Kelley: Unconscionable to Use Federal Pensions As A ‘Piggy Bank’ for Transportation Projects

Press Release February 9, 2012

Washington, D.C. –It is unconscionable for Congress to use drastic reductions in federal pensions as a “piggy bank” to fund transportation projects, as pending legislation would do, the leader of the nation’s largest independent union of federal employees told members of the House today.

In a letter to all members of that body, President Colleen M. Kelley of the National Treasury Employees Union (NTEU) stressed her strong opposition to provisions in H.R. 7, the transportation funding bill, that imposes drastic changes in the federal pension program.

Earlier in the week, the House Oversight and Government Reform Committee marked up H.R. 3813; at that markup, President Kelley said, the chief proponent of the bill slashing federal pensions, Rep. Dennis Ross (R-Fla.), “indicated that the cuts were necessary for deficit reduction. That appears to no longer be true.”

The pension provisions in the transportation bill would require all current federal employees to contribute nearly twice as much toward their pensions—a development the NTEU leader described as “clearly, a steep pay cut for employees who are already in the second year of a pay freeze.”

The impact on an employee covered under the Federal Employees Retirement System (FERS) and earning $50,000 a year would be to boost that person’s pension contribution from $400 a year to $1,150 a year for a less-generous pension.

Further, the legislation would eliminate, at the end of this year, the FERS Social Security supplement, a payment that temporarily provides roughly one-third of the value of the pension for those who have met the age and service requirements to retire before age 62.

“This provision is incredibly unfair,” Kelley wrote. “Federal employees have planned for and relied on this benefit being available to them for decades.”

She added that NTEU has “been inundated with stories from our members who will face serious personal hardship if this provision is enacted. It is hard to imagine that this Congress would blatantly break this promise when so many are just about to become eligible for this benefit.”

Such a tactic, Kelley said, “seems more suited to some of the worst corporate actors who cut off benefits they have promised to employees for decades just as they were about to retire.”

As she has on previous occasions, the NTEU leader emphasized that federal employees are middle class workers—“the kind the country needs more of”—and pointed out that no one gets rich on a federal employee pension. “Changing the employee contribution without changing the benefits in a similar way is simply a tax on federal employees,” she said.

The proposed legislation would set up an extremely expensive and drastically-reduced new pension system for future federal hires, requiring them to contribute four times more than current contributions for a pension that would be reduced by about 40 percent from its present value. This would make more difficult the efforts of federal agencies to attract new and talented employees.

“Federal employees are the only group singled out so far to contribute to deficit reduction, losing $60 billion in a two-year pay freeze already,” Kelley reminded House members.

As the nation’s largest independent federal union, NTEU represents some 150,000 employees in 31 agencies and departments.

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