Pay raise, increased retirement contributions in President's FY2013 budget request

Monday - 2/13/2012, 1:50pm EST

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President Obama's fiscal 2013 budget request released today ends the two-year civilian federal pay freeze but increases contributions feds will have to make toward their retirement benefits.

The request included a 0.5 percent pay raise for civilian federal workers, who are now in the second year of a two-year pay freeze. The request also proposed increasing retirement contributions by 1.2 percent, phased in at 0.4 percent over three years.

"This change in employ­ee contribution levels would not change the amount of each Federal employee's pension benefit, but would result in $21 billion over 10 years in mandatory savings," according to the budget request.

The American Federation of Government Employees said the changes would be a "$27 billion hit" to federal employees.

Another federal employee union said the changes to retirement benefits would be the "difference between keeping a roof over their heads and going into foreclosure," according to an emailed statement from the National Federation of Federal Employees.

"Even when factoring in the proposed 0.5 percent pay increase for 2013, the increased retirement contributions are a losing proposition for federal workers," the NFFE statement said. The union added, "This results in a net 0.1 percent pay increase, amounting to a total of $50 for the year, or $4.16 each month. After adjusting for inflation, this turns into a third year of net pay loss for federal employees."

The National Treasury Employees Union issued a statement stating it was "disappointed" with the pension contribution proposal.

"While this proposal is similar to the one submitted by the White House to the super committee last fall, it nonetheless fails to recognize the $60 billion contribution to deficit reduction already being made by the federal workforce through the two-year pay freeze," said NTEU President Colleen Kelley in a statement.

The Federal Managers Association also spoke out against the pension contribution increase.

"While Congress is simultaneously debating how to put more money into the paychecks of American citizens, it is incomprehensible that the same rationale does not apply to federal employees," said FMA National President Patricia Niehaus in a statement.

The President's budget request acknowledged the ongoing debate on the federal vs. private sector pay gap. A Congressional Budget Office report released last month found federal employees earn 16 percent more in pay and benefits compared with their private sector counterparts. However, this gap depended on the educational level, and in fact federal employees who had advanced degrees made less than their private sector counterparts.

The administration's budget request noted the type of work federal employees do has changed drastically over time. For example, the proportion of the workforce that does blue-collar work fell from 22 percent in 1981 to 9.7 percent in 2011.

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