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Republicans Revise Federal Benefits Cuts in Reconciliation Bill

Republicans Revise Federal Benefits Cuts in Reconciliation Bill

Federal Benefits Financial News News

By Drew Friedman


The House Rules Committee’s revised version of the GOP reconciliation bill, released on Monday, made several tweaks to the provisions seeking to cut federal benefits and civil service protections.

The changes included in the latest print of the legislation mostly look to adjust the dates the provisions would take effect, and define specific groups of federal employees who would be exempt from some changes.

But notably, the proposal to increase the Federal Employees Retirement System (FERS) contribution rate to 4.4% for all federal employees appears to be fully off the table. Lawmakers removed the provision from the newest version of the House reconciliation bill.

Other proposed cuts originating from the House Oversight and Government Reform Committee remain intact. Those include:

  • Eliminating the FERS annuity supplement
  • Switching from a “high-3” to a “high-5” annuity calculation
  • Requiring newly hired federal employees to choose between maintaining a lower FERS contribution rate or preserving civil service protections
  • Charging employees a fee to file a case with the Merit Systems Protection Board
  • Mandating an audit of participants in the Federal Employees Health Benefits program

Republicans on the Oversight committee previously estimated that the across-the-board increase in the FERS contribution rate — now removed from the legislation — would have accounted for about $30 billion of the $50 billion that the benefits cuts would save over 10 years.

The new revisions to the bill come after the House Budget Committee voted to advance the GOP budget reconciliation bill over the weekend — clearing a key hurdle for the proposed cuts to federal benefits to move forward. The bill narrowly passed late Sunday night in a vote of 17-16, as several Republican lawmakers are holding out and demanding even deeper cuts in the legislation. The bill’s advancement comes just days after the committee’s first vote failed last week.

There is still time, however, for further revisions to take place as the reconciliation bill heads toward consideration on the House floor. Any potential changes would most likely come from lawmakers who tee up amendments in the nature of a substitute on the legislation.

Other revisions to federal benefits cuts

Five of the six proposals attempting to remove, reduce or otherwise make changes to federal benefits are still contained in the language of the legislation, but with a few notable changes.

The House’s newest version of the reconciliation bill, for one, punts the date for switching federal retirees’ annuity calculations from a “high-3” to a “high-5” calculation. Rather than the previous 2027 implementation date, that provision would now take effect on Jan. 1, 2028.

Additionally, the elimination of the FERS annuity supplement would also take effect on Jan. 1, 2028, according to the newest version of the House bill. The previous version of the bill text said the elimination of the supplement would be effective immediately.

The committee also tweaked the language defining the groups of federal employees who would be exempt from the FERS supplement elimination. Specifically, the new bill text exempts those who are subject to a mandatory early retirement — either by reaching age 57, accruing 20 years of service by age 50, or reaching 25 years of service at any age. Previously, the language indicated that only feds who retired at age 57 would be able to keep the FERS supplement.

Federal employees already receiving the annuity supplement, or those who become eligible to start receiving the supplement prior to 2028, would not be affected by the proposed changes.

On top of that, feds subject to mandatory early retirement would also be exempt from the provision requiring employees to choose between an “at-will” employment status and keeping their current FERS contribution rate — or maintaining their civil service protections but accepting a 5% increase to their FERS contribution rate.

There appeared to be no other significant changes to the provisions on the “at-will” employment trade-off, the MSPB filing fee or the FEHB audit requirements.

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