To save, Congress targets fed workers’ pensions
WASHINGTON — Top lawmakers have found easy prey in their hunt for savings for Congress’ budget deal: Federal workers’ retirement programs, which are notably generous compared to the norm in private industry.
Most federal civilian employees hired beginning in January will contribute 4.4 percent of their pay to their pension plans under the bipartisan budget agreement. Current government workers’ rates will remain unchanged: Those hired in 2013 will continue paying 3.1 percent, while most on the payroll before then will keep contributing 0.8 percent.
The workers say they’ve been singled out for a painful hit in the measure, which the House approved last Thursday and the Senate is expected to complete this week.
“These are working class people,” said Jackie Simon, policy director for the American Federation for Government Employees, citing Border Patrol agents and nursing assistants at Veterans Administration hospitals. “These are not people who can afford it.”
But with federal employees low on voter priority lists and a scant presence in most congressional districts, they proved an irresistible target for lawmakers. And at a time when pensions for private industry workers are edging toward extinction, some said diminished retirement programs are a sign of the times.
“This is not your parents’ retirement you’re looking at,” said Olivia Mitchell, a professor and pension expert at the University of Pennsylvania’s Wharton business school.
While 38 percent of private industry workers received pensions in 1979, just 14 percent did in 2011, the most recent figures from the Employee Benefit Research Institute, which advocates for employee benefit programs.
Besides having pensions, most federal workers can also put money into a 401(k)-like retirement savings program, the Thrift Savings Plan, to which the government makes matching contributions.
That combination is far better than what’s available to most private industry workers. There, only 11 percent of employees had both savings plans and monthly pension payments to look forward to in retirement, according to the research institute’s 2011 figures.
Federal workers and their supporters argue that their pensions tell just part of the story.
The 2.2 million federal civilian employees have had their pay frozen for the past three years. In addition, most were furloughed for one day or longer without pay this year, thanks to the sequester — automatic spending cuts — imposed because of the two parties’ budget standoff.
This week’s budget deal gets $6 billion in 10-year savings from federal workers’ increased pension contributions. Overall, the measure would save $85 billion, money used to restore $63 billion in spending cuts over the next two years and slightly reduce federal deficits.
The measure saves another $6 billion by reducing benefits for military personnel who retire early and $6 billion by increasing premiums paid by corporations to the government’s Pension Benefit Guarantee Corp. to guarantee pension benefits.
The bill also helps federal workers. By easing the sequester by $63 billion, it reduces the likelihood that the workers will face unpaid furloughs over the next two years.