The House Budget Committee, primarily composed of Republicans, has released a report proposing an increase in the contributions that federal employees make towards their annuity benefits as part of changes to federal retirement. This recommendation is included in a budget “resolution” passed by the committee earlier this year, which sets spending targets for the upcoming fiscal year.
The budget resolution, however, serves more as a statement of preferred policies rather than a firm step towards their implementation. The report’s filing clears the way for a House floor vote, but it’s unlikely to progress further due to the Senate’s lack of action on a counterpart.
One of the key policy changes proposed in the report is requiring federal employees to contribute more towards their defined benefit retirement plans. While specifics are not provided, past recommendations suggest that employees may be required to pay several percent more of their salary, potentially up to 6 or 7 percent. This change could apply to both the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS), but the report does not mention any exceptions for certain groups such as federal law enforcement officers, firefighters, and air traffic controllers.
The report also suggests ending the “special retirement supplement” for FERS employees who retire before age 62. This supplement largely duplicates the Social Security benefit they earn through federal employment until they reach 62 and can start drawing Social Security.
Furthermore, the report recommends eliminating the defined benefit portion of federal retirement for employees hired after a future, unspecified date. It also suggests reducing the rate of return on the Thrift Savings Plan’s government securities G fund, a proposal that has been opposed by the TSP in the past.
The report also emphasizes the need for government agencies to reduce their spending and employment levels. Similar proposals have been made in the past, but they have generally not advanced, except for two increases in required contributions by FERS employees towards their civil service annuities a decade ago.
Democrats on the committee have issued a dissenting statement, rejecting the proposed budget and its priorities. The report has implications for the federal workforce, including potential increases in retirement contributions and changes to retirement benefits, as well as potential reductions in employment levels.
