Today, U.S. Senators Richard Burr (R-NC), Tom Coburn (R-OK), and Saxby Chambliss (R-GA) reintroduced the Public-Private Employee Retirement Parity Act to address long-term liabilities facing the federal government. The legislation would end the defined benefit pension portion of the Federal Employee Retirement System (FERS) for new federal government hires starting six months after enactment, leaving fully in place the Thrift Savings Plan with the current match (up to 5%) for both current and future federal workers. The bill would also apply to Members of Congress.
"Right now, federal government workers receive far more generous retirement benefits than private sector employees. The cost to taxpayers of these benefits is unsustainable and we simply cannot afford it," said Sen. Burr. "We cannot ask taxpayers to continue to foot the bill for public employee benefits that are far more generous than their own."
"Generous pension plans for members of Congress have helped turn congressional service into a career rather than a calling," said Dr. Coburn. "At the same time, federal workers enjoy a better benefits package and higher overall pay than most taxpayers -- even at a time when many Americans are still simply looking for a job. This status quo is unsustainable and needs to be reformed."
"With America now $17 trillion in debt, we simply cannot continue to commit to future government spending," said Sen. Chambliss. "Americans have demanded their leaders make the necessary changes to our fiscal policies to put our nation on a track to sustain economic growth and real job creation. The Public-Private Employee Retirement Parity Act is a small change that will have a big impact on our debt and deficit."
Currently, federal workers enjoy both a defined benefit pension and a Thrift Savings Plan (equivalent to a 401(k)) with up to a 5% match, paid for by the taxpayers. The average private sector employee gets a 401(k) with a 3% employer match and no pension. Federal workers also continue to enjoy federal health care benefits (FEHBP) after they retire, a benefit that is becoming increasingly rare in the private sector.
The legislation will require the Administration to make the annual report on the on the actuarial status of the federal retirement system publically available online by January 31st each year. According to the most recent Office of Personnel Management's Civil Service Retirement and Disability Fund annual report, the FERS system is currently underfunded by $20.1 billion for fiscal year 2012. In the coming years, as more of the retirement burden falls on the FERS system, the required federal government contributions to FERS will skyrocket, especially in comparison to what federal workers will put into the system. In 2012, the Federal government contributed about $22.2 billion to FERS. By 2065, those required contributions will rise to $239.5 billion, with the government paying out $415.3 billion in benefits.
Current federal government employees and retirees would not be impacted by the changes in the Burr-Coburn-Chambliss bill.