Republicans tee up federal worker benefit cuts to pay for tax cuts

House Republicans last week unveiled a proposal to institute a new round of cuts to federal workers’ retirement benefits, including the imposition of a new pension surcharge unless a new hire elects to serve on an at-will basis.

The House Oversight and Reform Committee will meet Wednesday to consider the panel’s portion of the GOP’s budget reconciliation package to extend and expand tax cuts for the ultrawealthy, first implemented during President Trump’s first term.

Atop the panel’s laundry list of benefit cuts would involve the four-year phase-in of the 2013 Federal Employees Retirement System employee contribution hikes across government. When first enacted more than a decade ago, the increase of FERS employee contributions to 4.4% of basic pay did not apply to federal workers hired before December 2013, and those hired during 2013 contribute 3.1% toward their FERS annuity.

Coupled with the contribution rate increase for existing federal workers is a provision that would affect new hires into government. Although pitched as a chance to receive “higher take-home pay,” the proposal would institute a 5 percentage-point hike in employees’ FERS contribution to 9.4% of basic pay, unless the new employee elects to serve on an at-will basis, forgoing their civil service protections.

Altogether, committee staff estimated the two proposals would amount to $35.2 billion in reduced federal spending and come as President Trump is expected to announce a pay freeze in 2026—setting up agency employees for an effective pay decrease next year. These planned increases to the cost of federal workers’ defined benefit annuity come alongside proposals to reduce the value of the pension benefit.

The panel also proposed eliminating the FERS supplement for federal workers who retire before Social Security kicks in at age 62, except for law enforcement officers and other employees in occupations with mandatory early retirement, such as air traffic controllers. And it proposes shifting the calculation for federal retirees’ annuity payments from the average of their highest three years of salary to a new formula averaging the highest five years of salary.

And it orders the Office of Personnel Management to conduct a “comprehensive audit” of the Federal Employee Health Benefits Program to root out dependents who are no longer eligible for benefits.

“The House Oversight Committee is taking a critical step to advance President Trump’s America First agenda and ensure taxpayer dollars are used effectively, efficiently and responsibly,” said Chairman James Comer, R-Ky., in a statement. “The committee will consider legislation that delivers a substantial win for fiscal responsibility, achieving a reduction in the federal deficit of over $50 billion. Congressional Republicans, alongside President Trump, are taking bold action to safeguard taxpayer dollars and secure America’s financial future—delivering on our promise to hardworking American taxpayers.”

Ranking Member Gerry Connolly, just days before announcing he would step aside from his role on the panel due a cancer relapse, blasted the committee’s reconciliation proposal as a “billionaire giveaway.”

“House Republicans are rubber stamping the Trump-Musk administration’s cruel and arbitrary attacks on life-saving federal programs and the dedicated public servants that keep our government running,” Connolly said. “Republicans are targeting the people who make sure Social Security checks go out on time, who make sure veterans get the benefits they deserve, who safeguard our nation’s defense, who care for our sick and injured, who help parents get the services they need to make ends meet, and more—all to subsidize tax giveaways for billionaires and force upon the American people their extremist, cost-raising agenda.”