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(VIDEO) NTU's Pete Sepp Testifies before Congress on Federal Pensions

Douglas Kellogg
January 30, 2012

The Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy held a hearing entitled, "Retirement Readiness: Strengthening the Federal Pension System" on Wednesday, January 25th. The issue at hand was legislation proposed by Rep. Dave Camp (R-Mich.), which would add an additional 12 months to the current two-year freeze on basic federal pay and increase federal workers’ retirement contributions starting in 2013. 

The current Federal Employees Retirement System (FERS) is calculated by taking the retiree's three highest salaries and dividing it by years of service and a variable pension accrual rate. That rate is currently 1.1 percent for federal employees and 1.7 percent for members of Congress. The Treasury pays about $4.9 billion every month for about 1.8 million retirees. But a 2010 Congressional Research Service study reported that US government pension programs had a shortfall of $674.2 billion.

Pete Sepp of the National Taxpayers Union testified at the hearing. NTU calculated that under the current pension system, a federal retiree’s combined benefit would be almost 2-1/2 times greater than a corporate retiree’s. Federal employees are eligible for Social Security benefits, the defined contribution Thrift Savings Plan (TSP), and the defined benefit Federal Employee Retirement System (FERS). Typical private sector workers rely primarily on Social Security and a 401(k) plan.


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