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Benefits Cuts for Federal Employees Being Considered in House Budget Legislation
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Apr 28, 2025
The House Committee on Oversight and Government Reform is holding a legislative markup session in which it will consider legislative proposals that could lead to significant cuts or changes to federal employees' benefits in areas such as retirement. Stay informed with our comprehensive summary and analysis of the key points and potential impacts of these legislative decisions. Related Articles Benefits Cuts on the Table in House Budget Legislation https://www.fedsmith.com/2025/04/28/benefits-cuts-on-table-in-house-budget-legislation/ Possible Changes for Federal Employees in the 2025 Federal Budget https://www.fedsmith.com/2025/04/21/possible-changes-for-federal-employees-in-2025-budget/ Chapters 0:00 Introduction 0:29 Mark Up Session Announced in House of Representatives 0:53 Disclaimer on the Proposals 1:04 Details of the Legislative Proposals 5:08 Statement from Congressman Comer 5:50 Conclusion
View Video Transcript
0:00
if you're a federal employee you'll want
0:02
to be aware of and pay attention to some
0:04
proposals that are floating around in
0:06
Congress right now because if they were
0:09
to actually become law they could
0:11
significantly impact your benefits in a
0:14
negative way Let's take a look Hi
0:16
everyone I'm Ian Smith with fedsmith.com
0:19
and I wanted to bring to your attention
0:22
uh some proposals that have been floated
0:24
recently in Congress as the budget
0:26
process and budget legislation is being
0:28
debated The latest ones were just
0:30
announced in the House by Congressman
0:33
James Comr a Republican from Kentucky
0:36
and he is chairman of the House
0:38
Committee on Oversight and Government
0:39
Reform Comr announced markup of budget
0:43
legislation that's going to be taking
0:44
place this week on Wednesday April 30th
0:47
at 10:00 a.m Eastern I'm recording this
0:50
video on the Monday before so that's why
0:52
I say this week Now just a disclaimer up
0:54
front these are just proposals that are
0:57
being considered in the House They are
0:59
not law They're not for sure happening
1:01
and they're subject to change So please
1:03
be aware of that What are these
1:06
proposals the first one would raise the
1:10
federal employees retirement system or
1:12
furs contribution requirements And uh
1:15
this would raise the contribution rate
1:17
for many existing civilian federal
1:20
employees and postal employees up to the
1:23
new rate of
1:24
4.4% And the estimated savings of this
1:28
would be
1:29
$30.716 billion in revenue uh that would
1:33
be increased to go towards deficit
1:35
reduction And on that point I I meant to
1:37
mention earlier the reason all this is
1:39
being debated is because the um the
1:42
Republicans in Congress are looking to
1:44
pass a budget that that makes spending
1:46
cuts to help offset the growing federal
1:50
debt which currently stands at just over
1:53
36 trillion last I checked The second
1:55
proposal would eliminate the FUR's
1:57
annuity supplement This would according
2:00
to Comr this would apply to new federal
2:02
retirees It would eliminate the
2:04
additional additional retirement annuity
2:06
payment that those eligible to retire
2:09
before the age of 62 currently receive
2:12
until they reach the age of Social
2:14
Security retirement eligibility benefits
2:17
However federal employees in jobs
2:19
subject to mandatory early retirement
2:21
would be exempt from this The estimated
2:24
savings of this proposal are 10.113
2:27
billion The next item is switching to a
2:30
high- five average salary for pension
2:34
calculations So currently the pension
2:38
for under furs or CSRS is calculated um
2:41
based on a high three This would change
2:43
to a high five meaning your highest five
2:45
years of uh earnings which typically are
2:49
your your last years of federal service
2:52
And this would likely reduce the
2:53
retirement payments for most federal
2:55
employees um by changing it from the
2:59
highest three years of average earnings
3:02
to high five The estimated savings on
3:04
that is 4.75 billion on this proposal
3:08
Next up is an option for new hires to
3:12
elect at will employment and lower furs
3:15
contributions So what this proposal
3:17
would do is it would give newly hired
3:19
federal employees the option to elect to
3:21
serve as at will employees without the
3:23
typical merit system protections that
3:26
most federal employees have in exchange
3:28
for higher take-home pay with a lower
3:31
FUR's contribution rate
3:34
Federal employees who opt to retain
3:36
their civil service protections would
3:38
face higher retirement contributions in
3:40
other words and thereby creating a
3:43
financial penalty for for that job
3:46
security The estimated savings of this
3:48
proposal is 4.541 billion The next item
3:53
is setting up a filing fee for MSPB
3:57
claims and appeals And what this
3:59
proposal says is it would it's designed
4:01
to reduce frivolous employee appeals to
4:04
the MSPB that's the Merit Systems
4:06
Protection Board regarding agency
4:08
disciplinary actions And it would charge
4:11
a modest fee for MSPB filings that would
4:15
be refunded to employees who win their
4:18
appeals And the estimated savings on
4:20
this proposal is an additional $2
4:23
million in revenue increase to go toward
4:26
deficit reduction And the final item is
4:29
FEB protection So what this would do is
4:34
um it would require a comprehensive
4:36
audit of employee dependents who are
4:39
currently enrolled in FEB That's the
4:41
head excuse me the federal employees
4:43
health benefits program And uh this
4:46
audit would require verifying say
4:48
marriage and birth certificates Any
4:50
individuals who are found to be
4:51
ineligible would be disenrolled because
4:55
there currently are some individuals
4:59
um on FEB plans through their family
5:01
members who shouldn't be there And so
5:03
this would just be an audit looking for
5:04
those The estimated savings of that
5:07
would be 1.5 billion And Congressman
5:09
Comr said in a statement about this
5:12
quote "The House Oversight Committee is
5:14
taking a critical step to advance
5:16
President Trump's America First agenda
5:19
and ensure taxpayer dollars are used
5:21
effectively efficiently and responsibly
5:24
The committee will consider legislation
5:26
that delivers a substantial win for
5:28
fiscal responsibility achieving a
5:31
reduction in the federal deficit of over
5:33
$50 billion Congressional Republicans
5:36
alongside President Trump are taking
5:38
bold action to safeguard taxpayer
5:40
dollars and secure America's financial
5:43
future delivering on our promise to
5:45
hardworking American taxpayers So anyway
5:47
that statement encapsulates the
5:49
reasoning behind these proposals So just
5:52
to sum up I want to reiterate that these
5:55
are just proposals Remember that they
5:57
have not become law They may never
5:58
become law We don't know But they are
6:00
being considered I wanted to make you
6:02
aware of it so you can monitor it and
6:04
pay attention to it since again it could
6:06
have a significant impact on you if any
6:09
of these proposals were to become law Um
6:12
they're likely to change along the way
6:14
and we also aren't going to have a
6:16
tremendous amount of information if or
6:18
until they become law We've been getting
6:20
questions from our readers about um how
6:23
would this affect me directly i mean
6:25
here's my situation specifically Will
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this apply to me unfortunately the
6:30
answer is I don't know Again until it
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becomes enacted and um it's determined
6:36
how it will apply and to whom it will
6:38
apply to we don't have that information
6:40
Some of these proposals also have been
6:42
proposed numerous times in the past and
6:44
they've never come to fruition The
6:46
change to the high- five for instance
6:48
goes back decades that I'm aware of um
6:51
just on FedSmith alone I've come across
6:54
articles written over 10 years ago that
6:56
were talking about this change because
6:58
it was being floated in Congress at that
7:00
time That's a recap of the situation I
7:02
wanted to make you aware of it Like I
7:04
said these proposals are out there and
7:06
it's it's worth monitoring to see where
7:09
they go We will continue to provide
7:11
updates and more information as they're
7:13
available on fedsmith.com and here on
7:15
our YouTube channel So be sure to to
7:18
follow us like subscribe for more
7:20
updates Thank you for watching and
7:22
listening
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