Budget Deal Hits Future Employees

The agreement between House and Senate budget leaders would spare current federal employees from an increase in their required contributions toward retirement but would impose yet a further increase on future employees. Under the agreement, those hired into government in 2014 or later and who have fewer than five years of prior creditable service, will have to pay an additional 1.3 percent of salary toward their FERS benefits (the increase does not apply to CSRS because that system is closed to new hirees, nor to those returning to government under CSRS Offset, because by definition they have at least five years of prior service). That is similar to a law enacted last year to raise the required contribution by those hired into the government 2013 and later with fewer than five years of prior service. The result will be a three-headed FERS system consisting of those hired before 2013 paying 0.8 percent of salary, those hired in 2013 paying 3.1 percent, and those hired in 2014 and after paying 4.4 percent. Employee organizations said they are not happy with the arrangement but are relieved that the deal—which still must clear several rounds of congressional voting—does not include proposals that had been under discussion to require higher contributions of current employees, of upwards of 6 percent of salary more.