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Carriers mobilize to oppose FERS bill

On Jan. 24, Rep. Dennis Ross, the chairman of the House Subcommittee on the Federal Workforce, U.S. Postal Service, and Labor Policy, introduced H.R. 3813, the Securing Annuities for Federal Employees Act. But it probably comes as little surprise that Ross’ measure, were it to become law, would in fact threaten the retirement benefits of federal workers—including postal workers. [A summary of the AFGE's letter in opposition to H.R. 3813 is included below.]










The American Federation of Government Employees (AFGE) wrote a letter to the leadership of the House Oversight and Government Reform committee in opposition of H.R. 3813. Here is a summary of the letter:

H.R. 3813, introduced by Rep. Dennis Ross (R-FL), would require not only massive increases in contributions to pensions by current and future federal employees, but also make draconian reductions in retirement benefits for current and future federal employees.

These cuts would force contribution increases to a retirement system that's fully funded while slashing federal workers' retirement income at the same time.

Federal workers have already contributed $60 billion in deficit reduction through the current two-year pay freeze. The retirement cuts in H.R. 3813 would total an additional estimated $45 billion.

It's important to note that although postal workers are indeed federal employees, our pay is negotiated with the Postal Service and comes from the sale of postage and postal products and services, not taxpayer money. However, our retirement benefit comes from either the older Civil Service Retirement System (CSRS) or the newer Federal Employees Retirement System (FERS), which makes this particular fight ours as well.

The cuts to federal retirement included in H.R. 3813 include:

  • for current CSRS and FERS employees, permanent increases in contributions to retirement of 1.5 percent, phased in over three years, starting in 2013.
  • for current vested FERS employees, reducing the multiplier from 1.1 percent to 1 percent if they retire at 62 or later, which will cut benefits 9 percent to 10 percent from the current formula.
  • for any FERS employees who retire after 2012, eliminating the Social Security supplement if they retire before becoming eligible for Social Security.
  • for anyone hired after 2012 with fewer than five years of previous civilian service, they would be in a new category, called Secure Annuity Employee (SAE).

SAEs would have to pay 4 percent—instead of the current 0.8 percent—of their salary to the FERS defined benefit pension, plus 6.2 percent to Social Security, for a total of 10.2 percent coming out of salary, not including any contributions to the Thrift Savings Plan.

SAEs' pensions would be calculated on the basis of the average of the highest 5 years of service (high 5) rather than the current high-3, a benefit cut of about 5 percent.

SAEs' pensions would be calculated on the basis of a 0.7 percent multiplier, rather than the current 1.1 percent multiplier, resulting in a benefit cut of approximately 36 percent.

This new pension system would discourage potential applicants because the economic sacrifice required would make it impossible for them to raise their families and simultaneously plan for a retirement with some amount of dignity.

Federal employees have not been immune to the economic woes of this country. Similar to our private-sector counterparts, federal workers are confronting financial hardships due to unemployed spouses, major declines in the values of their homes, rising health care costs and general living expenses. Many are responsible for supporting their families on a single paycheck.