Bigger pension payments sought from U.S. workers

March 16, 1995|By Richard O'Mara | Richard O'Mara,Washington Bureau of The Sun

WASHINGTON -- The nearly 3 million federal government employees, including 300,000 who live in Maryland, would have to contribute up to 36 percent more to their pensions under a bill expected to be approved by a House committee.

The House Reform and Oversight Committee recessed yesterday to give members time to study the legislation. The bill is fiercely opposed by federal employees unions, as well as by many members of Congress and their staffs, whose more generous pensions would be reduced.

As a result, the bill is not expected to make it through Congress in its current form, and some in Congress say it may not survive at all.

"I think this is a bad idea whose time will not come," said Rep. Constance A. Morella, a Montgomery County Republican who is on the committee. "A contract was made with federal employees. The contract was their pension. To break that will lose the good faith of these workers."

The bill would, according to supporters, who are mainly Republicans, "equalize" the retirement systems of federal employees with those of members of Congress and their staffs.

It would do so, in part, by raising the federal employees' contribution to their pensions from the current 7 percent of salary to 9.5 percent by 1997. The contribution of members of Congress and their staffs would also rise to that level, from 8 percent.

Another proposal in the legislation that has met resistance would effectively reduce the size of federal employees' retirement checks. This provision would change the formula by which the annuity is calculated: Instead of basing it on the three-highest-paid consecutive years, it would be based on the five-highest-paid consecutive years.

"I represent a great number of federal employees, and I know an employee who makes $20,000 a year would pay an additional $500 a year," Mrs. Morella said. "That's a big tax on a middle-class worker."

Rep. Robert L. Ehrlich Jr., a Republican whose Baltimore County district is also home to many federal employees and who is on the House Reform and Oversight Committee, supports the bill.

the numbers are correct, then the system is broke and has to be fixed," Mr. Ehrlich said, referring to reports that the trust fund from which federal pensions are drawn is about $500 billion short.

Mr. Ehrlich said he has told federal employees in his district that sacrifices are needed to make up for the shortfall, and that the legislation offers the best chance to do that.

"There is a great deal of momentum among other freshmen to go far beyond what this bill does," Mr. Ehrlich said. Some, he said, want to make the contributions even greater.

But Mrs. Morella said she was not certain that a shortfall existed. Even if it does exist, she said, "it will not be corrected with $11 billion," the amount that the proposed increase would generate over five years.

Rep. Steny H. Hoyer, a Prince George's County Democrat who is among the bill's fiercest opponents, accused its supporters of trying to raise money for purposes other than federal pension reform.

"What the Republicans want to do is get an additional $11 to $12 billion so they can fund their tax cut," he said. "This represents a 10 percent tax on federal employees."

"We argue that the system is not broken, or at least doesn't need this kind of fix," he said. "You've got a 'Contract with America,' but you also got a contract with your employees, one on which they relied."

The bill was introduced by Rep. John Mica of Florida, but it is being reshaped by the committee chairman, Rep. William F. Clinger Jr. of Pennsylvania.

Mr. Clinger amended the bill with the intention of equalizing the pension formula of federal employees and those of members of Congress and their staffs. The lawmakers and their staffs now accrue benefits faster, and the length of service and age requirements are lower than those of other federal employees.

The faster congressional accrual rates produce disparities. For instance, a member of Congress, or staff member with 20 years' service, can retire with an annuity equal to 50 percent of his or her salary. A high-ranking federal employee would receive only 36.5 percent.

"There is no question that the public views congressional pensions as excessive," said a committee staff member who asked not to be named.

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