On Friday February 17, Congress passed a bill that altered the Federal Employees Retirement System (FERS) and changed the percentage that future federal employees have to contribute towards their pension plans. Originally passed by Congress in 1986, FERS replaced the existing Civil Service Retirement System, and provided federal workers with a variety of benefits including an annuity (a type of pension). The annuity was equal to 1% of the employee’s salary for each year of work. To be eligible for the annuity, the federal employee needed to contribute 0.8% of his salary per year. For example, after a 25-year career, a federal worker who made $60,000 at the time of their retirement would receive an annuity of $15,000 per year.
The Bill just enacted raises the percentage of salary that future federal employees must contribute to be eligible for the annuity. In order to receive the annuity, new federal employees will have to contribute 3.1% of their salaries towards the plan, an increase of 2.3%.
This legislation has enraged members of the Labor community and it is seen as yet another unfair attack on government workers who have already had to endure pay freezes and benefit cuts. Particularly hard hit will be the members of the American Federation of Government Employees (AFGE), which represents over 625,000 federal employees. John Gage (President of AFGE) has attacked the Legislation saying, “No group has sacrificed like federal employees. Congress froze their pay for two years, which cost federal employees $60 billion in lost wages. Meanwhile, the millionaires and billionaires who have continued to profit during this economic recession haven’t been asked to pay one nickel more in taxes.”
What worries union leaders even more are the bills currently proposed in the House that would increase the percentage that current federal employees will need to contribute in order to be eligible for an annuity. H.R. 3813, introduced by Representative Ross (R-FL), would force current federal workers to increase the percentage of their salary they must contribute to the pension plan. In addition, the bill would change the formula used to calculate the annuity and would substantially affect the amount current employees would receive upon retirement.
These types of bills demonstrate that certain factions in Congress are dedicated to making federal employees bear a disproportionate share of deficit and debt reduction. With another battle over the debt ceiling looming over the horizon, leaders in the Labor movement will have to fight hard to ensure that already hard hit federal employees do not once again become the scapegoats for a bloated Congress unwilling to have the wealthy face any share of debt reduction.
AFGE President John Gage’s Changes to Federal Pensions and AFGE’s full statement on the changes can be viewed at the above link.