Tags: budget | deal | federal | pensions

Budget Deal Requires New Federal Workers to Pay More Towards Pensions

Wednesday, 11 Dec 2013 12:00 PM

By Melanie Batley

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Federal workers who are hired after January 1, 2014 will pay more toward their pensions than current employees under the terms of the new bipartisan budget proposal that will be up for a vote by congressional lawmakers as early as this week.

According to The Washington Post
, new workers would make an additional contribution of 1.3 percent of their salary toward their retirement benefits which would save the government $6 billion over 10 years.

Federal employee unions, however, are strongly opposed to the plans even though the terms are more generous than initial proposals by both Republicans and President Barack Obama. The GOP had originally wanted all federal workers to pay an additional 5.5 percent toward retirement while the president proposed a 1.2 percent increase for all employees.

"This has been a brawl over the last 48 hours," Maryland Democratic Rep. Chris Van Hollen, told the Post. "This agreement will not require additional contributions by any current federal employees."

Others, however, welcomed the deal.

Colleen Kelley, president of the National Treasury Employees Union, told the Post she was "disappointed that the budget deal announced today proposes increases to federal employee retirement contributions for new hires," adding, "However, I am glad to see the numbers were significantly reduced from original proposals and that these retirement increases will not impact current employees."

The agreement would create a three-tier system for employee contributions to their civil service pensions, according to the Post. Those hired before 2013 would pay 0.8 percent of their salary, those hired in 2013 would pay 3.1 percent, while those hired after Jan. 1 would pay 4.4 percent.

Congressional budget negotiators reached the two-year agreement on Tuesday which aims to avoid a government shutdown on Jan. 15 by cutting $23 billion from the federal deficit and halting sequestration cuts targeting the Pentagon over the next two years.

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