(Bloomberg) — Federal employee pension benefits are set to be pared back in Republicans’ giant tax and spending package working its way through the US House, another slap at a workforce roiled by Elon Musk’s cost-cutting efforts.
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The proposal, which House Oversight Committee and Government Reform Committee Chairman James Comer announced on Friday night, would force many federal civilian employees to pay higher premiums for retirement benefits and to lower their eventual benefits by changing the formula for calculating payments.
The Oversight Committee expects to vote next week on that plan and other workforce changes. If approved, they would be combined into legislation enshrining President Donald Trump’s legislative agenda, which Republicans aim to enact by August without the help of Democrats.
Comer said in a statement that the committee’s proposal would achieve “reduction in the federal deficit of over $50 billion.”
The biggest change would be to raise the premium many long-time federal and postal employees pay out of their salaries in the Federal Employee Retirement System. Under the current system, contribution rates are arranged by the year an employee started: 0.8 percent in 2012 and earlier; 3.1 percent if hired in 2013, and 4.4 percent if hired in 2014 and afterward. The change would have employees pay 4.4% to raise $30.7 billion over a decade, according to the statement.
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The proposal would also try to save $4.75 billion by basing retiree pension benefits on the highest five years of salary rather than the current three highest years. Those benefits are calculated based on top salary received and number of years of in the US workforce.
Other changes being proposed include eliminating supplemental retirement benefits for those who retire before age 62 and are unable to yet collect Social Security and auditing family members of federal employees to see if they are eligible for health benefits.
Republicans are planning a House floor vote next month on the larger legislation. The bill would then be sent to the Senate, where it could pass without the help of Democrats so long as the targets in the budget resolution the chambers already adopted are followed.
