Bill takes aim at retirement benefits
Defined-benefit portion of FERS is at stake
Editor's note: This article has been changed to clarify information about TSP benefits.
Two Republican senators introduced a bill that would end the defined-benefit portion of the Federal Employees Retirement System for new federal hires, starting in 2013. The bill would not affect benefits for current feds.
Sens. Richard Burr (R-N.C.) and Tom Coburn (R-Okla.) introduced the Public-Private Employee Retirement Parity Act March 17. The bill would apply to future federal employees, including members of Congress. FERS employees now receive a defined-benefit pension and also may participate in the Thrift Savings Plan, which is equivalent to a private-sector 401(k) retirement plan.
In a joint statement, the senators said FERS is underfunded by nearly a billion dollars already, and as FERS accounts for more of the retirement burden in the future, required federal contributions to the FERS annuity will skyrocket.
The bill would not affect the TSP portion of the FERS retirement benefit. Like a 401(k), TSP is a defined-contribution plan that depends on employee and employer contributions. TSP participants receive matching contributions from agencies on as much as 5 percent of the pay that an employee contributes. Employees receive a dollar-for-dollar agency match for the first 3 percent of pay contributed, and a 50 percent match for the next 2 percent of pay contributed. Employee contributions above 5 percent are not matched.
“Federal government workers receive far more generous retirement benefits than private-sector employees,” Burr said. "The cost to taxpayers of these benefits is unsustainable, and we simply cannot afford it. We cannot ask taxpayers to continue to foot the bill for public-employee benefits that are far more generous than their own.”