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NTEU Strongly Opposes White House Call For Higher Retirement Contributions

Wednesday, April 10 2013

Washington, D.C.—The leader of the nation’s largest independent federal union today took sharp issue with the administration’s fiscal 2014 budget proposal for a significant increase in federal employee retirement contributions with no increase in annuity.

“It is outrageous to see the federal workforce targeted once again despite the massive contribution employees already are making to deficit reduction,” said President Colleen M. Kelley of the National Treasury Employees Union (NTEU).

The White House proposal, released today, calls for an increase of 1.2 percent, at 0.4 percent for each of the next three years, in pension contributions from federal workers—with no increase in annuity, making it effectively a pay cut. If enacted, that proposal would boost their deficit reduction contribution—already at $114 billion over 10 years—by an additional $20 billion.

The proposed budget would end for new hires the supplement payable under the Federal Employees Retirement System (FERS). That supplement provides temporary payment to FERS retirees who are not yet eligible for their Social Security benefits.

The White House budget would also change the method for measuring inflation used for Social Security and retirement cost-of-living payments, moving to the so-called ‘chained’ CPI. “Over time this would drastically reduce benefits for our nation’s seniors—including retired federal employees who have devoted their careers to serving this country. They deserve better,” Kelley said.

The NTEU leader also was critical of the White House proposal for a 1 percent pay raise for federal employees in 2014. “This is simply inadequate, particularly in light of what will become at the end of 2013 a three-year pay freeze.” She added: “It is time to get the federal pay raise back on track.”

That pay freeze, combined with larger pension contributions from federal hires after last December 31, makes the federal workforce contribution toward deficit reduction total $114 billion.

“Federal workers have sacrificed enough,” Kelley said. “They are facing an actual pay cut this year from unpaid furlough days generated by sequestration, on top of the existing pay freeze.” For some employees, the furloughs could result in a 10 percent pay cut, a devastating development for middle-class employees seeing price hikes in food, gas and health care.

A recent NTEU survey of its members showed that many of them are having trouble making ends meet. A considerable number are going further into debt; many are worried about paying their rent or mortgage, as well as educational expenses; and nearly four in 10 of the more than 2,200 NTEU members who responded said they have deferred medical treatment because of costs.

The budget identified an emerging challenge facing the federal agencies—nearly 22 percent of the more than 687,000 respondents to the 2012 Office of Personnel Management Employee Viewpoint Survey expressed an intent to retire during the next five years.

“In the face of those numbers, the fact is that continued attacks on the federal workforce pose a very great risk for our country,” President Kelley said. “In the short term, a great deal of experience and institutional knowledge will be leaving the federal government. The current environment makes it very difficult for agencies to attract the talent they need to replace what they are losing.”

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

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