Retirement cuts tweaked in House reconciliation package

House Republicans on Monday unveiled a series of changes to a bevy of proposed cuts to federal workers' retirement benefits aimed at making them more politically palatable following bipartisan backlash.

Last month, the House Oversight and Reform Committee advanced its portion of the House GOP’s budget reconciliation bill, which would cut federal spending to partially pay for tax cuts for the wealthy and increased immigration enforcement, including an array of proposals that, taken together, amount to requiring federal workers to pay more toward less generous retirement benefits.

The bill included provisions requiring employees hired prior to 2014, who had previously been exempted from that decade’s increase in how much feds must contribute toward their own retirement benefits, to pay 4.4% of their basic pay toward the Federal Employees Retirement System alongside more recent hires.

It also would have eliminated the FERS supplement for people who retire before Social Security kicks in at age 62, made annuities less valuable by basing them on the average highest five years of an employee’s salary rather than the current high-3 model, and requires new federal employees to choose between serving at-will—with no civil service protections—and paying nearly 10% of their salary toward their pension each paycheck.

But Rep. Mike Turner, R-Ohio, said he and some other Republicans would not support the measure on the floor because some of the provisions amount to reducing the retirement benefits of federal workers who have already earned and are vested in their pension. The proposals have also provoked outcry among federal workers who agreed to participate in the deferred resignation program, Voluntary Early Retirement Authority or a combination of the two, as well as groups representing federal law enforcement officers.

According to the latest draft of the bill, published early Monday morning, Republicans have ditched the plan to effectively un-grandfather employees hired prior to 2014 into paying more of their paychecks toward their retirement benefits.

On the FERS supplement, which can amount to one-third of a federal retiree’s income until they turn 62, lawmakers expanded an exemption for federal workers who are required to retire early, such as air traffic controllers and federal law enforcement personnel, to cover all such employees, regardless of whether they actually are forced out because they hit the mandatory retirement age. The implementation date, previously set on the date of the bill’s enactment, has been shifted to Jan. 1, 2028, and language now exists clarifying that federal employees may maintain eligibility for the supplement provided they are “entitled” to it prior to 2028.

The latest draft also delays the change in federal retirees’ annuity calculations from the high-3 to high-5 average salary model by one year, to Jan. 1, 2028.

John Hatton, staff vice president for policy and programs at the National Active and Retired Federal Employees Association, said that while his organization welcomes the changes, more must be done to protect employees who have already earned their retirement benefits.

“From our view it’s definitely an improvement, and a significant improvement,” he said. “But the FERS supplement elimination and the High-5 proposal still breaks promises that were made to federal retirees and they’re still applying benefit reductions based on people’s past work history. If you’re vested already, every paycheck you paid into this, earning and investing in that system, and now this is cutting that back after the fact.”