Plan to Cut Federal Employee Pensions Advances in House

The measure passed the House Oversight Committee, 22 to 21, with Representative Michael Turner, R-Ohio, joining Democrats in opposition, and is expected to move to the Budget Committee.

The House Committee on Oversight and Government Reform has advanced a proposal that would revamp the federal pension system by gradually reducing benefits.

The panel voted 22 to 21 on Wednesday to pass the measure, voting mostly along party lines, with Representative Michael Turner, R-Ohio, joining Democrats in opposition.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

“I oppose any and all efforts to reduce federal spending by taking money from the hard-earned pensions of federal workers,” Turner said in a statement issued prior to the vote. “These pensions are not giveaways—they are promises to federal workers in exchange for their dedicated service.”

The proposal serves as the House Oversight Committee’s portion of the GOP’s budget reconciliation process, with goals of extending President Donald Trump’s 2017 tax cuts and severely cutting government spending.

During Wednesday’s hearing, Turner doubled down on his dissent, expressing confidence that the proposals will not end up in the larger reconciliation bill, based on his conversations with fellow Republicans.

“I do not think that [the proposal] is fair and represents either Republican values or American values,” he said.

The House Oversight Committee’s proposal, detailed last week, would make several changes to how federal civilian employees pensions work.

Representative James Comer, R-Kentucky and chairman of the Oversight Committee, said during the hearing that the changes were necessary, since federal employees’ retirement benefits outpace those received by private sector workers.

He justified the cuts by citing a 2024 Congressional Budget Office study that compared federal and private sector employees benefits from 2022, finding that federal employees received 43% more in benefits than private sector employees. Comer did not mention that federal employees have 10% lower wages than private sector employees, which was also outlined in the report.

“All of these benefits are funded by hardworking taxpayers in the private sector and, increasingly now, federal government borrowing,” Comer said during the hearing.

The bill advanced by the Oversight Committee includes raising all federal and postal employees’ retirement contribution rates to 4.4%. The current rates range depending on the employee’s date of hire as follows: 0.8% if hired before 2012; 3.1% if hired in 2013; and 4.4% if hired in 2014 or later, according to the U.S. Department of Commerce.

New federal retirees would also lose out on the extra annuity payment currently offered to those who retire before age 62, which lasts until they reach retirement age.

The proposal would also reduce benefit payments by averaging the highest average five years of salary, compared with the current highest average of three years. In total, according to the House Oversight Committee, the measures would reduce the budget by $50.9 billion.

The bill will now head to the House Budget Committee Budget for further consideration as part of the larger budget reconciliation package.

GOP House Bills Target DOL Audit Process

The legislation would require the Department of Labor to submit annual reports on the status of its investigations, including those active for more than 36 months.

A pair of bills proposed by Republican members of the U.S. House of Representatives would require the Department of Labor to submit annual reports to Congress on the status of its audits, including active investigations that have been open for more than 36 months.

Representative Lisa McClain, R-Michigan, introduced the Employee Benefit Security Administration Investigations Transparency Act on April 10 to amend Section 504 of the Employee Retirement Income Security Act of 1974, which grants the DOL the authority to investigate potential violations of ERISA.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

If passed, the DOL’s Employee Benefit Security Administration would need to report to Congress:

  • The date an investigation was opened;
  • The date any initial documents were requested from the target of the investigation;
  • Whether the investigation was concluded within three years and, if not, what prevented the investigation from being completed in that time frame; and
  • When the investigation is likely to be completed.

The bill is cosponsored by Representative Burgess Owens, R-Utah, and Representative Tim Walberg, R-Michigan, who chairs the House Committee on Education and the Workforce, to which the bill has initially been referred.

A separate bill, introduced by Representative Michael Rulli, R-Ohio, on April 17, requires EBSA to submit an annual report to Congress on “adverse interest agreements.” It has also been referred to the Education and Workforce Committee.

Adverse interest typically refers to when personal interests conflict with an organization’s duty, leading to improper decision making, which the DOL has been accused of by House Republicans.

In January, the House Committee on Education and the Workforce issued a request to the DOL’s Office of Inspector General to investigate an allegation that DOL personnel shared confidential plan information with a plaintiffs’ attorney.

“As we saw in the first [President Donald] Trump administration, career bureaucrats have sought to undermine the goals of the President and his cabinet Secretaries,” Walberg wrote in that requestWe know of cases where bureaucrats have leaked sensitive information or are working with plaintiffs’ attorneys to skew court cases against employers.”

«