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House Bill Would Result in Significant Federal Pay Cut, Kelley Says

Thursday, December 20 2012

Washington, D.C.—The severe pension-driven pay cut for federal employees contained in a bill proposed by House leadership simply cannot be defended in the face of an ongoing two-year federal pay freeze, the leader of the nation’s largest independent union of federal employees told House members today.

H.R. 6684, which the House is scheduled to take up today, would require employees to contribute an additional 5 percent of salary toward their pensions, starting with a 1.5 percent increase in 2013. The additional contributions would not trigger any additional benefit.

“Make no mistake, an increased contribution toward one’s pension, with no corresponding increase in benefits, is a pay cut.” National Treasury Employees Union (NTEU) President Colleen M. Kelley wrote to every House member in calling for defeat of the legislation.

She emphasized to House members that federal workers already have contributed more than any other group toward efforts to reduce the fiscal deficit—$103 billion in a combination of pay freezes and pension contribution increases.

For most federal employees, the additional mandatory contributions combined with Thrift Savings Plan contributions, and Social Security contributions for workers covered by the Federal Employees Retirement System (FERS), would mean 17 percent of take-home pay going for retirement funding, said President Kelley.

Moreover, she pointed out, H.R. 6684 incorporates language replacing the majority of the automatic sequester cuts aimed at defense accounts with language that instead directs those cuts to domestic discretionary spending. These cuts, Kelley said, “would require non-defense federal agencies to dramatically reduce their workforces and curtail the services they provide to the public.”

As one striking example of H.R. 6684’s affect on the public, Kelley pointed to the Internal Revenue Service (IRS), saying that the cuts resulting from this legislation would have “a particularly harsh impact” there since it already has faced deep funding cuts.

The IRS itself has said it is unable to answer three out of every 10 calls it receives, and that nearly half of all taxpayers who write to the IRS must wait more than 6 ½ weeks for a reply. “Staffing levels at the IRS are already 20 percent below what they were 15 years ago,” Kelley said.

The cuts to federal employees’ pay and benefits called for in the House measure, known as ‘Plan B’ in reference to ongoing fiscal cliff negotiations, are “serious enough to result in an inability to attract or retain talented people in the federal government,” she said.

The NTEU president warned that continuing down this road would inevitably have a strongly adverse impact on the government’s ability to attract and retain talented employees. “Already, we are seeing a significant increase in retirement and a significant decline in interest in federal service by college graduates,” she wrote.

“Our civil service is one of the best in the world,” Kelley said, warning that “such a civil service will not survive if these cuts are instituted.”

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

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