSP – “while reducing the defined benefit component”—that is, the annuity component. The Republican-controlled House in recent years has passed numerous plans calling for a substantial increase in employee contributions toward retirement, not just for employees hired in the future. Those measures did not advance in the Senate, which has been in Democratic control. Republican control of the Senate begins in January.