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Federal Employees News Digest : Dec 16, 2013
Phil Piemonte, Managing Editor E-mail: email@example.com What's Inside44 DECEMBER 16, 2013 • VOL. 63, NO. 22 Bad vibes What's happening in Detroit could spread to other areas. Including Uncle Sam's workforce. Consider: For years Detroit has suffered a population drain, with more affluent tax- payers fleeing to the suburbs, or to other states. At one point, the city had 1.7 million residents, many of them in well-paid, auto-industry jobs and related occupations. Now the city is down to about 700,000 residents, so it has a much smaller tax and revenue base, yet a high demand for services provided by public workers, from police and firefighters to sanitation workers. The city's hometown newspaper, the Detroit News, said that last year the city had 10,000 employees---but double that number of retirees, about 21,000. Similar situations---though not yet at the Detroit level---exist in Illinois, which has already cut pension benefits, and in Rhode Island. But the problem is growing and spreading. Robert J. Samuelson, a columnist for the Washington Post Writers Group, wrote last week of a war between the generations. He cited a report which said that pension costs of city workers in Boston eat up 7.9 percent of tax revenue. New York City's pension INSIGHT BY MIKE CAUSEY continued on page 2 For more news...see Federal Daily at www.FederalDaily.com • Hagel details reductions 4 • In Brief 4 • Informed Investor 7 • Federal Benefits Q&A 8 continued on page 3 Budget bill raises employee pension contributions In what many perceived to be an inev- itable development, House and Senate budget conferees last week introduced a two-year, bipartisan budget propos- al that once again would increase the employee share of pension contribu- tions for federal new hires. The bill, introduced on Dec. 10, would require new federal employees hired after Dec. 31, 2013, with fewer than five years of service, to contribute more to their defined retirement benefit by increasing the employee share by 1.3 percentage points. The legislation marked the second time in a year that Congress targeted the pension contributions of new hires. Federal employees hired before the beginning of 2013 contribute 0.8 per- cent of salary to their defined retirement benefit, but under legislation signed into law earlier this year, those hired in 2013 contribute 3.1 percent. Under the conference budget bill, those hired next year would contribute 4.4 percent. Another provision in the legislation would modify the annual cost-of-living adjustment to retired pay and retainer pay amounts for working-age (under 62) military retirees by making the adjustments equal to inflation minus 1 percent. The change would be phased in gradually, with no change for the current year, a 0.25 percent decrease in December 2014, and a 0.5 percent decrease in December 2015. The change would not affect service members who retired because of disability or injury. The bill does contain one improve- ment for federal employees: It would allow the Office of Personnel Management to offer a self-plus-one option in the Federal Employees Health Benefits program. Contractor salaries also would take a hit under the legislation. A provi- sion in the bill would limit the amount a contractor could charge the federal government for an employee's compen- sation to $487,000. The move comes in response to calls from labor and the administration to bring contrac- tor salaries more into line with those of top federal executives. The Office of Management and Budget recently pub- lished a memorandum announcing it had calculated a ''benchmark compen- sation amount'' of $952,308 as the cap for certain executives and employees under federal defense and civilian con- tracts during fiscal 2012. New era? The lead budget conferees expressed hopes that the bipartisan budget pro- posal represented a new level of coop- eration. "This agreement breaks through the recent dysfunction to prevent another
Dec 9, 2013
Dec 23, 2013