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News | Cuts to Federal Employee Retirement Annuities Proposed in House; Denounced by NARFE
Cuts to Federal Employee Retirement Annuities Proposed in House; Denounced by NARFE
In a policy reform proposal to President Obama that would potentially save billions
of taxpayer dollars over the next five years, House Republican leaders
recommended a reduction in the retirement annuities of federal employees and
a new rule to require them to work longer to receive their full annuity.
The proposal, made on June 4 by Minority Leader John Boehner (R-OH) and
Minority Whip Eric Cantor (R-VA), proposed the following [editor's
note: this is from the original language in the proposal here]:
Update The Formula For Federal Pensions To Reflect Private Sector
Initial pension benefits for federal civilian employees are calculated based
on the average of employee's highest earnings over three consecutive years. It
is common practice in the private sector to base benefits on a five year
average. The Congressional Budget Office has estimated that moving to a five
year average would save taxpayers $1.2 billion over five years.
Eliminate Full-time Union Representatives From Federal
Under current law, federal employees who are part of a collective bargaining
unit may be granted "official time" to perform representational duties on behalf
of the union. While on official time, the employee is paid by the government but
is acting on behalf of the union. According to the Office of Personnel
Management, in FY 2008 the federal government spent $120 million paying
employees for their time spent working on union activities. While some employees
only spend minimal time on union activities, others are designated as 100
percent on official time, meaning they are paid to spend all of their time on
union activities. In their report, OPM suggests a significant amount of the time
spent on general labor-management category (as opposed to dispute resolution or
contract negotiations) is spent by those on 100 percent official time.
Eliminating 100 percent official time would save taxpayers millions of dollars
each year. Savings of just 10% a year would save taxpayers $12 million next year
and $60 million over five years.
Eliminate Retirement Payments For Federal Workers Who Retire Before
The federal government provides civilian employees with a benefit not
normally offered to private sector employees, Federal employees who retire at
age 55 or older with at least 30 years of service or at age 60 with at least 20
years of service receive until they reach 62 a benefit equal to the estimated
Social Security benefit for which the worker will become eligible at age 62.
This policy not only encourages federal employees to retire early, but it comes
at a significant cost to taxpayers. Preliminary estimates indicate that the
early retirement benefit costs taxpayers $267 million a year.
NARFE Deplores the Proposed Cuts
"Not only would these proposals dishonor the government's obligations to its
workers, but it also makes public service a much harder sell to the highly
talented and skilled individuals needed to take on the challenges of recovering
from an unparalleled economic upheaval, fighting two wars and defending the
homeland," said National Active and Retired Federal Employees Association
(NARFE) President Margaret L. Baptiste. "The federal government should
serve as a model to other employers and should not be a part of the mindless
race to the bottom, which has contributed to the growing number of employees
without adequate retirement savings or health insurance."
Baptiste concluded, "Federal workers and annuitants have dedicated their
careers and continue to give so much for our nation and our ideals. NARFE
urges the Congress not to demean their public service by reducing the retirement
and health benefits that are rightfully theirs."