House budget proposal pushes civil pension reform
- By Derek B. Johnson
- Jul 18, 2017
A 2018 budget resolution by House Budget Committee chair Diane Black (R-Tenn.) calls for federal employees to contribute a greater amount of their salaries to the government’s defined benefit retirement plan.
“This [budget] would achieve significant savings while recognizing the need for new federal employees to transition to a defined contribution retirement system,” the resolution states. “The vast majority of private sector employees participate in defined contribution retirement plans.”
The budget resolution claims to incorporate pension reform recommendations from the so-called “Simpson-Bowles” commission, named after former congressmen and co-chairmen Alan Simpson and Erskine Bowles.
The commission, formed by President Barack Obama (D) in 2010 to much fanfare, was designed to tackle and solve larger issues of federal spending, revenue and debt. However, lawmakers on both sides of the aisle blanched at the massive tax increases, spending cuts and welfare reductions included in the final recommendations, and the commission’s report eventually faded into obscurity.
Among their cost-saving proposals was a plan to reform civil service pensions by increasing the number of earnings years used to calculate pension benefits, deferring cost of living adjustments for early retirees and adjusting the ratio of employer/employee contributions.