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House committee advances federal retirement reforms

A House committee approved a package of reforms which would make sweeping changes to the federal retirement system.

[Editor's note: This story has been changed to clarify that the bill's proposed changes to the FERS multiplier apply only to a new class of Secure Annuity Employees.]

A House committee approved a package of reforms which would make sweeping changes to the federal retirement system.

The House Oversight and Government Reform Committee on Feb. 7 voted 22-16 to advance the Secure Annuities for Federal Employees (SAFE) Act (H.R. 3813).
 
The bill, introduced by Oversight Subcommittee on Federal Workforce Chairman Dennis Ross (R-Fla.), would change the employee share of contributions to retirement, introduce a high-five formula for the pension calculations of new employees, and eliminate the FERS supplement in cases of early, non-mandatory retirement. The changes also apply to congressional employees, special occupational groups and members of Congress.

The bill would raise the employee share of contributions to the Civil Service Retirement System and the Federal Employees Retirement System by an additional 1.5 percent of salary over three years, beginning in 2013—the CSRS employee share would go from 7 percent to 8.5 percent of salary, and the FERS employee share would go from 0.8 percent of salary to 2.3 percent.
 
Additionally, the bill would establish new, separate rules for employees hired after Dec. 31, 2012, who have less than five years of creditable service for retirement purposes. Rules for this new class of “Secure Annuity Employee” would set new employees’ contribution to FERS at 4 percent of salary, rather than the current 0.8 percent; the contribution for special occupational groups would be set at 4.5 percent of basic pay.

The legislation also would use an average of the highest five years of salary in the FERS pension calculations of new employees. The bill would be grandfathered to allow existing CSRS and FERS employees to use the high-3.

If passed into law, the bill would eliminate the FERS supplement for individuals younger than age 62 who are not subject to mandatory retirement, beginning Jan. 1, 2013—excluding employees who are subject to mandatory retirement ages, such as law enforcement officers, firefighters, air traffic controllers and nuclear materials couriers.
 
For the new class of Secure Annuity Employees, the bill would set the FERS pension formula multiplier for employees, congressional employees, and members of Congress at 0.7 percentage points, instead of 1 percent or 1.7 percent.  Employees in special occupational groups are subject to a proportional adjustment to the multiplier (0.3 percentage points lower than current law).

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