Obama’s proposed 2014 budget: contribute more, but maybe see a pay increase

“For the third year in a row, the president’s budget blueprint disproportionately takes aim at federal employees in an effort to balance the budget,” National Active and Retired Federal Employees Association President Joseph Beaudoin said. “Federal employees who are currently enduring a three-year pay freeze have already sacrificed $114 billion from their pocketbooks for US budget savings over the next decade. Enough is enough.”

This statement is in response to President Obama’s budget plan for 2014 released last week, which proposes increasing the retirement contributions for federal employees hired before 2013 by 1.2 percentage points, phased in over three years, as part of his fiscal 2014 budget. This would bring the contributions of Federal Employees Retirement System (FERS) workers up from 0.8 percent to 2.0 percent, and Civil Service Retirement System (CSRS) employees’ contributions up from 7 percent to 8.2 percent. Obama proposed the same increase last year, as part of his fiscal 2013 budget request.

Last year, Congress hiked the pension contributions of federal employees who are newly hired or rehired with less than five years of service beginning in 2013 to 3.1 percent of each paycheck, which is expected to save $15 billion over a decade. Obama’s 2014 budget would not further increase those employees’ contributions.

The budget said a 1.2 percentage point increase in previously hired employees’ contributions would save $20 billion over a decade. However, that is less than the $27 billion in savings predicted in last year’s budget. Part of that reduction may come from the fact that newly hired federal employees, whose pensions have already been increased, are not included in this change.

The budget proposal calls for the pension contribution increases to begin in 2014. They would help the government reduce the unfunded liability of the Civil Service Retirement and Disability Fund, which hit $761.5 billion in fiscal 2011, the latest year for which statistics are available. Critics of the federal pension system say that deficit — which is primarily due to a severe flaw in the design of the older CSRS system — is a serious problem that must be addressed.

One bit of good news is that the budget also proposes a 1 percent increase in federal pay in 2014, which would break the current three-year pay scale freeze. “A permanent pay freeze … is neither sustainable nor desirable,” the budget said.

The budget proposal also calls for switching to a less-generous measure of inflation known as the chained Consumer Price Index. This would translate into lower cost-of-living adjustments for federal retirees’ pensions, and also reduce the growth in Social Security benefits. Federal employee groups and unions strongly oppose the chained CPI.

The chained CPI is usually 0.25 to 0.30 percentage points lower each year, on average, than the standard CPI measurements that are used to determine COLAs. Switching to a lower CPI at first would mean a few hundred dollars less per year for federal retirees. But its effect would compound over the years until, eventually, some retirees would likely earn tens of thousands of dollars less than they would under the current method of setting COLAs.


6 Comments for Obama’s proposed 2014 budget: contribute more, but maybe see a pay increase


Posted on Wednesday 1st May, 2013, 7:06am

Since when did the federal debt become the responsibility of the federal workers? Over the past several years we have seen pay freeze, hiring freeze, increase in retirement contribution, and most recently furloughs looming over us.
Federal workers give over and beyond what is requried, we deploy as needed, we travel away from our families as needed (TDY), we stay beyond our scheduled hours to attend meetings or meet a deadline and again the list goes on.

I love my country and I love working for the United States Air Force. I have spent time away from my family because it is what was needed at the time. I would do that again, however, you are now putting my family at risk. Losing 20% of my pay will put my livilyhood at risk. Will I be able to pay my mortage, utilities, car, food, insurance and the list goes on. Maybe I will be able to juggle things but it will impact my budget and depending how well I juggle it will affect my credit score.

Federal employees did not break the government and they should not continually be called on to fix it.

Again, I love my country but I also love my family and they are paying for the “sins of the father”

Posted on Thursday 2nd May, 2013, 11:20am

What are Congressional members giving up for this huge debt ? Have they cut their transportation costs, giving up portions of their salary, or cut their office budget ? Better yet,what has the Commander-In-Chief and the entire White House Staff sacrificed I personally like Senator Paul Ryan’s proposal for Budget Cut’s. Why are the Federal Employees being targeted ?

Posted on Monday 13th May, 2013, 5:07am

why did congress get a $900.00 raise and whe are getting furlouhed? also, why aren’t other government agencies getting
furloughed?

Posted on Tuesday 28th May, 2013, 4:53pm

What is Congress doing to reduce the federal deficit? Are they reducing their retirement benefits? Are they being furloughed? What they are doing is NOTHING to help reduce the federal deficit.

Posted on Friday 26th July, 2013, 4:55pm

Let’s not forget; how much is Congress and the President paying into their federally (tax payer) funded retirement plan. Absolutely nothing! It’s time they start doing their part.

Posted on Thursday 22nd August, 2013, 3:01pm

Comrades don’t worry, the plan is socialism where all suffer equally except the ruling class. Your sacrifice and hard work, is of no consequence to congress. We’re setting up to have a single payer socialist medical system, that is the ultimate goal. As has been done to the military forever, you’re promised one thing and receive another.

What about the 47% who don’t pay taxes, but get big tax refunds, we can support illegals, but keep asking those who serve to keep giving. Not to worry the system will collapse without real change and soon. If you’re in the smaller and smaller percentage that do pay taxes, you’re told you’re not paying your fare share. 2014 is our last chance. Enough is Enough it’s time to stand up.

Wanna say something?






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