House approves federal pension contribution hike
By Andy Stonehouse
The House approved a bill Thursday requiring federal employees to contribute 5 percent more of their salaries over five years toward retirement, as part of a wider deal hoping to avoid the fiscal cliff.
The 2012 Spending Reduction Act, introduced by House Majority Leader Eric Cantor (R-Va.), is almost the same as a measure passed by the House last spring that sought to prevent the automatic sequestration cuts by replacing them with alternative savings.
Federal workers under the Federal Employees Retirement System now pay 0.8 percent of their salaries toward their pensions while the government kicks in 11.7 percent. Under the proposed bill, by 2017 federal workers under FERS would be required to contribute 5.8 percent.
The bill would also eliminate a supplementary payment for feds who retire before they're eligible for Social Security, however, that would only apply to new hires.
House Republican leaders are pairing the spending-cut bill with their "Plan B" tax-cut bill. Votes on both bills were expected Thursday evening.
The bill also contains a provision allowing federal employees to invest unused annual leave and vacation into their Thrift Savings Plan accounts.
Federal-employee unions have denounced the pension hikes.
"Make no mistake, an increased contribution toward one's pension, with no corresponding increase in benefits, is a pay cut," Colleen Kelley, president of the National Treasury Employees Union, wrote in a letter to lawmakers.
Critics speculate the bill is likely to go nowhere once it hits the Senate - when the House passed the earlier version of the bill this year, the Senate's Democratic leaders failed to bring it forward for a vote.
Originally published on BenefitsPro.com