Repeal New Federal Employee Pay Cuts

Categories: Job Cuts, General Schedule

At the urging of AFGE, Rep. Donna Edwards of Maryland this week reintroduced a bill that would repeal massive pay cuts to new federal employees. The legislation would reverse the large retirement contribution increases imposed on federal employees hired after 2012 as part of prior budget agreements.

“While these higher retirement contributions were sold as a way to fund temporary increases in unemployment insurance and to pay for the stimulus that got the nation out of the Great Recession, Congress made them permanent,” AFGE President J. David Cox Sr. said. “This is a major financial burden on these employees and it’s time for Congress to do the right thing and roll back these unfair increases. These higher retirement contributions also make it more challenging for agencies to recruit and retain new employees.”

The increases in retirement contributions are among $159 billion in compensation cuts imposed on federal employees since 2011. The Federal Employees Retirement System (FERS) is fully funded, and employees are getting no additional benefit for the extra money they are forced to contribute.

Employees hired since the beginning of 2014 now pay 4.4% of their salaries toward the FERS defined benefit, reducing their take-home pay by $21 billion over 10 years, while employees hired during 2013 are paying 3.1%. Employees hired before 2013 pay 0.8% toward the pension system. In addition, employees pay 6.2% of their salary to Social Security and must contribute 5% toward the government’s 401(k)-style retirement plan to get the full match.

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