25 Years After Federal Pension Reform
June 23, 2011
As various states grapple with reforming their public employee pension systems, the experience of how the federal government managed pension reform 25 years ago may provide some useful background to governors and state legislatures.
The nonpartisan Employee Benefit Research Institute (EBRI), in its July EBRI Issue Brief, takes a look at how the federal government handled pension reform and the political and legislative forces involved when Congress enacted the Federal Employees Retirement System Act of 1986.
The legislative history of the five-year effort to pass FERS, as the system is known, is written by Jamie Cowen, who served as chief counsel of the Senate Governmental Affairs Subcommittee on Civil Service, and who played a key role in passing FERS. After more than two decades, the law has changed little, and remains the basis for retirement benefits provided to some 3 million civilian federal employees.
FERS contained the most sweeping overhaul of retirement benefits for civilian workers in recent history, and resulted in large part from the need to shore up the Social Security system by broadening its base (by mandating coverage of the federal civilian work force), along with pressure from then-President Ronald Reagan to reduce federal spending. The success of the law can be seen in the fact that, in the current debate over cutting federal spending, no sweeping proposals have been made to cut federal retirement benefits (although there is a proposal to raise workers’ contributions to their retirement plan).