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On May 4, Office of Personnel Management (OPM) Director Jeff Pon sent a letter to Speaker of the House Paul Ryan making four legislative recommendations that, if enacted, would require current and future federal employees to make larger pension contributions, and also would scale back retirement benefits for current retirees. The proposals would mainly affect Federal Employees’ Retirement System (FERS) employees; Civil Service Retirement System (CSRS) participants would be affected to a lesser extent.
OPM’s proposals reflect the White House’s last two budget requests, which called for:
- Increasing FERS federal employee pension contributions to 7.25 percent. Currently, there are three tiers of FERS pensions, with newly hired postal and federal workers in 2013 and 2014 paying more of the contributions (3.1 percent and 4.4 percent, respectively) into the FERS retirement system with no corresponding benefit increase. This proposal would call for all current and future FERS participants to contribute 1 percent more toward their annuities each year until they are contributing 7.25 percent of their basic pay into the pension. This increase comes without any corresponding pension increase, representing a significant pay cut for postal and federal employees.
- Replacing the high-3 with the high-5. This would significantly cut the retirement annuity of postal and federal employees.
- Eliminating and reducing the federal retiree COLA. This would eliminate the COLA for FERS participants and cut the COLA for CSRS participants, preventing postal and federal retiree pensions from keeping pace with inflation.
- Eliminating the FERS annuity supplement. This proposal would take away the possibility for many postal and federal workers to retire before the age of 62. It also needlessly harms firefighters, law enforcement officers and others who must retire before age 62.
The White House has called on Congress to adopt these changes and while it has yet to do so, these proposals can come up throughout the remainder of the 115th Congress, so letter carriers should be prepared.
“These proposals are nothing but a blatant attack on postal and federal workers,” NALC President Fredric Rolando said. “We will do everything in our power to prevent Congress from putting the burden of paying for federal spending on the backs of letter carriers, other federal employees and retirees.”