Obama plan asks federal workers to contribute more to retirement

“Over the past several years, there have been significant shifts both in how people work and how their benefits are structured,” the proposal says. “Organizations of all sizes have had to reform and alter the retirement benefits they give in order to remain competitive and, in some cases, solvent. As a result, compared to the private sector, the Federal retirement program can seem generous.”

The document notes, for example, that the “defined benefit” pensions that many government workers receive are becoming “increasingly rare,” and are available to only about 21 percent of all private employees. It also said estimates says private sector employees contribute nearly 50 percent of their retirement savings, while government employees pay just 33 percent.

{mosads}The size of government pay and benefits has increasingly become a flashpoint for conservatives who believe federal workers are vastly overpaid, particularly at a time when Congress is looking for ways to bring down federal spending.

That said, the administration put forward what it admittedly calls a “modest” proposal — a 1.2 percent increase in federal employee contributions to their retirement. This increase would be spread out over three years, starting in 2013, and would increase the employees’ contributions by 0.4 percent each year for those three years. The proposal estimates that this would save $21 billion over 10 years.

It also calls for broader reform to get at the issue of how to deal with the performance of government workers. This deals with the perception among federal employees that the current system “fails to effectively deal with poor performers and does not reward innovation.”

To get at these issues and others, Obama proposes the establishment of a Commission on Federal Public Service Reform, made up of members of Congress and the administration. This commission would develop recommendations on how to reform personnel policies, including “compensation, staff development and mobility, and personnel performance and motivation.”

Elsewhere, the proposal calls for some reforms related to military retirees. For example, it calls on new fees for these retirees to help pay for their healthcare coverage, and also calls for a new commission to review military retirement benefits.

And it seeks to limit what it calls the “overpayment of Federal contractor executives.” Under current law, federal money can only contribute $750,000 in salaries to executives from companies with annual sales of over $50 million. Obama’s plan would lower that to $200,000.

“[T]the Administration believes the Government is reimbursing too much for contractor executives, and the cap’s amount cannot be justified,” it says.

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