Bill would end pensions for new feds

Bill would end pensions for new feds

Nov. 18, 2013 – 06:00AM   |  By SEAN REILLY   |
Senate Finance Committee Holds Hearing Recent IRSSen. Richard Burr, R-N.C., questions current and former IRS employees May 21 before the Senate Finance Committee in Washington. (Getty Images)

Newly hired federal employees would not be eligible for traditional pensions under a bill reintroduced last week by Sen. Richard Burr, R-N.C., and two colleagues.

The measure, which would also apply to new members of Congress, would end the defined benefit portion of the Federal Employees Retirement System (FERS) for employees who come on board starting six months after it is signed into law, according to a news release from Burr’s office.

New federal employees could still participate in the Thrift Savings Plan,the federal government’s equivalent of a 401(k)-type program under which agencies match employees’ contributions up to 5 percent of their salaries.

“Right now, federal government workers receive far more generous retirement benefits than private-sector employees,” Burr said in the release. For taxpayers, he added, the cost is “unsustainable.”

Current federal workers and retirees would not be affected.

Co-sponsoring the bill are Sens. Tom Coburn, R-Okla., and Saxby Chambliss, R-Ga. A similar measure introduced by Burr in 2011 never got out of a Senate committee.

But pressure on the status quo is coming from other quarters. U.S. Postal Service leaders, for example, would like to end FERS defined benefit pensions for new employees; a Senate bill introduced in August would give the mail carrier the green light to bargain over the issue with its unions.

On a separate track, the Obama administration has proposed phasing in a 1.2 percent increase in workers’ share of contributions to both FERS and the Civil Service Retirement System over three years.

For FERS participants, the proposed change would boost their share of contributions from 0.8 percent of salary to 2 percent, while CSRS employees would pay 8.2 percent, compared to 7 percent today.

The White House has broached the proposal in both its 2013 and 2014 budget requests; lawmakers have not acted on it.

 

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