Federal Employee Pension Fairness Act of 2015
H.R.785 - Federal Employee Pension Fairness Act of 2015114th Congress (2015-2016) |
Bill
| Sponsor: | Rep. Edwards, Donna F. [D-MD-4] (Introduced 02/05/2015) | ||
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| Committees: | House - Ways and Means; Oversight and Government Reform; Foreign Affairs | ||
| Latest Action: | 02/05/2015 Referred to House Foreign Affairs (All Actions) | Summary: H.R.785 — 114th Congress (2015-2016)All Bill Information (Except Text)
There is one summary for H.R.785. Bill summaries are authored by CRS.
Shown Here:
Federal Employee Pension Fairness Act of 2015 |
The House Oversight and Government Reform Committee this evening passed a bill cutting federal pensions on a party-line vote. HR 3813, the Securing Annuities for Federal Employees Act, would raise the amounts federal employees contribute to their pensions by 1.5 percentage points, eliminate the Federal Employees Retirement System supplement for retirees who aren’t yet eligible for Social Security, and drastically cut pensions for future federal retirees. Read more about the bill here.
Rep. Dennis Ross, R-Fla., the bill’s sponsor, said federal pensions are too expensive for the cash-strapped government to continue to cover. But Democrats unanimously blasted Republicans for treating feds like a “piggy bank,” in the words of Rep. Elijah Cummings, D-Md. They say the GOP is asking federal employees to sacrifice their pensions to alleviate the deficit, while refusing to even consider raising taxes on the wealthiest Americans.
And Rep. Gerry Connolly, D-Va., was the most vehement denouncer of the bill. He called it “a new low” for the House GOP, and said Republicans may be close to sadism. Said Connolly:
One has to wonder when the House Republican leadership crosses the line from political opportunism to sadism in its relentless assault on public servants. Do some derive pleasure from denigrating and, with this bill, impoverishing the patriots who volunteer to serve their country?Ross dismissed accusations that Republicans aimed to trash feds. “It is not at all a swipe at anybody,” Ross said. “There is no vilification going on.”
But as the bill goes to the full House, the rhetoric is clearly heating up. Stay tuned for more information on this bill tomorrow.
Legislation Introduced to Cut Federal Pensions
Congressman Bruce Westerman (R-AR) has introduced legislation (H.R. 1230) that would change the pension benefit formula for federal employees to use the highest five years of earnings to calculate civil service pension benefits.
“This bill would simply change the formula for determining pension benefits for civilian federal employees from the best-earning three years to the best-earning five years of service,” said Westerman. “The bill ensures that the program employees of the federal government have paid into for their careers is available in retirement and sustainable for future generations.”
It is estimated that the change would save taxpayers a total of $3.1 billion over 10 years. The change would go into effect on January 1, 2017.
As a part of the proposal, all federal civilian employees – including Members of Congress and their staffs – would be impacted by the change. The only exemption to the proposed legislative action are active duty and retired military personnel.
House to vote on federal pension changes separate from highway bill
Last month, H.R.3813 was inserted into a massive highway bill, H.R.7, or the American Energy and Infrastructure Jobs Act. The House now is breaking up H.R.7 into three components, one of which is H.R.3813. A House Rules Committee spokesperson said H.R.3813 will be voted on Thursday.
The current language of H.R. 3813 increases federal employees’ contributions to their retirements by 1.5 percent, phased in over three years. For individuals not subject to mandatory retirement who choose to retire on or after Jan. 1, 2013, the FERS minimum supplement is eliminated. Currently, the FERS minimum supplement is paid to those qualifying employees who retire prior to age 62.
The legislation also introduces a new pension formula that applies to employees who have less than five years of creditable service or are hired after Dec. 31, 2012. The new annuity formula would be based on the highest five years of salary instead of the current calculation of the highest three years. Also, the contribution for these new employees is 4 percent.
In an effort to save federal employees from the benefit cuts, Rep. Gerry Connolly (D-Va.) introduced an amendment to H.R. 7 on Wednesday to replace language in the bill that would increase federal employees’ contributions to their pension funds. Connolly’s amendment would replace it with language addressing oil industry tax credits. However, now with the separation of H.R.7 into different components, federal benefits is still on the table.
Connolly has spoken out against the cuts to retirement benefits.
“Federal employees have already contributed $60 billion in deficit reduction through a two-year pay freeze,” he said in a statement. “They’ve done their part and rightfully would like to know why they are being singled out yet again. Furthermore, there is no nexus between a so-called transportation bill and slashing federal pensions. The transportation bill should be funded by transportation-related user fees, as it always has.”
The conferees debating the payroll tax cut extension also are considering increases to federal pension contributions. Their tentative deal would make federal employees pay 1.2 percent more for their pensions as a way to pay for jobless benefits. It’s unclear how the potential passage of H.R.3813 would impact the conferees’ proposal.
On Wednesday, Patricia Niehaus, the national president of the Federal Managers Association (FMA), sent a letter to House members criticizing both bills for disproportionately targeting federal employees.
“Federal employees are not only being targeted in the name of deficit reduction, but now it seems Congress is willing to use them as a means to pay for any legislation moving through the House,” Niehaus wrote. “This sets a dangerous precedent and disproportionately places an inequitable burden on federal employees under the false pretense that their pay and benefits are far greater than their private sector counterparts.”
Niehaus specifically objected to language in the bills calling for changes to CSRS and FERS, which would require federal employees to make the 1.5 percent contribution to their retirement plans. She also expressed concern over the provision that eliminated the FERS annuity supplement.
The House broke up H.R. 7 into three parts, one of which is H.R. 3813. House members will begin debating H.R. 3813 today, according to Doug Andres, director of the House Rules Committee. He said that a vote on the bill is expected for Thursday.
Hatch Unveils Bill to Overhaul Pension Benefit System, Secure Retirement Savings
In Speech on Senate Floor, Utah Senator Says, “America cannot continue sleepwalking into the financial disaster that awaits us if we do not get the public pension debt crisis under control.”
July 9, 2013To address the public pension debt crisis and better secure retirement savings for millions of Americans, Finance Committee Ranking Member Orrin Hatch (R-Utah) today unveiled the Secure Annuities for Employee (SAFE) Retirement Act of 2013, legislation to strengthen and reform much of the nation’s public and private pension benefit system.
“America cannot continue sleepwalking into the financial disaster that awaits us if we do not get the public pension debt crisis under control,” said Hatch during a speech on the Senate floor today. “The problem is getting more serious every day and cannot be remedied merely by fine-tuning the existing pension structures available to public employers. A new public pension design is needed: one that provides cost certainty for state and local taxpayers, retirement income security for state and local employees, and does not include an explicit or implicit federal government guarantee.”
Dangerously high unfunded pension liabilities of state and local governments have threatened the fiscal solvency of states and municipalities as well as the nation’s long-term fiscal health, including the U.S. credit rating. Today public pension debt remains as high as $4.4 trillion and outstanding state and local municipal bond debt adds another $3.7 trillion. Last year, Hatch issued a report - which served as the foundation for the legislation - outlining the financial risks of the public pension debt crisis and its negative impact on the American economy.
Even more, with a national savings rate of only 2.5 percent, longer life expectancies and far fewer workers covered by defined-benefit pension plans, Americans across the country are struggling to adequately prepare for their retirement. The Finance Committee has received evidence in hearings that access to a retirement plan at work is the best way to ensure that individuals save for retirement.
“A pension is insurance against outliving the money you have available to pay your monthly bills,” Hatch continued. “It cannot be denied that people are living longer. And as wonderful as that is, it also means we need find new ways to stretch our monthly pension dollars over longer lifetimes. The SAFE Retirement Plan can meet the test.”
The SAFE Retirement Act of 2013 streamlines current pension programs by providing states, employers, and American workers with stronger tools for providing pensions and better secure retirement savings. Specifically, the Hatch plan takes a three-prong approach to pension reform:
- Public Pension Reform: This legislation creates a new pension plan, called the SAFE Retirement Plan, with stable, predictable costs that state and local governments may use to deliver secure pension benefits. This new tool eliminates pension plan underfunding prospectively while delivering lifetime retirement income to employees. SAFE Retirement Plans are state regulated, market based, fixed annuity solutions to the retirement income crisis in the states, with a consumer safety net, only minimal involvement by the federal government and no federal taxes.
- Private Pension Reform: The SAFE Retirement Act includes a host of common-sense and long-overdue reforms that will especially help small- and mid-sized employers establish and maintain retirement savings plans for their employees. The SAFE Retirement Act also creates an innovative new plan called the Starter 401(k), a retirement savings plan that allows employees to save up to $8,000 per year, more than in an IRA, but does not involve the administrative burden or expense of a traditional 401(k) plan. The Starter 401(k) is perfect for a small or start-up business that is not in a position to contribute to a plan but wants to help its employees save.
- Access to Professional Investment Advice: The SAFE Retirement Act also takes action to stop the Department of Labor from unilaterally over-regulating 401(k) plans and IRas. The legislation restores jurisdiction over the fiduciary rules in the Tax Code to the Treasury Department. In addition, Treasury will consult with the Securities and Exchange Commission in prescribing rules relating to the professional standard of care owed by brokers and investment advisors to IRA investors. This legislation is consistent with the bipartisan and bicameral effort to convince the Labor Secretary to preserve access to professional investment advice for middle class investors.
To view a summary of the legislation click HERE.
To view a copy of Hatch’s remarks on the Senate floor click HERE.
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