On the House floor this week. Here’s is NARFE’s warning:

February 14, 2012

U.S. House of Representatives
Washington, DC 20515

Dear Representative,

On behalf of the 4.6 million federal employees and annuitants represented by the National Active and Retired Federal Employees Association (NARFE), I urge you to oppose the highway funding bill, H.R. 7, and specifically to vote against the provisions in the bill derived from H.R. 3813, a bill that threatens federal employee retirement security. NARFE will score this vote.

H.R. 3813 would substantially reduce the retirement income security provided by the Federal Employees Retirement System (FERS) and effectively provide a pay cut for all federal employees – those covered by both FERS and the Civil Service Retirement System (CSRS), who have experienced a pay freeze for the last two years.

For new employees with less than five years of service, H.R. 3813 would create a new retirement system that would base retirement annuities on the average of the highest five years of consecutive service instead of the highest three years and would reduce the accrual rate by more than 36 percent, to 0.7 percent. The resulting 41 percent reduction in FERS annuities would produce a new median annuity of only $425 per month ($5,098 annually). That is barely over a third of what a minimum wage earner would make per year ($15,080), working 40 hours per week for $7.25 per hour.

New employees also would face a 3.2 percent increase in retirement contributions, while other current employees (covered by both CSRS and FERS) would face a 1.5 percent increase in retirement contributions over three years.

Additionally, H.R. 3813 would eliminate the FERS annuity supplement for employees who have planned for retirement relying on the promise of receiving it. This provision would result in a substantial reduction in the annuities for early retirees – federal employees who have dedicated their entire careers to public service and are counting on receiving this supplement as part of their retirement compensation. It also threatens to create a significant, disruptive wave of federal employee retirements before the end of the year.

The cuts to retirement benefits proposed by H.R. 3813 stand in stark contrast to those contained in President Obama’s fiscal year 2013 budget proposal. First, the president’s proposal does not reduce basic federal retirement annuities at all, let alone by more than 41 percent. Second, the president’s proposal eliminates the FERS annuity supplement only for new hires, not for those who are on the verge of retirement. Third, the president proposes a smaller increase in retirement contributions for current employees and a significantly smaller increase for the new employees that the government needs to recruit.

Of course, all of these proposed cuts to federal retirement benefits and continued pay freezes would harm hardworking federal employees and their families, who are struggling in this economy just like their private-sector counterparts.

Apart from the personal toll these cuts take on dedicated civil servants, these actions will undermine the federal government’s ability to attract and retain the talent this nation needs to overcome the challenges we face. Shared sacrifice is fair, but singling out federal employees and retirees for disparate treatment threatens to do permanent harm to a federal civil service tasked with meeting the increasingly complex and critical functions of government. The American public deserves an engaged and efficient federal workforce, not one characterized by members of Congress as the source of our country’s problems.

For these reasons, I urge you to vote against H.R. 7, and particularly to vote against the provisions derived from H.R. 3813.

Sincerely,

Joseph A. Beaudoin

President

National Active and Retired Federal Employees Association (NARFE)