House Votes to Continue Federal Workers' Pay Freeze and Increase Federal Employees' Retirement Contributions to 3.1 Percent of Salary for New Hirees

Federal employees' advocates are crying foul, saying two consecutive years of seeing their pay frozen means the nation's 2 million civil servants already have contributed more than $60 billion to reducing government costs. Republicans, led by their aggressive House freshman class, say federal employees, with their generally secure jobs and benefits, can do more. They have proposed several bills to make that happen. The White House also is asking federal employees to pitch in more for their retirement plans. Under the bill passed Friday, about half of the $30 billion cost of extending unemployment benefits will be made up by requiring newly hired federal workers to pay an additional 2.3 percent of their salaries for their pensions. Currently they pay 0.8 percent. [Source]

House Votes to Continue Federal Worker Pay Freeze

February 1, 2012

Townsquare News Network - Republicans have pushed through the House a bill that would freeze the wages of federal workers for a third year and bar members of Congress from giving themselves a pay raise. [Correction: The pay freeze went into effect in 2011 (not including step increases and bonuses); federal employees received a 2% pay raise in 2010) — so 2012 marks only the second year without a cost-of-living increase.]

Republican sponsors said their measure, which would freeze federal worker wages through 2013, would save taxpayers $26 billion. It would not apply to military personnel. [Between 2001 and 2009, per capita spending on three major components (basic pay and allowances for housing and subsistence) of cash compensation for active military personnel rose by 37 percent in inflation-adjusted dollars.]

Many Democrats objected to the freeze, arguing that federal workers already had done their part in reducing budget deficits.

President Barack Obama is expected to propose a 0.5 percent hike in federal employee wages in this 2013 budget proposal.

But some Democrats were also reluctant to cast an election-year vote Wednesday that would suggest they support giving themselves a pay raise. The salaries of rank-and-file members of Congress has remained at $174,000 since 2009.

Confusion Remains on Contributions Law

February 29, 2012

FEDWeek.com - President Obama has signed into law (PL 112-96) the recently enacted legislation to require employees newly hired into the government starting in calendar year 2013, and who have less than five years of experience at the time, to pay 2.3 percent more of salary into the retirement system, meaning their FERS civil service contribution will be 3.1 percent of salary.

Although there is some concern in the workforce that the provision could affect current employees who switch jobs inside the government with fewer than five years of experience at that point, that is not the case. The congressional report phrases the change specified that the change affects those “entering service after December 31, 2012, who have less than five years of creditable civilian service.”

The change was made as a partial offset to extending unemployment benefits; CBO has estimated that it will cost future employees $15.5 billion over 10 years, growing steadily from $100 million in 2012 to $3.3 billion in 2012 as current employees are replaced with new hirees subject to the increase.

See: In 2011, Taxpayers Will Pay $19 Billion to Fund Federal Pensions, While Federal Employees Will Contribute Only $1 Billion

Current Employees Not Out of Woods Yet

Although many current employees have expressed relief that the change was applied only to future outside hirees, proposals to require higher contributions of them, as well, remain active at least among Republicans in Congress.

For now, the House has pulled back a bill that had been on the schedule two weeks ago that not only would increase contributions by all current employees by 1.5 percentage points, but also would end the FERS supplemental benefit for most of those retiring before age 62 that is paid until they can begin collecting Social Security, and would create a new retirement system for those hired after this year.

Employee organizations are warning that there are numerous potential vehicles for enacting such proposals, including a budget outline that the House Budget Committee will start writing in the upcoming weeks. Also still alive for consideration are proposals such as extending the salary rate freeze and mandating a cut in employment through a partial hiring freeze.

Read more here and here.