“One of the most difficult challenges we faced as we worked through this, was the issue of federal employees and military,” said Sen. Patty Murray, D-Wash., during a press conference with Rep. Paul Ryan, R-Wis. J. Scott Applewhite/AP
New federal employees and military retirees would have to contribute more to their pensions under the bipartisan deal the congressional budget conference committee unveiled Tuesday evening.
Federal workers hired on or after Jan. 1, 2014, with less than five years of service would have to pay 4.4 percent toward their defined retirement benefit — 1.3 percent more than the current 3.1 percent that employees hired after 2012 contribute.
Military retirees under the age of 62 would see a decrease, phased-in over the next two years, to the calculation of their cost-of-living adjustment, equal to inflation minus 1 percent. “This change would be gradually phased in, with no change for the current year, a 0.25 percent decrease in December 2014, and a 0.5 percent decrease in December 2015,” according to a summary of the deal. The change would not affect service members who retired because of injury or disability. Continue reading “Budget Deal Asks New Feds to Contribute More to Pensions”
OPTIONS FOR REDUCING THE DEFICIT: 2014 TO 2023
|(Billions of dollars)
|Change in Revenues
Note: This option would take effect in January 2014.
The federal government provides most of its civilian employees with an annuity in retirement through either the Federal Employees Retirement System (FERS) or its predecessor, the Civil Service Retirement System (CSRS). Those annuities are jointly funded by the employees and the federal agencies that hire them. About 85 percent of federal employees participate in FERS, and most of them contribute 0.8 percent of their salary toward their future annuities. The Middle Class Tax Relief and Job Creation Act of 2012 increased the contribution rate to 3.1 percent for most employees hired after December 31, 2012. Federal employees who are still covered by CSRS generally contribute 7 percent of their salary and accrue larger annuities. Agency contributions for FERS and CSRS do not have any effect on total federal spending or revenues because they are intragovernmental payments, but employee contributions are counted as federal revenues. (Annuity payments made to FERS and CSRS beneficiaries represent federal spending.) Continue reading “CBO —Option 36 Increase Federal Civilian Employees’ Contributions to Their Pensions”