On Wednesday evening, March 25, the House of Representatives approved a budget bill that targets the earned health and retirement benefits of postal and federal employees. House Concurrent Resolution 27 passed the House by a 219-208 vote. The measure hits Federal Employee Retirement System (FERS) contributions, the Thrift Savings Plan (TSP), and the Federal Employees Health Benefits Program (FEHBP). In addition, the budget bill suggests changes to mail frequency and type of delivery.
Pensions: The budget bill proposes to require members of the federal and postal workforce who participate in the Federal Employees Retirement System (FERS) to make a greater annuity contribution. The budget bill assumes the
use of the equal-share proposal embraced in the 2010 National Commission on Fiscal Responsibility and Reform (aka Simpson-Bowles Commission); that is, a 6 percent contribution rate by FERS participants. Currently, most FERSparticipating NAPUS members contribute 0.8 percent towards their annuity.
Retirement Savings: The budget bill proposes to lower the interest rate earned on Thrift Savings Plan (TSP) contributions into the G-Fund. The G-Fund invests in special short-term Treasury securities. Since its inception in 1987, the GFund has earned an average annualized rate of return of 5.43 percent. The budget proposal would have the effect of reducing the rate of return to about 0.01 percent, according to the Federal Retirement Thrift Investment Board.
Health Benefits: A perennial cost-cutting proposal has been the replacement of the current Federal Employees Health Benefits Program (FEHBP) contribution formula with a fixed-dollar voucher, adjusted annually to the consumer price index (CPI). Presently, the employer contribution is based upon the weighted average premium of all FEHBP plans. As a result, health care inflation is taken into account when adjusting employee premium contributions. The net impact of the proposed change would be to shift about $127 billion, over the next
decade, from the government onto the backs of federal and postal employees and retirees. A second proposal that would impact FEHBP premium contributions is longevity-based retiree health plan contributions. And, finally,
the budget proposes that USPS contributions on behalf of its employees be the same level as provided to federal employees. Postmasters already pay the same share of premium as federal employees; so, this proposal would impact postal employees covered by collective-bargaining agreements that provide for a higher contribution level.
Postal Operations: The House budget proposal references the adoption of unspecified changes to the “frequency and type of delivery.” It should be assumed that the budget is promoting five-day delivery and a move towards
centralized or curbside residential mail delivery.
Late Thursday, the Senate was still considering its budget bill, Senate Concurrent Resolution 11. Senate Budget Committee Chair Michael Enzi (RWY) introduced it. Over 640 amendments to the bill were filed and we expect
votes on about one-quarter of them. Significant cuts are assumed in the Senate budget measure and would impact our benefits; however, the legislation did not identify those cuts.
Please link to the eNAPUS Legislative & Political Bulletin for more information.