Like many other parts of government, our federal pension program spends more than it takes in and is currently going broke.
Enter Congressman Bruce Westerman — who recently introduced a bill to change that. Westerman’s bill would save taxpayers money by changing the way federal civilian pensions are calculated. Currently, federal retirees’ pensions are based on their highest-earning three years of federal employment. If Westerman’s bill were to become law, pensions would be calculated by retirees’ highest-earning five years of federal employment.
This bill would simply change the formula for determining pension benefits for civilian federal employees from the best-earning three years to the best-earning five years of service. The bill ensures that the program employees of the federal government have paid into for their careers is available in retirement and sustainable for future generations.
According to the Federal Times, if passed into law, it would go into effect Jan. 1, 2017 and would save $3.1 billion over a 10-year period, according to calculations by the Congressional Budget Office. The bill would apply to all members of Congress and their staffs. Military pensions would not be affected.
But like most plans to reform cash-strapped government programs, it is receiving major pushback from federal employee union officials:
David Cox, president of the American Federation of Government Employees, said they strongly opposed the new legislation, which would amount to another benefit cut.
“Federal employees already have lost $159 billion in earnings due to pay freezes, pension cuts, and similar maneuvers that made them the scapegoat for an economic downturn they had no part in creating. Federal employees are working class people just like most other Americans, and singling them out for more pain and sacrifice is just plain wrong,” Cox said.
Contrary to Cox’s statement, however, no one is arguing that federal employees are the only reason for the Great Recession. Nonetheless, federal overspending and possible future higher levels of taxation are a major reason to fear a greater economic downturn in the future.
This bill would be one small solution to that problem. Besides, private-sector pension plans are largely a thing of the past. According to Peter Orszag, the former Congressional Budget Office director, since 1985 the number of Fortune 100 companies offering their new hires traditional defined-benefit pension plans has decreased from 89 to 13.
Federal union employee officials like Cox are on shaky ground when they complain about reasonable reductions to federal pension plans — especially while many in the private sector continue to see their benefits cut much more drastically.