Obama calls for federal employees to increase contributions to their retirement

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Obama plan would require feds to pay more toward retirement

By FederalDaily Staff
Sep 19, 2011

A new, wide-raging deficit reduction plan released by the White House on Sept. 19 proposes increasing federal employees’ contribution toward retirement, and recommends the formation of a new commission to reform federal personnel policies.

The plan, titled “The President’s Plan for Economic Growth and Deficit Reduction: Living Within Our Means and Investing in the Future,” proposes increasing employees’ contribution by a total of 1.2 percent, phased in at 0.4 percent a year over three years, beginning in 2013.

The plan also proposes to eliminate the Federal Employees Retirement System (FERS) annuity supplement for new employees. The supplement is paid to FERS retirees until they reach age 62.

The administration estimates that the changes to the federal civilian retirement system will save $21 billion over 10 years.

In addition to those changes, the plan proposes to create a new commission to look for ways to update and modernize the federal personnel system.

“Federal managers and employees need a modernized personnel system that reflects the reality of the 21st Century—where agencies offer compensation reflecting competing markets for employees, facilitate career-development mobility across agencies and with the private sector, address poor performers consistently and fairly, develop staff, and motivate better performance using the best evidence-based public and private sector practices,” the plan stated.

The plan also calls for Congress to establish a Commission on Federal Public Service Reform to recommend personnel system changes that “could include but would not be limited to compensation, staff development and mobility, and personnel performance and motivation.” The commission would include members of Congress and representatives of the President’s Labor-Management Council, as well as private-sector and academic experts.

Labor unions immediately pushed back against the recommendations.

“Federal employees are already under a two-year pay freeze—which amounts to a $60 billion contribution from federal workers over the next 10 years,” said National Treasury Employees Union President Colleen Kelley in a statement. “And now they are being asked to contribute additional money to their retirement without an increase in benefits.”

American Federation of Government Employees President John Gage concurred.

“Asking federal employees to accept additional cuts to their take-home pay is unfair, especially at a time when citizens are demanding more services from their government,” Gage said. “This is a double whammy for federal employees, who are facing the same economic hardships as most other Americans. Enough is enough.”

Problem unions?

proposes increasing employees’ contribution by a total of 1.2 percent, phased in at 0.4 percent a year over three years, beginning in 2013.
I applaud him for approaching a very politically nuclear position, but it's nowhere near enough.

If he had gone 4% total over the next 5 years beginning in 2012, I would be fully supportive. 4% is still well below private sector today, and that stands to grow over the next few years as well.

Like it or not Bush had a smart thing going with privatizing Social Security. Without doing that we're going to need to make it a norm to privatize your actual retirement. (like most intelligent people do anyway)

Obama, more of the same?


Registered User
The increase in contributions is needed, but will be spun as another tax on the middle class while the wealthy elite contribute less than the office secretary.