VICE PRESIDENT/LEGISLATIVE INFORMATION - ROBERT WEINAUG -

PENSION HIKE ADVANCES AS ALTERNATIVE TO AUTOMATIC CUTS


Since Congress was unable to make desired budget cuts, Congress passed the Budget Control Act establishing a Super Committee to accomplish this task. However, the Super Committee failed and according to the law, a sequestration (automatic budget cuts) of 1.2 trillion dollars begins January 2013. A plan has been introduced in the House to avoid automatic cuts to discretionary spending, including the Defense Department. Among the 300 billion dollars in alternative cuts approved by the House committee is a provision requiring federal employees to pay more for their retirement benefits.

Representative Paul Ryan (R-WI), chairman of the House Budget Committee, introduced the Sequester Replacement Act of 2012. It nullifies the across-the-board cuts, known as sequestration. Also included in Ryan's sequestration alternative is a package of spending cuts that House Republicans are aiming to pass in a fast-track measure known as reconciliation. That measure, the Sequester Replacement Reconciliation Act of 2012, contains cost-savings first identified by various House committees, including Agriculture, Energy and Commerce, Financial Services, Judiciary, Oversight and Government Reform, and Ways and Means. As a result, the House Budget Committee passed a bill that would hike federal employees' pension contributions by 5 percent.

The Sequestration Replacement Reconciliation Act of 2012 seeks to shift 109 billion dollars in sequestration budget cuts scheduled to take effect in January away from defense and other programs. To avoid these scheduled budget cuts, this bill would phase in the 5 percent contribution hikes to both the Federal Employees Retirement System and the Civil Service Retirement System over five years. The bill would effectively cut federal employees' pay by 5 percent, and leave FERS employees contributing 5.8 percent toward their pensions and CSRS employees contributing 12 percent.

Congressman Ryan said the cuts are vital to avoid hollowing out the nation's defense. Congressman Ryan further stated that we all believe in a strong federal workforce, but workers in the private sector are being asked to share more equitably in the cost of their retirement benefits, and federal workers need to do the same. The bill would also require new federal employee who are hired after 2012 with fewer than five years of previous federal service to immediately pay 5.8 percent to the FERS plan with no phase-in. New employees hired beginning in 2013 would not receive the FERS Social Security Supplement which is now paid to FERS employees who voluntarily retire before reaching age 62.

Democrat lawmakers oppose these cuts and believe this bill will die in the Senate. Representative Steny Hoyer (D-MD) fears these proposals could be revived in the coming months and attached to a bill the Democrats can't refuse. In order to keep the government running, Congress must periodically pass continuing resolutions and increase the budget ceiling when necessary. Whenever these events occur, there is a chance of the government shutting down and unusual legislation can become law. With the threats federal employees and retirees face today to their benefits, I can not understand why people do not join NARFE. President Joe Beaudoin spoke on this subject at the recent Florida Federation convention. We have got to spread the word and get others to join us in this battle. And we must also retain the members we already have. Otherwise, we will all be asked to share more equitably in the cost of our retirement benefits.