Budget deal ups new fed workers’ retirement contributions

Among the losers in this week’s proposed federal budget deal are any employees hired after Dec. 31.

That’s because the biggest change in the retirement plan would require new employees to pay 4.4 percent of their salaries toward retirement benefits. The current contribution from new workers is 3.1 percent, while those hired before 2012 pay 0.8 percent of their salary.

The deal brokered by House and Senate leaders calls for $6 billion in pension cuts.

Some military pensions were also the target of the budget deal. Those who retire before age 62 would see their cost of living adjustments reduced until they reach that age. At that point, they would get some of the money back. The change would not apply to those who retire because of a disability.

The American Federation of Government Employees, which represents 670,000 government workers, decried the cuts.

“AFGE rejects the notion that there should be a trade-off between funding the programs to which federal employees have devoted their lives, and their own livelihoods,” said the union’s president, J. Daniel Cox Sr., in a statement. “Though the $6 billion in increased retirement contributions for new employees is less severe than the administration's $20 billion proposal, it is still unacceptable.”

Before the deal was struck, unions representing federal employees were bracing for the cuts. They argued that workers had already contributed enough to fixing budget problems through furloughs, a three-year pay freeze and other pension changes. They also argued that raising contribution to fund retirement benefits amounted, in effect, to a pay cut.

The Senate and the House still have to vote on the budget deal. Leaders of both parties have said they expect it to be approved.

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