Top lawmakers have found easy prey in their hunt for savings as part of a congressional budget deal: Federal workers’ retirement programs, which are notably more generous than most in private industry.
Federal civilian employees hired before this year contribute just 0.8 percent of their pay to their pension plans. Those hired this year pay 3.1 percent, while those hired beginning in January will see their contribution ratcheted up to 4.4 percent as part of the budget agreement.
The workers say they’ve been singled out for a painful hit.
“These are working-class people,” said Jackie Simon, policy director for the American Federation for Government Employees, citing Border Patrol agents and nursing assistants at Veterans Administration hospitals. “These are not people who can afford it.”
But with federal employees low on voter priority lists and a scant presence in most congressional districts, they proved an irresistible target for lawmakers. And at a time when pensions for private industry workers are edging toward extinction, some experts say diminished government retirement programs are a sign of the times.
While 38 percent of private employees received pensions in 1979, just 14 percent did in 2011, according to the Employee Benefit Research Institute, which advocates for employee benefit programs.
Federal workers and their supporters argue that their pensions tell just part of the story.
The 2.2 million federal civilian employees have had their pay frozen for the past three years. In addition, most were furloughed for at least one day this year, thanks to the sequester — automatic spending cuts — imposed because of the two parties’ budget standoff.
Federal workers aren’t the only public employees facing growing pension expenses. Such plans remain common for many state and local workers, and 30 states imposed higher pension costs on their employees between 2009 and 2012, according to a survey by the National Conference of State Legislatures.
Such plans — called defined benefits because employers must spend whatever is needed to fully finance them — have been fading in the private sector for decades, as companies shed those expenses. Many firms have shifted to savings plans to which they make a defined contribution, transferring the risk to workers if investments go bad.
Federal workers “have to be careful about crying foul over something for which the other solution would be to eliminate it,” said Lynn Dudley, senior policy vice president for the American Benefits Council, which represents big companies that provide retirement benefits.
About the Author
