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[House Report 112-394]
[From the U.S. Government Printing Office]


112th Congress                                            Rept. 112-394
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================



 
          SECURING ANNUITIES FOR FEDERAL EMPLOYEES ACT OF 2012

                                _______
                                

                February 9, 2012.--Ordered to be printed

                                _______
                                

   Mr. Issa, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3813]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Oversight and Government Reform, to whom 
was referred the bill (H.R. 3813) to amend title 5, United 
States Code, to secure the annuities of Federal civilian 
employees, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     5
Section-by-Section...............................................    10
Explanation of Amendments........................................    12
Committee Consideration..........................................    12
Rollcall Votes...................................................    12
Application of Law to the Legislative Branch.....................    13
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................    13
Statement of General Performance Goals and Objectives............    14
Federal Advisory Committee Act...................................    14
Unfunded Mandate Statement.......................................    14
Earmark Identification...........................................    14
Committee Estimate...............................................    14
Budget Authority and Congressional Budget Office Cost Estimate...    14
Changes in Existing Law Made by the Bill as Reported.............    21
Minority Views...................................................    32
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Securing Annuities for Federal 
Employees Act of 2012''.

SEC. 2. RETIREMENT CONTRIBUTIONS.

  (a) Civil Service Retirement System.--
          (1) Individual contributions.--Section 8334(c) of title 5, 
        United States Code, is amended--
                  (A) by striking ``(c) Each'' and inserting ``(c)(1) 
                Each''; and
                  (B) by adding at the end the following:
  ``(2) Notwithstanding any other provision of this subsection, the 
applicable percentage of basic pay under this subsection shall, for 
purposes of computing an amount--
          ``(A) for a period in calendar year 2013, 2014, or 2015, be 
        equal to the applicable percentage under this subsection for 
        the preceding calendar year (including as increased under this 
        paragraph, if applicable), plus an additional 0.5 percentage 
        point; and
          ``(B) for a period in any calendar year after 2015, be equal 
        to the applicable percentage under this subsection for calendar 
        year 2015 (as determined under subparagraph (A)).''.
          (2) Government contributions.--Section 8334(a)(1)(B) of title 
        5, United States Code, is amended--
                  (A) in clause (i), by striking ``Except as provided 
                in clause (ii),'' and inserting ``Except as provided in 
                clause (ii) or (iii),''; and
                  (B) by adding at the end the following:
  ``(iii) The amount to be contributed under clause (i) shall, with 
respect to a period in any year beginning after December 31, 2012, be 
equal to--
          ``(I) the amount which would otherwise apply under clause (i) 
        with respect to such period, reduced by
          ``(II) the amount by which, with respect to such period, the 
        withholding under subparagraph (A) exceeds the amount which 
        would otherwise have been withheld from the basic pay of the 
        employee or elected official involved under subparagraph (A) 
        based on the percentage applicable under subsection (c) for 
        calendar year 2012.''.
  (b) Federal Employees' Retirement System.--Section 8422(a)(3) of 
title 5, United States Code, is amended--
          (1) by striking ``(3) The'' and inserting ``(3)(A) The''; and
          (2) by adding at the end the following:
  ``(B) Notwithstanding any other provision of this paragraph, the 
applicable percentage under this paragraph shall, for purposes of 
computing any amount--
          ``(i) for a period in calendar year 2013, 2014, or 2015, be 
        equal to the applicable percentage under this paragraph for the 
        preceding calendar year (including as increased under this 
        subparagraph, if applicable), plus an additional 0.5 percentage 
        point; and
          ``(ii) for a period in any calendar year after 2015, be equal 
        to the applicable percentage under this paragraph for calendar 
        year 2015 (as determined under clause (i)).''.

SEC. 3. AMENDMENTS RELATING TO SECURE ANNUITY EMPLOYEES.

  (a) Definition of Secure Annuity Employee.--Section 8401 of title 5, 
United States Code, is amended--
          (1) in paragraph (35), by striking ``and'' at the end;
          (2) in paragraph (36), by striking the period and inserting 
        ``; and''; and
          (3) by adding at the end the following:
          ``(37) the term `secure annuity employee' means an employee 
        or Member who--
                  ``(A) first becomes subject to this chapter after 
                December 31, 2012; and
                  ``(B) at the time of first becoming subject to this 
                chapter, does not have at least 5 years of civilian 
                service creditable under the Civil Service Retirement 
                System or any other retirement system for Government 
                employees.''.
  (b) Individual Contributions.--Section 8422(a)(3) of title 5, United 
States Code (as amended by section 2(b)) is further amended--
          (1) in subparagraph (B) (as added by section 2(b)), in the 
        matter before clause (i), by striking ``this paragraph, the'' 
        and inserting ``this paragraph and except in the case of a 
        secure annuity employee, the''; and
          (2) by adding after subparagraph (B) (as so added) the 
        following:
  ``(C) Notwithstanding any other provision of this paragraph, in the 
case of a secure annuity employee, the applicable percentage under this 
paragraph shall--
          ``(i) in the case of a secure annuity employee who is an 
        employee, Congressional employee, or Member, be equal to 10.2 
        percent; and
          ``(ii) in the case of a secure annuity employee who is a law 
        enforcement officer, firefighter, member of the Capitol Police, 
        member of the Supreme Court Police, air traffic controller, 
        nuclear materials courier, or customs and border protection 
        officer, be equal to 10.7 percent.''.
  (c) Average Pay.--Section 8401(3) of title 5, United States Code, is 
amended--
          (1) by striking ``(3)'' and inserting ``(3)(A)''; and
          (2) by adding ``except that'' after the semicolon; and
          (3) by adding at the end the following:
          ``(B) in the case of a secure annuity employee, the term 
        `average pay' has the meaning determined applying subparagraph 
        (A)--
                  ``(i) by substituting `5 consecutive years' for `3 
                consecutive years'; and
                  ``(ii) by substituting `5 years' for `3 years'.''.
  (d) Computation of Basic Annuity.--Section 8415 of title 5, United 
States Code, is amended--
          (1) by striking subsections (a) through (e) and inserting the 
        following:
  ``(a) Except as otherwise provided in this section, the annuity of an 
employee retiring under this subchapter is--
          ``(1) in the case of an employee other than a secure annuity 
        employee, 1 percent of that individual's average pay multiplied 
        by such individual's total service; and
          ``(2) in the case of an employee who is a secure annuity 
        employee, 0.7 percent of that individual's average pay 
        multiplied by such individual's total service.
  ``(b)(1) The annuity of a Member, or former Member with title to a 
Member annuity, retiring under this subchapter is computed under 
subsection (a)(1), except that if the individual has had at least 5 
years of service as a Member or Congressional employee, or any 
combination thereof, so much of the annuity as is computed with respect 
to either such type of service (or a combination thereof), not 
exceeding a total of 20 years, shall be computed by multiplying 1.7 
percent of the individual's average pay by the years of such service.
  ``(2) The annuity of a Member, or former Member with title to a 
Member annuity, retiring under this subchapter is, if the individual is 
or was a secure annuity employee, computed--
          ``(A) under subsection (a)(2); and
          ``(B) disregarding paragraph (1) of this subsection.
  ``(c)(1) The annuity of a Congressional employee, or former 
Congressional employee, retiring under this subchapter is computed 
under subsection (a)(1), except that if the individual has had at least 
5 years of service as a Congressional employee or Member, or any 
combination thereof, so much of the annuity as is computed with respect 
to either such type of service (or a combination thereof), not 
exceeding a total of 20 years, shall be computed by multiplying 1.7 
percent of the individual's average pay by the years of such service.
  ``(2) The annuity of a Congressional employee, or former 
Congressional employee, retiring under this subchapter is, if the 
individual is or was a secure annuity employee, computed--
          ``(A) under subsection (a)(2); and
          ``(B) disregarding paragraph (1) of this subsection.
  ``(d) The annuity of an employee retiring under subsection (d) or (e) 
of section 8412 or under subsection (a), (b), or (c) of section 8425 
is--
          ``(1) in the case of an individual other than a secure 
        annuity employee--
                  ``(A) 1.7 percent of that individual's average pay 
                multiplied by so much of such individual's total 
                service as does not exceed 20 years; plus
                  ``(B) 1 percent of that individual's average pay 
                multiplied by so much of such individual's total 
                service as exceeds 20 years; and
          ``(2) in the case of an individual who is a secure annuity 
        employee--
                  ``(A) 1.4 percent of that individual's average pay 
                multiplied by so much of such individual's total 
                service as does not exceed 20 years; plus
                  ``(B) 0.7 percent of that individual's average pay 
                multiplied by so much of such individual's total 
                service as exceeds 20 years.
  ``(e) The annuity of an air traffic controller or former air traffic 
controller retiring under section 8412(a) is computed under subsection 
(a)(1), except that if the individual has had at least 5 years of 
service as an air traffic controller as defined by section 
2109(1)(A)(i), so much of the annuity as is computed with respect to 
such type of service shall be computed--
          ``(1) in the case of an individual other than a secure 
        annuity employee, by multiplying 1.7 percent of the 
        individual's average pay by the years of such service; and
          ``(2) in the case of an individual who is a secure annuity 
        employee, by multiplying 1.4 percent of the individual's 
        average pay by the years of such service.''; and
          (2) in subsection (h)--
                  (A) in paragraph (1), by striking ``subsection (a)'' 
                and inserting ``subsection (a)(1)''; and
                  (B) in paragraph (2), in the matter following 
                subparagraph (B), by striking ``or customs and border 
                protection officer'' and inserting ``customs and border 
                protection officer, or secure annuity employee.''.

SEC. 4. ANNUITY SUPPLEMENT.

  Section 8421(a) of title 5, United States Code, is amended--
          (1) in paragraph (1), by striking ``paragraph (3)'' and 
        inserting ``paragraphs (3) and (4)'';
          (2) in paragraph (2), by striking ``paragraph (3)'' and 
        inserting ``paragraphs (3) and (4)''; and
          (3) by adding at the end the following:
  ``(4)(A) Except as provided in subparagraph (B), no annuity 
supplement under this section shall be payable in the case of an 
individual whose entitlement to annuity is based on such individual's 
separation from service after December 31, 2012.
  ``(B) Nothing in this paragraph applies in the case of an individual 
separating under subsection (d) or (e) of section 8412.''.

SEC. 5. CONTRIBUTIONS TO THRIFT SAVINGS FUND OF PAYMENTS FOR ACCRUED OR 
                    ACCUMULATED LEAVE.

  (a) Amendments Relating to CSRS.--Section 8351(b) of title 5, United 
States Code, is amended--
          (1) by striking paragraph (2)(A) and inserting the following:
  ``(2)(A) An employee or Member may contribute to the Thrift Savings 
Fund in any pay period any amount of such employee's or Member's basic 
pay for such pay period, and may contribute (by direct transfer to the 
Fund) any part of any payment that the employee or Member receives for 
accumulated and accrued annual or vacation leave under section 5551 or 
5552. Notwithstanding section 2105(e), in this paragraph the term 
`employee' includes an employee of the United States Postal Service or 
of the Postal Regulatory Commission.'';
          (2) by striking subparagraph (B) of paragraph (2); and
          (3) by redesignating subparagraph (C) of paragraph (2) as 
        subparagraph (B).
  (b) Amendments Relating to FERS.--Section 8432(a) of title 5, United 
States Code, is amended--
          (1) by striking paragraphs (1) and (2) and inserting the 
        following:
  ``(1) An employee or Member--
          ``(A) may contribute to the Thrift Savings Fund in any pay 
        period, pursuant to an election under subsection (b), any 
        amount of such employee's or Member's basic pay for such pay 
        period; and
          ``(B) may contribute (by direct transfer to the Fund) any 
        part of any payment that the employee or Member receives for 
        accumulated and accrued annual or vacation leave under section 
        5551 or 5552.
  ``(2) Contributions made under paragraph (1)(A) pursuant to an 
election under subsection (b) shall, with respect to each pay period 
for which such election remains in effect, be made in accordance with a 
program of regular contributions provided in regulations prescribed by 
the Executive Director.''; and
          (2) by adding at the end the following new paragraph:
  ``(4) Notwithstanding section 2105(e), in this subsection the term 
`employee' includes an employee of the United States Postal Service or 
of the Postal Regulatory Commission.''.
  (c) Regulations.--The Executive Director of the Federal Retirement 
Thrift Investment Board shall promulgate regulations to carry out the 
amendments made by this section.
  (d) Effective Date.--The amendments made by subsections (a) and (b) 
shall take effect one year after the date of the enactment of this 
section, or upon such earlier date as may be established by the 
Executive Director of the Federal Retirement Thrift Investment Board 
under the regulations promulgated pursuant to subsection (c).

SEC. 6. COORDINATION WITH OTHER RETIREMENT SYSTEMS.

  (a) Foreign Service.--For provisions of law requiring maintenance of 
existing conformity--
          (1) between the Civil Service Retirement System and the 
        Foreign Service Retirement System, and
          (2) between the Federal Employees' Retirement System and the 
        Foreign Service Pension System,
see section 827 of the Foreign Service Act of 1980 (22 U.S.C. 4067).
  (b) CIARDS.--
          (1) Compatibility with csrs.--For provisions of law relating 
        to maintenance of existing conformity between the Civil Service 
        Retirement System and the Central Intelligence Agency 
        Retirement and Disability System, see section 292 of the 
        Central Intelligence Agency Retirement Act (50 U.S.C. 2141).
          (2) Applicability of fers.--For provisions of law providing 
        for the application of the Federal Employees' Retirement System 
        with respect to employees of the Central Intelligence Agency, 
        see title III of the Central Intelligence Agency Retirement Act 
        (50 U.S.C. 2151 and following).
  (c) TVA.--Section 3 of the Tennessee Valley Authority Act of 1933 (16 
U.S.C. 831b) is amended by adding at the end the following:
  ``(c) The chief executive officer shall prescribe any regulations 
which may be necessary in order to carry out the purposes of the 
Securing Annuities for Federal Employees Act of 2012 with respect to 
any defined benefit plan covering employees of the Tennessee Valley 
Authority.''.

                     Committee Statement and Views


                          PURPOSE AND SUMMARY

    Personnel costs for both current and former federal 
employees continue to rise. The taxpayer spends about $200 
billion per year on the federal civilian workforce, and also 
bears the risk of the federal pension system, which has a 
liability nearing $700 billion.\1\ The Congressional Budget 
Office (CBO) recently found the Federal Government provides its 
civilian employees 48 percent more in benefits than does the 
private sector.\2\
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    \1\Civil Service Retirement and Disability Fund, Annual Report of 
the Board of Actuaries, Civil Service Retirement and Disability Fund, 
Fiscal Year Ended September 30, 2011.
    \2\Congressional Budget Office. Comparing the Compensation of 
Federal and Private-Sector Employees. January 2011, page ix. http://
www.cbo.gov/ftpdocs/126xx/doc12696/01-30-FedPay.pdf.
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    Like other Americans, our Nation's civil servants, by and 
large, work hard, do a good job, and provide for their 
families. But it is unfair to ask taxpayers to keep footing the 
bill for unsustainable public sector pensions when those 
benefits far exceed what the private sector offers. State and 
local governments have already implemented reforms that 
strengthen their pension systems to help ensure solvency and 
ensure that current employees will be able to receive the 
annuities they have been promised.
    The purpose of H.R. 3813 is to modernize the federal 
pension system to better reflect the reality of today's world. 
H.R. 3813 increases the employee retirement contribution by 1.5 
percent of salary over three years. The bill also eliminates 
the supplemental payment to individuals who voluntarily retire 
before age 62. For new hires, H.R. 3813 increases the employee 
retirement contribution by 3.2 percent, changes the multiplier 
used in the pension formula, and uses a five-year average 
salary base. Asking federal employees to share more equitably 
in the cost of their retirement is a tough, but necessary 
choice to reduce our deficit.

                  BACKGROUND AND NEED FOR LEGISLATION

    Most federal civilian employees are enrolled in one of two 
defined benefit, retirement programs: the Civil Service 
Retirement System (CSRS) or the Federal Employees Retirement 
System (FERS). In FY 2011, the Office of Personnel Management 
(OPM) paid $69.79 billion in benefits from the Civil Service 
Retirement and Disability Fund (CSRDF).\3\
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    \3\U.S. Office of Personnel Management. Agency Financial Report: 
Fiscal Year 2011. Office of Personnel Management. Web. .
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    A combination of both employee and employer contributions 
fund the CSRDF based on statute and actuarial assumptions. 
Shortfalls accruing under the CSRS are covered by taxpayers 
through a transfer from the General Fund to the CSRDF.

The Federal Employee Pension System: An Unfunded Liability

    Under the CSRS, most federal employees are required to 
contribute seven percent of their salaries to the Civil Service 
Retirement Disability Fund (CSRDF). The employing agency, with 
the exception of the United States Postal Service, matches the 
employee contribution.
    OPM estimates the normal cost (i.e., the cost of providing 
future pension benefits in current dollars) of CSRS to be 26 
percent of an employee's salary. The 14 percent combined 
employee and employer contribution is not enough to fully fund 
the retirement benefits provided under CSRS, leaving a 
shortfall that is covered by taxpayers through a transfer from 
the General Fund to the CSRDF. For FY 2011 and 2010, the 
government paid a combined $64.5 billion to cover the 
shortfall. At the start of FY 2010, the CSRDF had an unfunded 
liability of $663.4 billion for the CSRS.
    In 1986, Congress established the FERS in part to help 
address the unfunded liability created by the CSRS. When it 
became effective on January 1, 1987, CSRS interim employees 
with less than five years of creditable civilian service on 
December 31, 1986, were automatically converted to FERS.
    The FERS uses three sources to provide employees with 
retirement income: Social Security, a defined benefit annuity, 
and the Thrift Savings Plan, to which the employing agency 
contributes an amount equal to one percent of basic pay. 
Agencies match employee contributions up to five percent of 
basic pay.
    Both FERS participants and their employing agencies are 
required by statute to make contributions to fully fund FERS 
coverage. FERS covered federal employees contribute the CSRS 
contribution amount minus the prevailing Old Age Survivor and 
Disability Insurance deduction rate. For most federal 
employees, the individual contribution rate is 0.8 percent of 
their basic pay. For Members of Congress, congressional 
employees, and other special occupational groups such as law 
enforcement, this amount equals 1.3 percent of basic pay.
    The employing agency is responsible for paying the 
remaining normal cost not covered by the employee contribution. 
For most federal employees, the employing agency currently pays 
11.9 percent of the salary (the 12.7 percent normal cost minus 
the employee's 0.8 percent contribution). For congressional 
employees, the employer pays 16.7 percent. For Members of 
Congress, the employer pays 18.3 percent. Employing agencies 
pay 16.7 percent for law enforcement officers, firefighters, 
nuclear materials couriers, customs and border protection 
officers, and air traffic controllers. OPM recalculates the 
normal cost each year based on actuarial assumptions.
    The normal cost is subject to increase each year based on 
actuarial assumptions such as longer life expectancy, lower 
Treasury yields, and a deficit from the previous year. The 
employing agencies--and ultimately the taxpayers--are 
responsible for the additional expense incurred from increased 
normal costs.
    The normal cost has steadily increased over the past 
decade: In FY 2002, the normal cost was 11.5 percent. At that 
time, the employee's contribution covered 6.9 percent of the 
normal cost. Today, because the normal cost continues to 
increase while employee contributions remain the same, 
employees only pay for 6.3 percent of their pension benefits, 
and the government pays an increasingly higher portion of the 
employee benefits. In FY 2012, the normal cost for most federal 
employees increased from 12.5 percent to 12.7 percent.
    Further, the pre-funding of FERS benefits still represents 
a liability for the Federal Government. The CSRDF had an 
unfunded liability of $681.7 billion at the start of FY 2011. 
The CSDRF is similar to the Social Security Trust Fund in that 
100 percent of the monies deposited must be used to purchase 
special-issue, U.S. Treasury bonds. These bonds are I.O.U.s 
issued by one agency of the Federal Government and held by 
another agency of the same government. The bonds cannot be sold 
by the trust fund to the general public in exchange for cash. 
They can only be redeemed through the Treasury, which must 
either collect taxes or borrow from the public in order to 
obtain the required cash.
    As the President's Fiscal Year 2010 Budget states:

          ``These [trust fund] balances are available for 
        future benefit payments and other trust fund 
        expenditures, but only in a bookkeeping sense. The 
        holdings of the trust funds are not assets of the 
        Government as a whole that can be drawn down in the 
        future to fund benefits. Instead, they are claims on 
        the Treasury. From a cash perspective, when trust fund 
        holdings are redeemed to authorize the payment of 
        benefits, the Department of the Treasury finances the 
        expenditure in the same way as any other Federal 
        expenditure--by using current receipts or by borrowing 
        from the public. The existence of large trust fund 
        balances, therefore, does not, by itself, increase the 
        Government's ability to pay benefits. Put differently, 
        these trust fund balances are assets of the program 
        agencies and corresponding liabilities of the Treasury, 
        netting to zero for the Government as a whole.''\4\
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    \4\U.S. Office of Management and Budget, Budget of the United 
States Government, Fiscal Year 2010: Analytical Perspectives, 2009, p. 
245.
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State and local government enacted pension reform

    The recent economic recessions, first in 2000-2001 and more 
recently in 2008-2009, have made State and local governments 
painfully aware that their generous pension benefits are 
unsustainable and unfair to taxpayers. Since 2001, at least 30 
states have made changes to their pension plans. According to 
the National Conference of State Legislatures (NCSL), more 
states enacted changes to their pension systems in 2010 than in 
any other year. Although some of these reforms are designed to 
shore up liabilities caused by the underfunding of the pension 
plans, the Center for State and Local Government Excellence 
(CSLGE) found that most pension funding shortfalls were a 
result of the weak economy. The CSLGE reported:

          ``The most common changes have been to increase 
        employee contributions to pensions or to establish 
        different tiers of benefits for newly hired employees. 
        New hires might have higher vesting requirements, 
        longer service requirements, a later retirement age, 
        and/or a lower pension. There also are more 
        restrictions on retired public workers returning to 
        covered service while continuing to receive their 
        retirement benefit.''\5\
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    \5\Center for State and Local Government Excellence, State & Local 
Pensions, An Overview of Funding Issues and Challenges, January 2011.

    During its review of public sector pensions, the Committee 
identified 29 states and 33 localities that had enacted major 
pension reform since 2000. These reforms include:\6\
---------------------------------------------------------------------------
    \6\Center for State and Local Government Excellence, (Pension 
Reform Map), http://maps.google.com/maps/
ms?hl=en&ie=UTF8&msa=0&msid=109918998022670131860.0004920a8519 
bafb03a45&ll=39.639538,-98.789062&spn=26.989212, 
87.890625&z=3&source=embed.
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     Moving from a high-three average salary to a high-
five average salary calculation (The Virginia Retirement 
System, e.g.).
     Increasing employee contributions and decreasing 
employer contributions (The Florida Retirement System, e.g.).
     Closing the defined benefit to new hires and 
creating a Tier II retirement system for new employees, who 
choose between a defined contribution plan and a hybrid plan 
(The State of Utah, e.g.).
     Replacing an existing defined benefit plan with a 
defined contribution plan for new employees (Gwinnett County, 
Georgia, e.g.).
    Many of these reforms require that employees pay a greater 
share of the normal cost of their pension benefits. State and 
local government employees covered by Social Security pay on 
average five percent of their salary toward pension benefits. 
The median employer contribution is 9.5 percent.\7\
---------------------------------------------------------------------------
    \7\Public Fund Survey, Summary of Findings for FY 2010, December 
2011, p. 9.
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    Compared to the FERS, State and local government employees 
pay more as a percentage of their salaries and more as a 
percentage of total benefits. Meanwhile, taxpayers at the local 
level pay less toward public sector pensions as both a 
percentage of civil servant salaries and as a percentage of 
total benefits.
    On average, State and local employees pay for 35 percent of 
their pension benefits while federal employees pay only 6 
percent. H.R. 3813 requires current federal employees to 
contribute only 18 percent of the normal cost--phased in over 
three years.
    New federal employees under H.R. 3813 will contribute four 
percent of their basic pay to the CSDRF--still less than the 
median five percent of salary State and local government 
employees pay.

Private sector trends

    According to Towers Watson, only 13 of this year's Fortune 
100 companies offered new employees a traditional defined 
benefit plan in 2011, compared to 58 in 2003.\8\
---------------------------------------------------------------------------
    \8\Towers Watson. Prevalence of Retirement Plan Types in the 
Fortune 100 in 2011, July 2011.
---------------------------------------------------------------------------
    Only half of all private sector workers have no retirement 
plan other than Social Security, according to the Employee 
Benefit Research Institute. The average annual Social Security 
benefit of $14,000 is meager when compared to the annual 
pension provided to Members retiring from Congress ($53,940).

Calls for reform

    The President's National Commission on Fiscal 
Responsibility and Reform (Simpson-Bowles) found that federal 
civilian employee pensions were out of line with pension 
benefits available to the average private sector worker. It 
therefore recommended that Congress change the federal employee 
pension system to bring it more in line with private sector 
practice. Simpson-Bowles recommended that an employee's highest 
five years average salary be used as the base for computing 
pensions, and that the employee and his employing agency make 
equal contributions toward pension costs.\9\ The FY 2012 Budget 
Resolution (H. Con. Res. 34) adopted by the House last April 
incorporates these reforms proposed by Simpson-Bowles.
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    \9\United States. The White House. The National Commission on 
Fiscal Responsibility and Reform. The Moment of Truth. Web. http://
www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/
TheMomentofTruth12_1_2010.pdf.
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    On March 9, 2011, the Federal Workforce Subcommittee held a 
hearing to examine federal employee compensation.
    In his Plan for Economic Growth and Deficit Reduction: 
Living Within Our Means, the President last September called on 
federal employees to contribute an additional 1.2 percent of 
their annual salary toward their defined benefit pension, and 
he proposed eliminating the FERS minimum supplement for new 
hires not subject to mandatory retirement.
    Also last fall, the Committee recommended the Joint Select 
Committee on Deficit reduction eliminate FERS for new hires, 
allowing the Federal Government to gradually end the fiscally 
irresponsible practice of accumulating large unfunded 
liabilities for retiree pensions.
    On December 13, 2011, the House passed H.R. 3630, the 
Middle Class Tax Relief and Job Creation Act, which requires 
federal employees to pay more to retain their defined benefit. 
The bill also establishes a new formula for the FERS defined 
benefit for new federal employees and Members of Congress that 
would increase its affordability by dramatically increasing 
contribution levels and reducing pension payouts.
    On January 25, 2012, Federal Workforce Subcommittee 
Chairman Dennis Ross held a hearing to examine the federal 
employee pension system, including the benefits provided to 
Members of Congress. Mr. Ross introduced legislation, H.R. 
3813, in connection with the hearing.
    On January 31, 2012, the Congressional Budget Office (CBO) 
found that federal employees receive an average of 16 percent 
more in total compensation (salary + benefits) than private 
sector employees. The predominant factor in this gap is the 
generous benefits that federal employees receive. On average, 
federal employees receive 48 percent more in benefits than 
their private sector peers. For some federal employees, the 
benefits package they receive is worth more than their salary.
    H.R. 3813 encompasses the recommendations of the Simpson-
Bowles Commission, the FY 2012 House Budget Resolution (H. Con. 
Res. 34), the President's Plan for Economic Growth and Deficit 
Reduction, and the Middle Class Tax Relief and Job Creation Act 
of 2011 (H.R. 3630).
    H.R. 3813 increases current federal employee and Member of 
Congress contributions by 1.5 percent of salary over three 
years. The bill also eliminates the supplemental payment to 
individuals who voluntarily retire before age 62. For new 
hires, H.R. 3813 increases the employee retirement contribution 
by 3.2 percent, changes the multiplier used in the pension 
formula, and substitutes a five-year average salary computation 
base for the current three-year one. The pension formula 
established in H.R. 3813 for federal employees with less than 5 
years of service hired after December 31, 2012 would apply 
equally to new Members of Congress (with less than 5 years of 
prior federal service).
    The bill also allows retiring federal employees to deposit 
lump-sum payments for unused annual leave into their TSP 
accounts. These contributions would be subject to the existing 
Internal Revenue Service (IRS) annual contribution limits. The 
provision helps align federal employee benefits with the 
private sector. In September 2009, the IRS issued regulations 
allowing employees to deposit any cash payment they received 
from their employer for accumulated leave into their 401(k) 
plans. This provision allows such contributions to be deposited 
in the TSP. Similar legislation was ordered reported by the 
Committee on April 14, 2010 (H.R. 4865).

                          LEGISLATIVE HISTORY

    The Civil Service Retirement Act of 1920\10\ established 
pension benefits for civilian federal employees. Federal 
civilian employees hired on or after January 1, 1984, were 
required to participate in Social Security,\11\ which 
contributed to the development of the FERS.\12\
---------------------------------------------------------------------------
    \10\P.L. 66-215.
    \11\P.L. 98-21.
    \12\P.L. 99-335.
---------------------------------------------------------------------------

                           Section-by-Section


Section 1. Short title

    The short title of the bill is the ``Securing Annuities for 
Federal Employees Act of 2012.''

Section 2. Retirement contributions

    Subsection (2)(a) increases the employee contribution to 
the Civil Service Retirement System (CSRS) by 1.5 percent of 
salary over three years, beginning in calendar year 2013. The 
employer contribution is reduced by the increased employee 
contribution.
    Subsection (2)(b) increases the employee contribution to 
the Federal Employees Retirement System (FERS) by 1.5 percent 
of salary over three years, beginning in calendar year 2013. 
Under existing law, the employer contribution equals the normal 
retirement cost reduced by the employee contribution.

Section 3. Amendments relating to secure annuity employees

    Subsection 3(a) establishes a new pension formula for 
federal employees and Members of Congress entering service 
after December 31, 2012, who have less than 5 years of 
creditable service for retirement purposes.
    Subsection 3(b) sets the employee, congressional employee, 
and Member of Congress contribution to FERS at 4 percent of 
salary. Employees in special occupational groups with a higher 
accrual rate, such as law enforcement, will contribute 4.5 
percent of their salary. Under existing law, Members of 
Congress, congressional employees, and special occupational 
groups contribute 0.5 percent more of their salary to FERS then 
the vast majority of federal employees.
    Subsection 3(c) calculates pensions using the average of an 
employee's highest five years of salary. Current CSRS and FERS 
employees will continue to have their pensions calculated using 
the average of their highest three years of salary.
    Subsection 3(d) sets the FERS pension formula multiplier 
for employees, congressional employees, and Members of Congress 
at 0.7 percentage points. Employees in special occupational 
groups such as law enforcement are subject to a proportional 
adjustment to the multiplier (0.3 percentage points lower than 
current law).
    Under current law, employee pensions are calculated using a 
multiplier of 1 percentage point. Pensions for employees 
retiring at age 62 with more than 20 years of service are 
calculated using a multiplier of 1.1 percentage points. 
Pensions for Members of Congress, congressional employees, and 
special occupational groups such as law enforcement are 
calculated using a pension multiplier of 1.7 percentage points 
for the first 20 years of service, and 1 percentage point for 
service beyond 20 years. Pensions for air traffic controllers 
are calculated using a pension multiplier of 1.7 percentage 
points.

Section 4. Annuity supplement

    Section 4 eliminates the FERS minimum supplement for 
individuals not subject to mandatory retirement who retire on 
or after January 1, 2013. Individuals subject to mandatory 
retirement include law enforcement officers, fire fighters, air 
traffic controllers, and nuclear materials couriers. Under 
current law, the FERS minimum supplement is paid to these 
employees and to Members of Congress and federal employees who 
retire before the age of 62. The FERS minimum supplement equals 
the amount the employee would have received from Social 
Security if he were 62 years old at age of retirement.

Section 5. Contributions to Thrift Savings Fund of payments for accrued 
        or accumulated leave

    Section 5 provides that employees (including postal 
employees and employees of the Postal Regulatory Commission) 
and Members may contribute in any pay period any part of any 
payment that the employee or Member receives as a lump-sum 
payment for accumulated and accrued annual or vacation leave 
upon separation or entering active duty.

Section 6. Coordination with other retirement systems

    Section 6 references the conforming changes required for 
Foreign Service, CIA, and TVA employees.

                       Explanation of Amendments

    Mr. Ross offered an amendment in the nature of a substitute 
(ANS). The amendment made technical and conforming changes to 
H.R. 3813.
    Mr. Cummings offered an amendment limiting the increase in 
current employee pension contributions to those earning more 
than $100,000 per year. The amendment was defeated by voice 
vote.
    Ms. Norton offered an amendment expressing the sense of 
Congress that a portion of the savings from H.R. 3813 should be 
directed to the Office of Personnel Management to increase its 
capacity to process retirement claims and to help eliminate the 
backlog of claims. The amendment was defeated by voice vote.
    Mr. Lynch offered an amendment to make increased employee 
contributions inapplicable during a pay freeze year. The 
amendment was defeated by a recorded vote of 17 ayes to 21 
nays.
    Mr. Davis offered an amendment to strike section 4 of the 
bill. The amendment was defeated by a recorded vote of 15 ayes 
to 22 nays.
    Mr. Kucinich offered an amendment to strike section 3 of 
the bill. The amendment was defeated by a recorded vote of 15 
ayes to 22 nays.
    Mr. Lynch offered an amendment (with Mr. Chaffetz) to allow 
federal employees to deposit all or part of the lump-sum 
payment they receive for unused annual leave into their Thrift 
Savings Plan account. The amendment was agreed to by voice 
vote.
    Mr. Cummings offered an amendment limiting the increase in 
current employee pension contributions to those earning more 
than $30,000 per year. The amendment was defeated by voice 
vote.

                        Committee Consideration

    On February 7, 2012, the Committee met in open session and 
ordered reported favorably the bill, H.R. 3813, as amended, by 
roll call vote, a quorum being present.

                             Rollcall Votes

    The following votes occurred during the consideration of 
H.R. 3813:
    1. Mr. Lynch offered an amendment to the Ross ANS to make 
increased employee contributions inapplicable during a pay 
freeze year. The amendment was defeated by a roll call vote of 
17 Ayes to 21 Nays.
          Ayes: Platts, Cummings, Towns, Maloney, Norton, 
        Kucinich, Tierney, Clay, Lynch, Connolly, Quigley, 
        Davis, Braley, Welch, Yarmuth, Murphy, and Speier.
          Nays: Issa, Burton, Mica, Turner, McHenry, Jordan, 
        Chaffetz, Walberg, Lankford, Amash, Buerkle, Gosar, 
        Labrador, Meehan, DesJarlais, Walsh, Gowdy, Ross, 
        Guinta, Farenthold, and Kelly.
    2. Mr. Davis offered an amendment to the Ross ANS to strike 
section 4 of the bill. The amendment was defeated by a roll 
call vote of 15 Ayes to 22 Nays.
          Ayes: Cummings, Towns, Maloney, Norton, Kucinich, 
        Tierney, Clay, Lynch, Connolly, Davis, Braley, Welch, 
        Yarmuth, Murphy, and Speier.
          Nays: Issa, Burton, Mica, Platts, Turner, McHenry, 
        Jordan, Chaffetz, Walberg, Lankford, Amash, Buerkle, 
        Gosar, Labrador, Meehan, DesJarlais, Walsh, Gowdy, 
        Ross, Guinta, Farenthold, and Kelly.
    3. Mr. Kucinich offered an amendment to the Ross ANS to 
strike section 3 of the bill. The amendment was defeated by a 
rollcall vote of 15 Ayes to 22 Nays.
          Ayes: Cummings, Towns, Maloney, Norton, Kucinich, 
        Tierney, Clay, Lynch, Connolly, Davis, Braley, Welch, 
        Yarmuth, Murphy, and Speier.
          Nays: Issa, Burton, Mica, Platts, Turner, McHenry, 
        Jordan, Chaffetz, Walberg, Lankford, Amash, Buerkle, 
        Gosar, Labrador, Meehan, DesJarlais, Walsh, Gowdy, 
        Ross, Guinta, Farenthold, and Kelly.
    4. The bill, H.R. 3813, as amended, was ordered favorably 
reported to the House, a quorum being present, by a recorded 
vote of 22 Ayes to 16 Nays.
          Ayes: Issa, Burton, Mica, Platts, Turner, McHenry, 
        Jordan, Chaffetz, Walberg, Lankford, Amash, Buerkle, 
        Gosar, Labrador, Meehan, DesJarlais, Walsh, Gowdy, 
        Ross, Guinta, Farenthold, and Kelly.
          Nays: Cummings, Towns, Maloney, Norton, Kucinich, 
        Tierney, Clay, Lynch, Connolly, Quigley, Davis, Braley, 
        Welch, Yarmuth, Murphy, and Speier.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill increases the employee retirement contribution by 1.5 
percent of salary over three years and eliminates the 
supplemental payment to individuals who voluntarily retire 
before age 62. For new hires, H.R. 3813 increases the employee 
retirement contribution by 3.2 percent, changes the multiplier 
used in the pension formula, and uses a five year average 
salary base. Legislative branch employees and their families, 
to the extent that they are otherwise eligible for the benefits 
provided by this legislation, have equal access to its 
benefits.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement as to 
whether the provisions of the report include unfunded mandates. 
In compliance with this requirement the Committee has received 
a letter from the Congressional Budget Office included herein.

                         Earmark Identification

    H.R. 3813 does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 3813. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 3813 from the Director of 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, February 9, 2012.
Hon. Darrell Issa,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3813, the Securing 
Annuities for Federal Employees Act of 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Amber G. 
Marcellino.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 3813--Securing Annuities for Federal Employees Act of 2012

    Summary: H.R. 3813 would make several changes to the 
current retirement system for federal employees. Specifically, 
the legislation would increase the percentage of salary that 
federal employees in the Civil Service Retirement System 
(CSRS), Federal Employee Retirement System (FERS), and smaller 
retirement systems are required to pay towards their 
retirement, make changes to the benefit formula used to 
calculate retirement annuities for certain employees, eliminate 
the FERS retirement supplement that would be paid under current 
law to certain future retirees under the age of 62, and allow 
employees to contribute to their Thrift Savings Plan (TSP) 
accounts any payment received for accumulated and accrued 
annual leave.
    CBO estimates that implementing the legislation would 
increase revenues by $42 billion and decrease direct spending 
by $2 billion over the 2012-2022 period. Pay-as-you-go 
procedures apply because enacting the legislation would affect 
direct spending and revenues.
    H.R. 3813 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments.
    The bill would impose a private-sector mandate on federal 
workers under FERS who are eligible by December 31, 2012 to 
retire and receive an annuity supplement and were not going to 
do so. Because of a lack of information about the potential 
behavioral responses of individuals to such a change, CBO 
cannot determine whether the cost of the mandate would exceed 
the annual threshold established in UMRA for private-sector 
mandates ($146 million in 2012, adjusted annually for 
inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3813 is shown in the following table. 
The impacts of this legislation fall within all functions of 
the budget.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      By fiscal year, in millions of dollars--
                                                  ----------------------------------------------------------------------------------------------------------------------------------------------
                                                      2012       2013       2014       2015       2016       2017       2018       2019       2020       2021       2022    2012-2017  2012-2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      CHANGES IN REVENUESa

Estimated Revenues...............................          0      1,163      2,342      3,470      3,977      4,305      4,664      5,060      5,465      5,898      5,807     10,951     42,151

                                                                                   CHANGES IN DIRECT SPENDINGb

Estimated Budget Authority.......................          0        -24        -89       -134       -176       -213       -242       -266       -298       -338       -390       -636     -2,169
Estimated Outlays................................          0        -24        -89       -134       -176       -213       -242       -266       -298       -338       -390       -636     -2,169

                                                    NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES

Impact on Deficit................................          0     -1,187     -2,430     -3,604     -4,153     -4,518     -4,906     -5,325     -5,763     -6,235     -6,197    -15,893    -44,320

                                                                          CHANGES IN SPENDING SUBJECT TO APPROPRIATIONb

Estimated Authorization Level....................          0     -1,175     -2,353     -3,478     -3,986     -4,315     -4,676     -5,074     -5,481     -5,916     -5,827    -15,306    -42,281
Estimated Outlays................................          0     -1,175     -2,353     -3,478     -3,986     -4,315     -4,676     -5,074     -5,481     -5,916     -5,827    -15,306    -42,281
Memorandum:
    Reduction in Offsetting Receipts Resulting             0      1,175      2,353      3,478      3,986      4,315      4,676      5,074      5,481      5,916      5,827     15,306    42,281
     from Lower Employer Contributionsc..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office and Joint Committee on Taxation.
a. For revenues, positive numbers indicate a decrease in the deficit.
b. For direct spending and changes in spending subject to appropriation, negative numbers indicate a decrease in the deficit.
c. Employer contributions are intragovernmental transactions that do not affect the deficit; positive numbers indicate a decrease in offsetting receipts.

    Basis of estimate: CBO estimates that H.R. 3813 would 
increase revenues by $42 billion over the 10-year period, 
stemming mostly from changes to the retirement contribution 
rates for federal employees ($43 billion), offset slightly by 
lower revenues ($367 million) from a proposal to allow 
employees to contribute any payment received for accumulated 
annual leave to their TSP accounts.
    Proposed reductions in the rates that agencies pay into the 
Civil Service Retirement and Disability Fund (CSRDF) on behalf 
of their employees would reduce spending subject to 
appropriations by $42 billion over the 2012-2022 period, CBO 
estimates; those lower payments from agencies would also reduce 
the amount of offsetting receipts received by the CSRDF; 
together those changes would have no impact on the deficit. 
However, since discretionary spending is currently subject to 
caps through 2021 (as specified in the Budget Control Act of 
2011--Public Law 112-25) and the legislation does not reduce 
those caps, CBO assumes the reductions in such spending would 
not result in a net decrease in discretionary funding.
    CBO also estimates that H.R. 3813 would reduce direct 
spending by $2 billion over the 2012-2022 period, as a result 
of eliminating the FERS annuity supplement for certain 
employees who retire before the age of 62 ($1.9 billion) and 
because of proposed changes to the retirement formula for 
federal employees ($274 million).

Changes in employee and agency contributions

    H.R. 3813 would increase the required contribution rate 
paid by federal employees and Members of Congress (in both CSRS 
and FERS) for their retirement by 1.5 percent of salary, phased 
in over three years (0.5 percent per year), beginning in 
January 2013. Under current law, most CSRS employees contribute 
7 percent of their salary towards retirement and most FERS 
employees contribute 0.8 percent. The proposed rate increase 
would apply to all employees and Members with 5 or more years 
of federal service as of January 1, 2013.
    For employees and Members who begin service on that date or 
later and have less than five years of prior federal service, 
H.R. 3813 would create a new retirement category of ``secure 
annuity employees.'' Such employees would be subject to a 
different contribution rate than CSRS and FERS employees: 
secure annuity employees would be required to pay 4 percent of 
their salary towards retirement (under current law this group 
would pay 0.8 percent of salary). A rate of 4.5 percent would 
apply to certain occupational groups--such as law enforcement 
officers, firefighters, air traffic controllers and nuclear 
materials couriers--who receive a higher pension benefit (the 
rate for this group under current law is 1.3 percent of 
salary).
    For the purposes of this estimate, CBO assumes that the 
current population of approximately 2.8 million federal 
employees will be maintained throughout the period. As 
employees in place as of January 1, 2013, retire or otherwise 
withdraw from federal service, CBO assumes they would be 
replaced, in equal number, by secure annuity employees. The 
estimated annual rate of attrition for the group in place as of 
January 2013 increases from 17 percent in 2013 to 22 percent by 
2022 for CSRS employees. The attrition rate for FERS employees 
is lower, ranging from 5 percent to 13 percent over the same 
time period, because of differences in the average age of each 
group.
    H.R. 3813 specifies that the following additional 
retirement systems must conform with the provisions outlined in 
the legislation: the Foreign Service Retirement System, the 
Central Intelligence Agency Retirement and Disability System, 
and any defined benefit program that covers employees of the 
Tennessee Valley Authority.
    Contributions by federal employees for their retirement are 
shown as revenues to the federal government; CBO estimates that 
the increase in the contribution rates proposed in H.R. 3813 
would boost revenues by $43 billion over the 2012-2022 period.
    Federal agencies are also required to make contributions 
toward their employees' retirement. For each of the proposed 
rate increases for employees described above, H.R. 3813 would 
make a corresponding reduction in the rate required to be paid 
by the employing agencies. Reducing the employer contribution 
rates would lower spending subject to appropriation by $42 
billion over the 2012-2022 period.\1\ However, this bill--or 
any legislation that would reduce the funds available for a 
particular discretionary program or that would achieve savings 
by undertaking a particular discretionary activity--would only 
reduce projected total appropriations if the caps on 
discretionary spending were also lowered. Without a reduction 
in the caps, CBO assumes funding for other discretionary 
programs would fill the gap created by the specific reduction 
or savings.
---------------------------------------------------------------------------
    \1\The estimated reduction in spending subject to appropriation 
(from decreased employer contributions) does not exactly equal the 
increase in revenues (from increased employee contributions) because 
the Tennessee Valley Authority (TVA) does not receive funding through 
the appropriations process.
---------------------------------------------------------------------------

Changes to the retirement annuity formula

    For secure annuity employees, H.R. 3813 would make changes 
to the formula used to calculate retirement benefits. Instead 
of calculating benefits based on an employee's highest three 
consecutive years of salary, as under current law, the bill 
would calculate benefits based on the highest five consecutive 
years of salary. In addition, the multiplier used in the 
annuity calculation would be reduced by 0.3 percentage points, 
from 1.0 percent to 0.7 percent of salary, for most 
employees.\2\ (Special occupational groups have a higher 
multiplier under current law, but would face the same 
proportional reduction under H.R. 3813.) The proposed changes 
in the multiplier and average pay calculations would reduce 
retirement annuities relative to current law. However, CBO 
expects that only a small number of secure annuity employees 
would retire in the 2012-2022 period; we estimate that the 
resulting drop in direct spending would total $274 million over 
that 10-year period.
---------------------------------------------------------------------------
    \2\The formula for calculating retirement benefits for most secure 
annuity employees under H.R. 3813 would be: average high-5 salary * 
number of years of service * 0.7.
---------------------------------------------------------------------------

Eliminate the FERS annuity supplement

    Under current law, certain FERS employees who retire before 
the age of 62 receive a supplement to their annuity that is 
intended to equal what they would receive from the Social 
Security Administration if they were eligible for Social 
Security benefits at the time of retirement. The supplement 
ends when the retiree turns 62 or becomes eligible to receive 
actual Social Security benefits. H.R. 3813 would eliminate that 
supplement for all FERS employees other than law enforcement 
officers, fire fighters, air traffic controllers and nuclear 
materials couriers who retire after December 31, 2012. 
Approximately 7,600 new retirees (that are not on the list of 
exceptions listed above) each year receive an annual supplement 
of just under $8,000 (inflated in future years to account for 
increased salaries). As a result, CBO estimates that this 
provision will lower direct spending by $1.9 billion over the 
2012-2022 period.

Leave payout contributions to the Thrift Savings Plan

    H.R. 3813 would allow any employee of the federal 
government who is eligible to make contributions to the TSP to 
contribute to it any payment received for accumulated annual 
leave. Such contributions would be subject to the annual limits 
that otherwise apply--annual contributions are currently 
limited to $17,000 for individuals ages 49 or younger and 
$22,500 for individuals ages 50 or older.
    Because income taxes are deferred on contributions to 
regular (non-Roth) TSP accounts, and earnings within the 
accounts would not be taxable, the anticipated increase in 
contributions would initially result in lower revenues from 
income taxes. The staff of the Joint Committee on Taxation 
estimates that the legislation would reduce revenues by $367 
million over the 2012-2022 period.
    Pay-as-you-go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.
    Estimated Impact on State, Local, and Tribal Governments: 
H.R. 3813 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments.

                     CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3813, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT AFFAIRS ON FEBRUARY 7, 2012
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      By fiscal year, in millions of dollars--
                                                  ----------------------------------------------------------------------------------------------------------------------------------------------
                                                      2012       2013       2014       2015       2016       2017       2018       2019       2020       2021       2022    2012-2017  2012-2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact...................          0     -1,187     -2,430     -3,604     -4,153     -4,518     -4,906     -5,325     -5,763     -6,235     -6,197    -11,375    -44,320
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated impact on the private sector: The bill would 
impose a private-sector mandate on federal workers under FERS 
who are eligible by December 31, 2012 to retire and receive an 
annuity supplement and were not going to do so. The cost of the 
mandate would be the income some employees would forego as a 
result of losing the option to retire at a later date and draw 
the annuity supplement. Because of a lack of information about 
the potential behavioral responses of individuals to such a 
change, CBO cannot determine whether the cost of the mandate 
would exceed the annual threshold established in UMRA for 
private-sector mandates ($146 million in 2012, adjusted 
annually for inflation).
    Estimate prepared by: Federal Costs: Amber G. Marcellino; 
Impact on Federal Revenues: Joint Committee on Taxation; Impact 
on State, Local, and Tribal Governments: Elizabeth Cove-
Delisle; Impact on the Private Sector: Paige Piper/Bach.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 5, UNITED STATES CODE




           *       *       *       *       *       *       *
PART III--EMPLOYEES

           *       *       *       *       *       *       *


SUBPART G--INSURANCE AND ANNUITIES

           *       *       *       *       *       *       *


CHAPTER 83--RETIREMENT

           *       *       *       *       *       *       *



SUBCHAPTER III--CIVIL SERVICE RETIREMENT

           *       *       *       *       *       *       *



Sec. 8334. Deductions, contributions, and deposits

  (a)(1)(A) * * *
  (B)(i) [Except as provided in clause (ii),] Except as 
provided in clause (ii) or (iii), an equal amount shall be 
contributed from the appropriation or fund used to pay the 
employee or, in the case of an elected official, from an 
appropriation or fund available for payment of other salaries 
of the same office or establishment. When an employee in the 
legislative branch is paid by the Chief Administrative Officer 
of the House of Representatives, the Chief Administrative 
Officer may pay from the applicable accounts of the House of 
Representatives the contribution that otherwise would be 
contributed from the appropriation or fund used to pay the 
employee.

           *       *       *       *       *       *       *

  (iii) The amount to be contributed under clause (i) shall, 
with respect to a period in any year beginning after December 
31, 2012, be equal to--
          (I) the amount which would otherwise apply under 
        clause (i) with respect to such period, reduced by
          (II) the amount by which, with respect to such 
        period, the withholding under subparagraph (A) exceeds 
        the amount which would otherwise have been withheld 
        from the basic pay of the employee or elected official 
        involved under subparagraph (A) based on the percentage 
        applicable under subsection (c) for calendar year 2012.

           *       *       *       *       *       *       *

  [(c) Each] (c)(1) Each employee or Member credited with 
civilian service after July 31, 1920, for which retirement 
deductions or deposits have not been made, may deposit with 
interest an amount equal to the following percentages of his 
basic pay received for that service:


------------------------------------------------------------------------
                           Percentage of basic pay     Service period
------------------------------------------------------------------------
Employee                   2 1/2                    August 1, 1920, to
                                                     June 30, 1926.
                           3 1/2                    July 1, 1926, to
                                                     June 30, 1942.
                           5                        July 1, 1942, to
                                                     June 30, 1948.
                           6                        July 1, 1948, to
                                                     October 31, 1956.
                           6 1/2                    November 1, 1956, to
                                                     December 31, 1969.
                           7                        January 1, 1970, to
                                                     December 31, 1998.
                           7.25                     January 1, 1999, to
                                                     December 31, 1999.
                           7.4                      January 1, 2000, to
                                                     December 31, 2000.
                           7                        After December 31,
                                                     2000.
Member or employee for     2 1/2                    August 1, 1920, to
 Congressional employee                              June 30, 1926.
 service
                           3 1/2                    July 1, 1926, to
                                                     June 30, 1942.
                           5                        July 1, 1942, to
                                                     June 30, 1948.
                           6                        July 1, 1948, to
                                                     October 31, 1956.
                           6 1/2                    November 1, 1956, to
                                                     December 31, 1969
                           7.5                      January 1, 1970, to
                                                     December 31 1998.
                           7.75                     January 1, 1999, to
                                                     December 31, 1999.
                           7.9                      January 1, 2000, to
                                                     December 31, 2000.
                           7.5                      After December 31,
                                                     2000.
Member for Member service  2 1/2                    August 1, 1920, to
                                                     June 30, 1926.
                           3 1/2                    July 1, 1926, to
                                                     June 30, 1942.
                           5                        July 1, 1942, to
                                                     August 1, 1946.
                           6                        August 2, 1946, to
                                                     October 31, 1956.
                           7 1/2                    November 1, 1956, to
                                                     December 31, 1969.
                           8                        January 1, 1970, to
                                                     December 31, 1998.
                           8.25                     January 1, 1999, to
                                                     December 31, 1999.
                           8.4                      January 1, 2000, to
                                                     December 31, 2000.
                           8.5                      January 1, 2001, to
                                                     December 31, 2002.
                           8                        After December 31,
                                                     2002.
Law enforcement officer    2 1/2                    August 1, 1920, to
 for law enforcement                                 June 30, 1926.
 service, member of the
 Supreme Court Police for
 Supreme Court Police
 service, and firefighter
 for firefighter service
                           3 1/2                    July 1, 1926, to
                                                     June 30, 1942.
                           5                        July 1, 1942, to
                                                     June 30, 1948.
                           6                        July 1, 1948, to
                                                     October 31, 1956.
                           6 1/2                    November 1, 1956, to
                                                     December 31, 1969.
                           7                        January 1, 1970, to
                                                     December 31, 1974.
                           7.5                      January 1, 1975, to
                                                     December 31, 1998.
                           7.75                     January 1, 1999, to
                                                     December 31, 1999.
                           7.9                      January 1, 2000, to
                                                     December 31, 2000.
                           7.5                      After December 31,
                                                     2000.
Bankruptcy judge           2 1/2                    August 1, 1920, to
                                                     June 30, 1926.
                           3 1/2                    July 3, 1926, to
                                                     June 30, 1942.
                           5                        July 1, 1942, to
                                                     June 30, 1948.
                           6                        July 1, 1948, to
                                                     October 31, 1956.
                           6 1/2                    November 1, 1956, to
                                                     December 31, 1969.
                           7                        January 1, 1970, to
                                                     December 31, 1983.
                           8                        January 1, 1984, to
                                                     December 31, 1998.
                           8.25                     January 1, 1999, to
                                                     December 31, 1999.
                           8.4                      January 1, 2000, to
                                                     December 31, 2000.
                           8                        After December 31,
                                                     2000.
Judge of the United        6                        May 5, 1950, to
 States Court of Appeals                             October 31, 1956.
 for the Armed Forces for
 service as a judge of
 that court
                           6 1/2                    November 1, 1956, to
                                                     December 31, 1969.
                           7                        January 1, 1970, to
                                                     (but not including)
                                                     the date of the
                                                     enactment of the
                                                     Department of
                                                     Defense
                                                     Authorization Act,
                                                     1984
                           8                        The date of
                                                     enactment of the
                                                     Department of
                                                     Defense
                                                     Authorization Act,
                                                     1984, to December
                                                     31, 1998.
                           8.25                     January 1, 1999, to
                                                     December 31, 1999.
                           8.4                      January 1, 2000, to
                                                     December 31, 2000.
                           8                        After December 31,
                                                     2000.
United States Magistrate   2 1/2                    August 1, 1920, to
 judge                                               June 30, 1926.
                           3 1/2                    July 1, 1926, to
                                                     June 30, 1942.
                           5                        July 1, 1942, to
                                                     June 30, 1948.
                           6                        July 1, 1948, to
                                                     October 31, 1956.
                           6 1/2                    November 1, 1956, to
                                                     December 31, 1969.
                           7                        January 1, 1970, to
                                                     September 30, 1987.
                           8                        October 1, 1987, to
                                                     December 31, 1998
                           8.25                     January 1, 1999, to
                                                     December 31, 1999.
                           8.4                      January 1, 2000, to
                                                     December 31, 2000.
                           8                        After December 31,
                                                     2000.
Court of Federal Claims    2 1/2                    August 1, 1920, to
 Judge                                               June 30, 1926.
                           3 1/2                    July 1, 1926, to
                                                     June 30, 1942.
                           5                        July 1, 1942, to
                                                     June 30, 1948.
                           6                        July 1, 1948, to
                                                     October 31, 1956.
                           6 1/2                    November 1, 1956, to
                                                     December 31, 1969.
                           7                        January 1, 1970, to
                                                     September 30, 1988.
                           8                        October 1, 1988, to
                                                     December 31, 1998.
                           8.25                     January 1, 1999, to
                                                     December 31, 1999.
                           8.4                      January 1, 2000, to
                                                     December 31, 2000.
                           8                        After December 31,
                                                     2000.
Member of the Capitol      2.5                      August 1, 1920, to
 Police                                              June 30, 1926.
                           3.5                      July 1, 1926, to
                                                     June 30, 1942.
                           5                        July 1, 1942, to
                                                     June 30, 1948.
                           6                        July 1, 1948, to
                                                     October 31, 1956.
                           6.5                      November 1, 1956, to
                                                     December 31, 1969.
                           7.5                      January 1, 1970, to
                                                     December 31, 1998.
                           7.75                     January 1, 1999, to
                                                     December 31, 1999.
                           7.9                      January 1, 2000, to
                                                     December 31, 2000.
                           7.5                      After December 31,
                                                     2000
Nuclear materials courier  7                        October 1, 1977 to
                                                     October 16, 1998.
                           7.5                      October 17, 1998 to
                                                     December 31, 1998.
                           7.75                     January 1, 1999 to
                                                     December 31, 1999.
                           7.9                      January 1, 2000 to
                                                     December 31, 2000.
                           7.5                      After December 31,
                                                     2000.
Customs and border         7.5                      After June 29, 2008.
 protection officer
------------------------------------------------------------------------

  (2) Notwithstanding any other provision of this subsection, 
the applicable percentage of basic pay under this subsection 
shall, for purposes of computing an amount--
          (A) for a period in calendar year 2013, 2014, or 
        2015, be equal to the applicable percentage under this 
        subsection for the preceding calendar year (including 
        as increased under this paragraph, if applicable), plus 
        an additional 0.5 percentage point; and
          (B) for a period in any calendar year after 2015, be 
        equal to the applicable percentage under this 
        subsection for calendar year 2015 (as determined under 
        subparagraph (A)).

           *       *       *       *       *       *       *


Sec. 8351. Participation in the Thrift Savings Plan

  (a) * * *
  (b)(1) * * *
  [(2)(A) An employee or Member may contribute to the Thrift 
Savings Fund in any pay period any amount not exceeding the 
maximum percentage of such employee's or Member's basic pay for 
such pay period allowable under subparagraph (B).]
  (2)(A) An employee or Member may contribute to the Thrift 
Savings Fund in any pay period any amount of such employee's or 
Member's basic pay for such pay period, and may contribute (by 
direct transfer to the Fund) any part of any payment that the 
employee or Member receives for accumulated and accrued annual 
or vacation leave under section 5551 or 5552. Notwithstanding 
section 2105(e), in this paragraph the term ``employee'' 
includes an employee of the United States Postal Service or of 
the Postal Regulatory Commission.
  [(B) The maximum percentage allowable under this subparagraph 
shall be determined in accordance with the following table:


------------------------------------------------------------------------
    [In the case of a pay period       The maximum percentage allowable
     beginning in fiscal year:                       is:
------------------------------------------------------------------------
2001                                 6
2002                                 7
2003                                 8
2004                                 9
2005                                 10
2006 or thereafter                   100.]
------------------------------------------------------------------------

  [(C)] (B) Notwithstanding any limitation under this 
paragraph, an eligible participant (as defined by section 
414(v) of the Internal Revenue Code of 1986) may make such 
additional contributions to the Thrift Savings Fund as are 
permitted by such section 414(v) and regulations of the 
Executive Director consistent therewith.

           *       *       *       *       *       *       *


            CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec. 8401. Definitions

  For the purpose of this chapter--
          (1) * * *

           *       *       *       *       *       *       *

          (3)(A) the term ``average pay'' means the largest 
        annual rate resulting from averaging an employee's or 
        Member's rates of basic pay in effect over any 3 
        consecutive years of service or, in the case of an 
        annuity under this chapter based on service of less 
        than 3 years, over the total service, with each rate 
        weighted by the period it was in effect; except that
          (B) in the case of a secure annuity employee, the 
        term ``average pay'' has the meaning determined 
        applying subparagraph (A)--
                  (i) by substituting ``5 consecutive years'' 
                for ``3 consecutive years''; and
                  (ii) by substituting ``5 years'' for ``3 
                years''.

           *       *       *       *       *       *       *

          (35) the term ``air traffic controller'' or 
        ``controller'' means--
                  (A) * * *
                  (B) a civilian employee of the Department of 
                Transportation or the Department of Defense who 
                is the immediate supervisor of a person 
                described in section 2109(1)(B); [and]
          (36) the term ``customs and border protection 
        officer'' means an employee in the Department of 
        Homeland Security (A) who holds a position within the 
        GS-1895 job series (determined applying the criteria in 
        effect as of September 1, 2007) or any successor 
        position, and (B) whose duties include activities 
        relating to the arrival and departure of persons, 
        conveyances, and merchandise at ports of entry, 
        including any such employee who is transferred directly 
        to a supervisory or administrative position in the 
        Department of Homeland Security after performing such 
        duties (as described in subparagraph (B)) in 1 or more 
        positions (as described in subparagraph (A)) for at 
        least 3 years[.]; and
          (37) the term ``secure annuity employee'' means an 
        employee or Member who--
                  (A) first becomes subject to this chapter 
                after December 31, 2012; and
                  (B) at the time of first becoming subject to 
                this chapter, does not have at least 5 years of 
                civilian service creditable under the Civil 
                Service Retirement System or any other 
                retirement system for Government employees.

           *       *       *       *       *       *       *


SUBCHAPTER II--BASIC ANNUITY

           *       *       *       *       *       *       *


Sec. 8415. Computation of basic annuity

  [(a) Except as otherwise provided in this section, the 
annuity of an employee retiring under this subchapter is 1 
percent of that individual's average pay multiplied by such 
individual's total service.
  [(b) The annuity of a Member, or former Member with title to 
a Member annuity, retiring under this subchapter is computed 
under subsection (a), except that if the individual has had at 
least 5 years of service as a Member or Congressional employee, 
or any combination thereof, so much of the annuity as is 
computed with respect to either such type of service (or a 
combination thereof), not exceeding a total of 20 years, shall 
be computed by multiplying 1 7/10 percent of the individual's 
average pay by the years of such service.
  [(c) The annuity of a Congressional employee, or former 
Congressional employee, retiring under this subchapter is 
computed under subsection (a), except that if the individual 
has had at least 5 years of service as a Congressional employee 
or Member, or any combination thereof, so much of the annuity 
as is computed with respect to either such type of service (or 
a combination thereof), not exceeding a total of 20 years, 
shall be computed by multiplying 1 7/10 percent of the 
individual's average pay by the years of such service.
  [(d) The annuity of an employee retiring under subsection (d) 
or (e) of section 8412 or under subsection (a), (b), or (c) of 
section 8425 is--
          [(1) 1 7/10 percent of that individual's average pay 
        multiplied by so much of such individual's total 
        service as does not exceed 20 years; plus
          [(2) 1 percent of that individual's average pay 
        multiplied by so much of such individual's total 
        service as exceeds 20 years.
  [(e) The annuity of an air traffic controller or former air 
traffic controller retiring under section 8412(a) is computed 
under subsection (a), except that if the individual has had at 
least 5 years of service as an air traffic controller as 
defined by section 2109(1)(A)(i), so much of the annuity as is 
computed with respect to such type of service shall be computed 
by multiplying 1 7/10 percent of the individual's average pay 
by the years of such service.]
  (a) Except as otherwise provided in this section, the annuity 
of an employee retiring under this subchapter is--
          (1) in the case of an employee other than a secure 
        annuity employee, 1 percent of that individual's 
        average pay multiplied by such individual's total 
        service; and
          (2) in the case of an employee who is a secure 
        annuity employee, 0.7 percent of that individual's 
        average pay multiplied by such individual's total 
        service.
  (b)(1) The annuity of a Member, or former Member with title 
to a Member annuity, retiring under this subchapter is computed 
under subsection (a)(1), except that if the individual has had 
at least 5 years of service as a Member or Congressional 
employee, or any combination thereof, so much of the annuity as 
is computed with respect to either such type of service (or a 
combination thereof), not exceeding a total of 20 years, shall 
be computed by multiplying 1.7 percent of the individual's 
average pay by the years of such service.
  (2) The annuity of a Member, or former Member with title to a 
Member annuity, retiring under this subchapter is, if the 
individual is or was a secure annuity employee, computed--
          (A) under subsection (a)(2); and
          (B) disregarding paragraph (1) of this subsection.
  (c)(1) The annuity of a Congressional employee, or former 
Congressional employee, retiring under this subchapter is 
computed under subsection (a)(1), except that if the individual 
has had at least 5 years of service as a Congressional employee 
or Member, or any combination thereof, so much of the annuity 
as is computed with respect to either such type of service (or 
a combination thereof), not exceeding a total of 20 years, 
shall be computed by multiplying 1.7 percent of the 
individual's average pay by the years of such service.
  (2) The annuity of a Congressional employee, or former 
Congressional employee, retiring under this subchapter is, if 
the individual is or was a secure annuity employee, computed--
          (A) under subsection (a)(2); and
          (B) disregarding paragraph (1) of this subsection.
  (d) The annuity of an employee retiring under subsection (d) 
or (e) of section 8412 or under subsection (a), (b), or (c) of 
section 8425 is--
          (1) in the case of an individual other than a secure 
        annuity employee--
                  (A) 1.7 percent of that individual's average 
                pay multiplied by so much of such individual's 
                total service as does not exceed 20 years; plus
                  (B) 1 percent of that individual's average 
                pay multiplied by so much of such individual's 
                total service as exceeds 20 years; and
          (2) in the case of an individual who is a secure 
        annuity employee--
                  (A) 1.4 percent of that individual's average 
                pay multiplied by so much of such individual's 
                total service as does not exceed 20 years; plus
                  (B) 0.7 percent of that individual's average 
                pay multiplied by so much of such individual's 
                total service as exceeds 20 years.
  (e) The annuity of an air traffic controller or former air 
traffic controller retiring under section 8412(a) is computed 
under subsection (a)(1), except that if the individual has had 
at least 5 years of service as an air traffic controller as 
defined by section 2109(1)(A)(i), so much of the annuity as is 
computed with respect to such type of service shall be 
computed--
          (1) in the case of an individual other than a secure 
        annuity employee, by multiplying 1.7 percent of the 
        individual's average pay by the years of such service; 
        and
          (2) in the case of an individual who is a secure 
        annuity employee, by multiplying 1.4 percent of the 
        individual's average pay by the years of such service.

           *       *       *       *       *       *       *

  (h)(1) In applying [subsection (a)] subsection (a)(1) with 
respect to an employee under paragraph (2), the percentage 
applied under such subsection shall be 1.1 percent, rather than 
1 percent.
  (2) This subsection applies in the case of an employee who--
          (A) * * *

           *       *       *       *       *       *       *

but does not apply in the case of a Congressional employee, 
military technician (dual status), law enforcement officer, 
member of the Supreme Court Police, firefighter, nuclear 
materials courier, air traffic controller, [or customs and 
border protection officer] customs and border protection 
officer, or secure annuity employee.

           *       *       *       *       *       *       *


Sec. 8421. Annuity supplement

  (a)(1) Subject to [paragraph (3)] paragraphs (3) and (4), an 
individual shall, if and while entitled to an annuity under 
subsection (a), (b), (d), or (e) of section 8412, or under 
section 8414(c), also be entitled to an annuity supplement 
under this section.
  (2) Subject to [paragraph (3)] paragraphs (3) and (4), an 
individual shall, if and while entitled to an annuity under 
section 8412(f), or under subsection (a) or (b) of section 
8414, also be entitled to an annuity supplement under this 
section if such individual is at least the applicable minimum 
retirement age under section 8412(h).

           *       *       *       *       *       *       *

  (4)(A) Except as provided in subparagraph (B), no annuity 
supplement under this section shall be payable in the case of 
an individual whose entitlement to annuity is based on such 
individual's separation from service after December 31, 2012.
  (B) Nothing in this paragraph applies in the case of an 
individual separating under subsection (d) or (e) of section 
8412.

           *       *       *       *       *       *       *


Sec. 8422. Deductions from pay; contributions for other service; 
                    deposits

  (a)(1) * * *

           *       *       *       *       *       *       *

  [(3) The] (3)(A) The applicable percentage under this 
paragraph for civilian service shall be as follows:


------------------------------------------------------------------------

------------------------------------------------------------------------
Employee                 7                        January 1, 1987, to
                                                   December 31, 1998.
                         7.25                     January 1, 1999, to
                                                   December 31, 1999.
                         7.4                      January 1, 2000, to
                                                   December 31, 2000.
                         7                        After December 31,
                                                   2000.
Congressional employee   7.5                      January 1, 1987, to
                                                   December 31, 1998.
                         7.75                     January 1, 1999, to
                                                   December 31, 1999.
                         7.9                      January 1, 2000, to
                                                   December 31, 2000.
                         7.5                      After December 31,
                                                   2000.
Member                   7.5                      January 1, 1987, to
                                                   December 31, 1998.
                         7.75                     January 1, 1999, to
                                                   December 31, 1999.
                         7.9                      January 1, 2000, to
                                                   December 31, 2000.
                         8                        January 1, 2001, to
                                                   December 31, 2002.
                         7.5                      After December 31,
                                                   2002.
Law enforcement          7.5                      January 1, 1987, to
 officer, firefighter,                             December 31, 1998.
 member
of the Capitol Police,   7.75                     January 1, 1999, to
 member of                                         December 31, 1999.
the Supreme Court        7.9                      January 1, 2000, to
 Police, or air                                    December 31, 2000.
traffic controller       7.5                      After December 31,
                                                   2000.
Nuclear materials        7                        January 1, 1987, to
 courier                                           October 16, 1998.
                         7.5                      October 17, 1998, to
                                                   December 31, 1998.
                         7.75                     January 1, 1999, to
                                                   December 31, 1999.
                         7.9                      January 1, 2000, to
                                                   December 31, 2000.
                         7.5                      After December 31,
                                                   2000.
Customs and border       7.5                      After June 29, 2008.
 protection officer
------------------------------------------------------------------------

  (B) Notwithstanding any other provision of this paragraph and 
except in the case of a secure annuity employee, the applicable 
percentage under this paragraph shall, for purposes of 
computing any amount--
          (i) for a period in calendar year 2013, 2014, or 
        2015, be equal to the applicable percentage under this 
        paragraph for the preceding calendar year (including as 
        increased under this subparagraph, if applicable), plus 
        an additional 0.5 percentage point; and
          (ii) for a period in any calendar year after 2015, be 
        equal to the applicable percentage under this paragraph 
        for calendar year 2015 (as determined under clause 
        (i)).
  (C) Notwithstanding any other provision of this paragraph, in 
the case of a secure annuity employee, the applicable 
percentage under this paragraph shall--
          (i) in the case of a secure annuity employee who is 
        an employee, Congressional employee, or Member, be 
        equal to 10.2 percent; and
          (ii) in the case of a secure annuity employee who is 
        a law enforcement officer, firefighter, member of the 
        Capitol Police, member of the Supreme Court Police, air 
        traffic controller, nuclear materials courier, or 
        customs and border protection officer, be equal to 10.7 
        percent.

           *       *       *       *       *       *       *


SUBCHAPTER III--THRIFT SAVINGS PLAN

           *       *       *       *       *       *       *


Sec. 8432. Contributions

  (a)[(1) An employee or Member may contribute to the Thrift 
Savings Fund in any pay period, pursuant to an election under 
subsection (b), an amount not to exceed the maximum percentage 
of such employee's or Member's basic pay for such pay period 
allowable under paragraph (2). Contributions under this 
subsection pursuant to such an election shall, with respect to 
each pay period for which such election remains in effect, be 
made in accordance with a program of regular contributions 
provided in regulations prescribed by the Executive Director.
  [(2) The maximum percentage allowable under this paragraph 
shall be determined in accordance with the following table:


------------------------------------------------------------------------
    [In the case of a pay period       The maximum percentage allowable
     beginning in fiscal year:                       is:
------------------------------------------------------------------------
2001                                 11
2002                                 12
2003                                 13
2004                                 14
2005                                 15
2006 or thereafter                   100.]
------------------------------------------------------------------------

  (1) An employee or Member--
          (A) may contribute to the Thrift Savings Fund in any 
        pay period, pursuant to an election under subsection 
        (b), any amount of such employee's or Member's basic 
        pay for such pay period; and
          (B) may contribute (by direct transfer to the Fund) 
        any part of any payment that the employee or Member 
        receives for accumulated and accrued annual or vacation 
        leave under section 5551 or 5552.
  (2) Contributions made under paragraph (1)(A) pursuant to an 
election under subsection (b) shall, with respect to each pay 
period for which such election remains in effect, be made in 
accordance with a program of regular contributions provided in 
regulations prescribed by the Executive Director.

           *       *       *       *       *       *       *

  (4) Notwithstanding section 2105(e), in this subsection the 
term ``employee'' includes an employee of the United States 
Postal Service or of the Postal Regulatory Commission.

           *       *       *       *       *       *       *

                              ----------                              


                 TENNESSEE VALLEY AUTHORITY ACT OF 1933



           *       *       *       *       *       *       *
  Sec. 3. (a) * * *

           *       *       *       *       *       *       *

  (c) The chief executive officer shall prescribe any 
regulations which may be necessary in order to carry out the 
purposes of the Securing Annuities for Federal Employees Act of 
2012 with respect to any defined benefit plan covering 
employees of the Tennessee Valley Authority.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    Committee Democrats strongly oppose H.R. 3813, the Securing 
Annuities for Federal Employees Act of 2012, as ordered 
reported by the Committee on February 7, 2012.
    Federal workers are the backbone of our government. They 
support our troops in the battlefield and provide care upon 
their return. They protect our borders, safeguard our food 
supply, ensure that our seniors' social security checks are 
disbursed, and help hunt down terrorists like Osama bin Laden. 
They carry out each and every federal program, service, and 
initiative.
    In return for their hard work and dedication, the majority 
has rewarded federal workers with an unprecedented assault on 
their compensation and benefits, including proposals to extend 
their current two-year pay freeze, to arbitrarily cut the 
number of federal employees, and now to slash their retirement 
benefits. H.R. 3813 breaks the promises made to federal workers 
and undermines morale, recruitment, and retention.
    According to the Congressional Budget Office, H.R 3813 
would take more than $45 billion out of the pockets of millions 
of middle-class American workers over the next ten years.\1\ 
This is in addition to the $60 billion that federal workers are 
already contributing as a result of the existing two-year pay 
freeze. While the majority would have federal workers 
contribute more than $100 billion toward reducing the nation's 
deficit, they have refused to ask the wealthiest Americans to 
sacrifice even a penny toward this goal.
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    \1\Letter from Douglas W. Elmendorf, Director, Congressional Budget 
Office, to Rep. Dave Camp, Chairman, Committee on Ways and Means (Dec. 
9, 2011) (online at www.cbo.gov/ftpdocs/126xx/docl2609/hr3630.pdf).
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    One of the most damaging aspects of H.R. 3813 is its 
provision eliminating FERS annuity supplements for workers who 
plan to retire beginning in 2013. Annuity supplements are 
payments intended to make up for amounts employees would 
receive as Social Security payments if they retire before 
becoming eligible for Social Security. Eliminating this benefit 
would throw into chaos the longstanding retirement plans of 
federal workers who have dedicated decades of service to this 
country.
    During a hearing before the Federal Workforce Subcommittee, 
the majority's own witness, Andrew Biggs, Research Scholar at 
the American Enterprise Institute, made exactly this point. He 
testified:

          Benefits already accrued should not be altered. Those 
        benefits have been promised and earned, and the 
        obligation to pay them should be honored.\2\
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    \2\Andrew G. Biggs, Ph.D., Statement Before the House Committee on 
Oversight and Government Reform, Subcommittee on Federal Workforce, 
U.S. Postal Service and Labor Policy, Hearing on ``Retirement 
Readiness: Strengthening the Federal Pension System'' (Jan. 25, 2012).

    The National Treasury Employees Union estimates that 
eliminating this benefit for the average employee eligible to 
retire at 55 would result in the ``loss of over $65,000 over 
seven years.''\3\
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    \3\Letter from Colleen M. Kelly, National President, National 
Treasury Employees Union, to Members of Congress (Feb. 6, 2012).
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    Many federal employees have been working for up to 30 years 
with the expectation of receiving this benefit, and many of 
them elected to switch out of CSRS and into FERS based on the 
promise of receiving these payments. For example, John Kelshaw, 
an employee working in the IRS' appeals office in New Jersey, 
started out as a CSRS employee, but switched over to FERS 
partly because of the promised supplement. In speaking on the 
unfairness of the proposed pension rule modification, Mr. 
Kelshaw stated, ``I have kept up my end of the bargain, but 
Congress wants to change the rules now.'' As Mr. Kelshaw 
stated, ``a promise made should be a promise kept.''\4\
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    \4\Rep. Gerry Connolly, NTEU Blast Bill Cutting Feds' Retirements, 
Federal Times (Feb. 6, 2012) (http://blogs.federaltimes.com/federal-
times-blog/2012/02/06/rep-gerry-connolly-nteu-blast-bill-cutting-feds-
retirements/).
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    Although Congressman Davis offered an amendment to strike 
this provision, the majority rejected it.
    H.R. 3813 would also negatively affect millions of middle-
class American workers by cutting by 1.5% the government 
portion of retirement contributions for federal employees 
covered by CSRS and FERS. The bill would force these employees 
to increase their own contributions by the same amount. These 
cuts would be phased in over three years, beginning in 2013, 
with a 0.5% decrease each year. These changes would also apply 
to Members of Congress, congressional staff, and employees of 
the U.S. Postal Service, Foreign Service, CIA, and Tennessee 
Valley Authority.
    Finally, the bill would negatively affect new employees. It 
would create a separate retirement system for ``secure annuity 
employees,'' which would include new employees and Members, as 
well as returning employees or Members with fewer than five 
years of prior federal service. Those employees would face a 
decrease of 3.2% compared to current government pension 
contributions; pensions based on the highest five years' 
average salary, rather than the current high three; and 
reductions in the pension formula multiplier to 0.7% of average 
pay. Law enforcement officers, firefighters, and air traffic 
controllers would receive a reduction in the multiplier from 
1.7% to 1.4%. Current law provides a 1% multiplier for federal 
employees and a 1.7% multiplier for Members of Congress and 
congressional staff. The cumulative effect of these changes is 
that newly hired federal employees would contribute 
significantly more for an annuity worth roughly 40% less than 
under existing law.\5\
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    \5\Letter from Joseph A. Beaudoin, President, National Active and 
Retired Federal Employees Association, to the House Committee on 
Oversight and Government Reform (Feb. 7, 2012).
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    Although Congressman Kucinich offered an amendment to 
strike these provisions, the majority rejected them.
    During the Committee's consideration of H.R. 3813, Ranking 
Member Cummings offered several amendments intended to prevent 
the most destructive cuts in the legislation from being applied 
to low and middle income workers. He offered one amendment that 
would have prevented these cuts from applying to federal 
workers who make less than $100,000, and he offered a second 
amendment to protect federal workers who make less than 
$30,000. The majority rejected both amendments.
    Congressman Lynch offered an amendment that would have 
deferred these cuts while federal workers continue to operate 
under an existing pay freeze. As he and others explained, it 
would be unfair to require federal workers to pay more toward 
their retirement benefits while effectively reducing the value 
of their compensation through a multi-year pay freeze, a result 
that would constitute a double hit to employee paychecks. This 
amendment was also rejected.
    The Committee did approve one amendment offered by 
Congressman Lynch that would allow federal and postal employees 
enrolled in CSRS or FERS to deposit unused annual or vacation 
leave into their TSP accounts upon retirement. This change 
would be consistent with changes adopted by the IRS in 2009 for 
private sector 401(k) plans and would ensure parity between 
federal and private sector retirement plans. It would also 
allow federal employees to rebuild their TSP accounts to make 
up for losses from the recession and from the reductions in pay 
and benefits that would result from implementation of this 
bill.
    Throughout debate on this legislation, the majority failed 
to offer any legitimate rationale for why these cuts are 
necessary or for what purpose the resulting savings would be 
used. After the Committee approved the bill, the House 
Republican leadership indicated that it intends to use the 
savings generated by this legislation not for deficit reduction 
efforts, but to pay for unrelated surface transportation and 
highway projects.
                                                Elijah E. Cummings.

                                  
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