The budget that Congress signed into effect in the last moments of 2013 legislative session substantially changes how new federal employees will fund their pensions, according to govexec.com
The 2013 Bipartisan Budget Act increased pension contributions for federal employees hired after Jan 1, 2014 to 4.4 percent of their salaries, meaning the Federal Employment Retirement System now has three tiers of contribution rates. Employees hired after 2012 pay in 3.1 percent, and all other employees contribute a paltry 0.8 percent.
If that seems unfair, new employees may now have to go into debt to their pension programs because of bureaucratic inefficiency. The Obama Administration previously announced it would delay the higher deductions until the software updates throughout federal agencies can account for the new three-tier pension system, the news site said.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
