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Shared Sacrifice: Reforming Federal Retirement Programs

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Introduction

The deadline for the Joint Select Committee on Deficit Reduction (“Select Committee”) to send to Congress its plan to bring this country’s debt under control is approaching. As the Select Committee continues to deliberate over how best to put our fiscal house in order, it must keep in mind the principle of shared sacrifice, and it must also ensure that it is doing everything possible to use taxpayer money wisely.

As the National Commission on Fiscal Responsibility and Reform (Bowles-Simpson) stated in its report, The Moment of Truth, “There is no easy way out of our debt problem, so everything must be on the table. A sensible, realistic plan requires shared sacrifice – and Washington must lead the way and tighten its belt.”

It was with this principle in mind – that the burden must be spread equally and that Washington must lead by example – that the Bowles-Simpson recommended that federal civil service and military retirement programs be re-evaluated by a federal workforce entitlement task force that would make recommendations for reforms to reduce the costs of those programs to taxpayers.

Military and civilian pensions are both out of line with pension benefits available to the average worker in the private sector, and in some cases, out of line with each other across different categories of federal employment. Bowles-Simpson recommended a review that examined both military and civil service retirement plans at the same time to ensure equity and consistency in the changes in each program.

While some of the differences between the military and civil service retirement systems are a result of the differences between the military and civilian workforces, many of them are a product of the programs being administered by different agencies and under the jurisdiction of different Congressional Committees.

The task force would be directed to make recommendations in civil service and military retirement programs that would: 1) make rules more consistent across similar programs; 2) bring both systems more in line with private sector plans and; 3) achieve savings of $70 billion over ten years. The recommendations would be considered by Congress under a fast track procedure.

Bowles-Simpson offered several areas in which the task force could find savings, including adjusting the ratio of employer/employee contributions, changing benefit calculations, deferring cost-of-living adjustment payments and making structural reforms to the military retirement system.

In light of the painful solutions we face, it is important that we bring the costs of federal military and civilian retirement under control. While many of the policies discussed in this paper would produce significant budgetary savings, just as importantly they would help correct inequities or flaws in the current federal retirement system while ensuring that federal and military retirees continue to have more generous retirement benefits than those typically received by employees in the private sector.

 

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Nov 16, 2011
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It was with this principle in mind – that the burden must be spread equally and that Washington must lead by example – that the Bowles-Simpson recommended that federal civil service and military retirement programs be re-evaluated by a federal workforce entitlement task force that would make recommendations for reforms to reduce the costs of those programs to taxpayers.