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Federal employee groups find little to cheer about in president's budget proposal

Employee groups reacted sharply to President Obama’s fiscal 2013 budget proposal.

Employee groups reacted sharply to President Obama’s fiscal 2013 budget proposal which—although it would end the two-year pay freeze and give feds a modest 0.5 percent pay raise—includes proposals to raise feds’ contributions to their retirements by 1.2 percent over three years, and would do away with the Federal Employees Retirement System supplement for new employees.

“In order to make reasonable changes to Federal worker retirement, while maintaining the ability to attract and retain highly qualified individuals, the Administration proposes to increase the employee contribution toward accruing retirement costs by 1.2 percent over three years beginning in 2013,” stated the budget text released today.

“Under the proposed plan, the amount of the employee pension would remain unchanged,” the budget stated. “We estimate this proposal will save $27 billion over 10 years. In addition, the Administration is proposing to eliminate the FERS Annuity Supplement for new employees. Overall, these changes are not expected to have a negative impact on the Administration’s ability to manage its human resources, nor inhibit the Government’s ability to serve the American people.”

The head of the largest federal employee union immediately shot back his reaction.

“Federal employees have already contributed $60 billion with pay freezes,” said American Federation of Government Employees National President John Gage in a Feb. 13 statement. “It’s been $60 billion, plus now $27 billion and I don’t see any jobs created. The White House is putting money into creating new jobs and then attacking the jobs that we have. “

Gage called the hit on federal retirements “a sop to the right wing,” and said that “the White House and congressional leaders should not treat federal employees’ paychecks like an ATM machine.”

The Federal Managers Association, as well as other groups, noted that the increased pension contribution would make the proposed 2013 pay increase a wash-out. “Under this proposal, civil servants would see an immediate loss of 0.4 percent in take home pay, effectively canceling out the 0.5 percent increase in pay proposed by the president,” FMA said.

“We at FMA continue to oppose any proposal which calls for federal employees to contribute more towards their retirement plan, which is an immediate decrease in the take home pay of 2 million hard working Americans,” FMA National President Patricia Niehaus said in a statement. “While Congress is simultaneously debating how to put more money into the paychecks of American citizens, it is incomprehensible that the same rationale does not apply to federal employees.”

The National Treasury Employees Union struck a tone that was a bit more conciliatory on one issue, noting that the budget limited the elimination of the FERS early retirement supplement to new hires.

“Retaining the FERS supplement for current employees clearly is the right thing to do,” said NTEU President Colleen Kelley in a statement. “It would be unfair to change the rules to take this from current employees at or near meeting the age and service requirements to retire prior to the age of 62.”

The National Federation of Federal Employees, on the other hand, stood firm on the annuity supplement, stating in a press release that “NFFE will never support a bill that treats new employees any different than their predecessors.”

The union also offered some quick math on the effect the proposed budget would have on an employee making $50,000 in 2013.

“[An] employee making $50,000 per year would see a 0.4 percent increase in their retirement contribution along with a 0.5 percent increase in their pay,” the union said. “This results in a net 0.1 percent pay increase, amounting to a total of $50 for the year, or $4.16 each month. After adjusting for inflation, this turns into a third year of net pay loss for federal employees.”

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