House Republicans are pursuing at least $50 billion in cuts to Federal Employee Retirement System (FERS) benefits to help pay for a $4.5 trillion package of tax cuts that would primarily benefit the rich and large corporations, a priority for President Trump.
The House Oversight and Government Reform Committee on April 30 advanced the steep cuts over 10 years to federal employee retirement benefits. If included in final legislation, this proposal would hurt the finances and retirement of federal employees and undermine the workforce’s ability to deliver services to all Americans.
The legislative process called reconciliation that may or may not include cuts to FERS is unfolding this month. It will be several weeks and perhaps months before we know whether the proposals to cut FERS become law.
“AFGE has been urging members of Congress on both sides of the aisle to understand that cutting FERS benefits will not come close to offsetting the cost of Trump’s massive $4.5 trillion tax giveaway and will only succeed in making the prospect of working for the federal government so unattractive as to drive from executive branch agencies experienced and dedicated employees who deliver services and benefits on which individuals, families, businesses, and communities in their districts depend,” said AFGE Acting Legislative Director Daniel Horowitz.
Below are the cuts proposed by the House GOP and how they would hurt federal workers’ finances and workplace protections:
1. Increase employees’ contribution to FERS
The committee wants all federal employees, regardless of when they were hired, to contribute 4.4% of their paychecks to FERS.
If enacted, this proposal will reduce the take-home pay of federal workers hired before 2014 who now contribute either 0.8% or 3.1% to their FERS. Those cuts would come on top of a possible pay freeze under Trump next year.
Simply put, raising FERS contributions to 4.4% for all federal employees would be a stealth income tax on – and in terms of buying power, a significant pay cut to – mostly older federal employees hired before 2014.
2. Change FERS retirement calculation to reduce pension amounts
The committee has proposed changing the long-standing formula used to calculate FERS retirement benefits from the average of an employee's earnings over their three highest-paid years to their five highest-paid years. This proposal would reduce the pension amount of virtually all current federal employees when they retire.
3. Eliminate the FERS supplement
The committee has proposed eliminating the FERS supplement for most federal employees who retire early. This proposal would deprive most federal workers who retire early of a critical income bridge until they are eligible to collect Social Security at 62.
4. Require new hires to pay extra if they want workplace protections
The committee has proposed a scheme designed to coerce new federal hires into opting out of the merit-based civil service by requiring them to pay a much higher contribution to FERS if they choose to work with civil service protections.
If enacted, this proposal will make it easy for a president to summarily terminate a federal employee for any reason, or no reason at all. The proposal is intended to cause the eventual extinction of the merit-based, nonpartisan civil service as new federal hires choose to be at-will employees rather than devote almost 10% of their salaries to finance their pensions.
5. Charge federal employees for exercising their due process rights
The committee has proposed imposing a fee on federal employees who file appeals with the Merit Systems Protection Board (MSPB).
If enacted, this proposal will deter federal employees from pursuing legitimate claims of discrimination, political retaliation, and workplace abuse, a process that helps ensure the integrity and nonpartisanship of the civil service. The right to seek relief from alleged government wrongdoing should not be contingent on paying what amounts to an entry fee.
Given the projected miniscule revenue this proposal would generate, it is clear that the primary purpose is not to help pay for the proposed multitrillion dollar tax package but to weaken a pillar of civil service law that for almost 50 years has protected federal merit systems against partisan political and other prohibited personnel practices and provided robust and meaningful protection for federal employees against abuses by agency management.
These bad proposals will come back and haunt members of Congress if enacted
These bad proposals are not only bad for federal workers but the American people they serve and members of Congress. Here’s how:
- The urgent problem members of Congress will face if federal employee retirement benefits are drastically reduced in reconciliation is not only unhappy federal employees in their districts, but also the rapid erosion and eventual collapse of services that their constituents depend on and take for granted as workers leave the civil service because it simply does not pay enough to make ends meet.
- The proposed cuts to FERS are taking place against the backdrop of the Trump administration’s systematic assault on the civil service. The bottom line is that the administration is pursuing a comprehensive and multilayered strategy to make federal employment across the executive branch so unattractive as to motivate federal employees to quit.
- Social Security claims, VA benefits, Small Business loans, food safety, all of these and much more will be adversely affected when there is no one qualified to do this work. Constituents who never even imagined they depend on the government will quickly complain to members of Congress if Trump and Republicans in Congress prevail in shredding federal retirement benefits that are a major reason why people join and stay in the civil service.
- Members of Congress don’t have to care about the plight of federal employees to oppose the proposed reconciliation cuts. If for no other reason, lawmakers should oppose the FERS cuts because no organization, public or private, can serve its customers effectively if its human capital is not treated with respect and compensated fairly.
