Two year pay freeze would really mean three

Tuesday - 11/30/2010, 8:40am EST

Senior Correspondent Mike Causey

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Federal News Radio Senior Correspondent Mike Causey told the Federal Drive that a two-year freeze actually translates into a three-year freeze.

Federal employees' pensions are based on the highest three-year average salary (usually the last three years worked). If that figure is frozen it could mean smaller than expected benefits when workers do retire.

"People's high-three won't go up," Causey said.

Federal employees will "be getting a salary but their retirement annuities won't go up," Causey said.

A freeze could affect other groups of workers, he said. Federal pay is tied to the salaries of federal contractors, foreign embassy employees and Washington-based unions.

Causey said the freeze would have a "rippling effect" but added, "This won't have a crippling effect."