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House passes reconciliation bill that cuts federal employee retirement benefits

Though Democrats were able to excise a plan to base federal retirees’ annuity payments on their highest five years of salary, rather than the current high-3, proposals to eliminate the FERS supplement and to charge employees for their civil service protections remain on the table.

In the intervening weeks, House Republicans further tweaked the bill to better exempt law enforcement personnel and other federal workers who are subject to mandatory retirement ages from the FERS supplement elimination and delaying implementation of the High-5 annuity proposal by one year. The changes also included the removal of the plan to require employees hired prior to 2014 to pay 4.4% of their basic pay toward their FERS benefit.

But before the vote Wednesday night on the House floor, the chamber’s leadership made further changes following pressure from Oversight Committee Democrats and some Republicans, specifically removing the High-5 calculation altogether. However, plans to eliminate the FERS supplement, a benefit that amounts to roughly one-third of a new retiree’s post-separation income, remain in the legislation.

If enacted as currently written, the FERS supplement would be eliminated beginning Jan. 1, 2028, though language stipulates that any federal worker already “entitled” to retire with the supplement on that date will retain their eligibility.

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