House Republicans have tacked on cuts to the federal retirement system to the budget resolution that, if it heads to the Senate, could make it possible for a tax reform bill to be passed via reconciliation.
Federal News Radio reports that the cuts were added October 4. The proposed measures would cut billions from federal employees' retirement over the next 10 years.
The measures included in the resolution include higher employee contributions to the federal defined benefit pension plan; elimination of supplemental payments to employees who retire before age 62; and a switch to a defined contribution pension plan for new federal employees.
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In addition, the report says, the resolution includes "reconciliation instructions" that charge the House Oversight and Government Reform Committee to develop legislative proposals to reduce the federal deficit by $32 billion over 10 years through reforms to civil service pensions.
According to a count from the House Budget Committee Democrats, the budget resolution includes $163 billion over 10 years in total cuts to federal compensation and retirement benefits.
An earlier Washington Post report said that the requirement for higher employee contributions would end up becoming a 6 percent pay cut over 6 years, while the elimination of the supplemental payments would leave employees retiring before age 62 without a bridge to Social Security. And research has already shown that DC plans do not prepare employees as well for retirement as defined benefit plans.
Other provisions in the resolution include changing the formula for the government's contribution to the Federal Employee Health Benefits Program (FEHBP) and a proposal that would reduce the G fund's rate of return in the Thrift Savings Plan. Upon an earlier suggestion of the latter proposal by lawmakers, both the Federal Retirement Thrift Investment Board and federal employee groups said such a change would make the G fund practically worthless for TSP participants.
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