Feb. 6, 2012 — On Jan. 24, Rep. Dennis Ross, the chairman of the House Subcommittee on the Federal Workforce, U.S. Postal Service, and Labor Policy, introduced H.R. 3813, the Securing Annuities for Federal Employees Act. But it probably comes as little surprise that Ross’ measure, were it to become law, would in fact threaten the retirement benefits of federal workers—including postal workers.
Ross’ proposal calls for entirely eliminating the defined benefit component government workers receive under the Federal Employees Retirement System (FERS). Instead, under the Ross plan, FERS annuitants would be entitled only to the benefits earned through both Social Security and the Thrift Savings Plan (TSP).
“Ross’ bill is a blatant attack on federal pensions,” NALC President Fredric Rolando said, “yet another front in the war on the middle class being pursued by the right-wing faction that now dominates the national Republican party.”
The Office of Personnel Management estimates that the annual FERS defined benefit pension is around $13,000 and makes up about 40 percent of a federal worker’s total annuity. “FERS is a modest benefit component, part of a sensible approach to retirement security that’s been in place for a quarter-century,” Rolando said.
“We usually think of FERS as a three-legged stool,” he said, “with the defined benefit component and the TSP designed to complement Social Security.”
Since the TSP can make or lose money in the stock market, Rolando said, federal workers already are somewhat exposed to risk. “So putting workers’ retirement security at further risk by taking away the guaranteed pension portion of FERS makes no sense at all,” he said.
The Thrift Savings Plan operates much like the 401(k) accounts in which many private-sector workers participate. Like the TSP, 401(k)s rise and fall with the stock market—which is why the 2008 stock market crash revealed the danger of placing too much faith in a 401(k) account: Millions of private-sector workers—many of whom were months away from retiring—lost as much as 40 percent of their 401(k) investments in that crash.
Ross argues that, since defined-benefit pensions are disappearing from the private sector, it makes sense to take them away from government workers as well.
“Congressman Ross seems to think that it’s OK to take away a large chunk of a federal worker’s retirement benefit and replace it with something that’s subject to the whims of a volatile stock market,” Rolando said. “That’s exactly backward.”
In a message to the NALC e-Activist Network, Rolando encouraged letter carriers to contact the members of Ross’ subcommittee and encourage them to oppose the bill. At last report, H.R. 3813 has yet to garner even one co-sponsor.