Larger Federal Employee Participation in Benefit Expense

April 8, 2014

FERS Annuity

In an effort to reduce the overall budget deficit, House Republicans are calling for a smaller government workforce and more employee participation with regard to the FERS federal benefits federal retirees are eligible to receive.

Wisconsin Representative, Paul Ryan proposal calls for federal employees to contribute 6.35% of their paychecks to their pensions. He also proposes an elimination of the special retirement supplement for certain employees who retire before 62.

Ryan’s proposal would make federal employees, lawmakers and congressional staff responsible for 50 percent of their pension costs. Under Ryan’s proposal, FERS eligible employees would contribute 6.35% as opposed to the 0.8% – 4.4% that federal employees are currently responsible for.

The FERS Annuity Supplement is also at risk of being eliminated. The FERS Annuity Supplement, which benefits federal employees who choose to retire before the age of 62. The FERS Annuity Supplement works by bridging the gap between when the federal employees retire and when they are due to receive Social Security benefits. President Obama has also gone on the record in support of eliminating the FERS Annuity Supplement.

Ryan, Chairman of the House Budget Committee, believes that the ‘Reform’ will reduce government expenditures by over $125 billion over the next decade.

Ryan’s proposal, which is part of The GOP budget proposal, dubbed “The Path to Prosperity: Fiscal-Year 2015 Budget Resolution,” also includes proposals to reduce the size of the federal government workforce through attrition, by up to 10%. Moreover, the Republican plan overall seeks to balance the budget over the next decade through a reduction of spending of nearly $5.1 trillion along with Tax Code and entitlement reforms over that same period of time.