Slashing Retirement Benefits

A bill introduced last week by Sens. Tom Coburn, R-Okla., and Richard Burr, R-N.C., would end the defined benefit pension of the Federal Employees Retirement System for new federal hires starting in 2013.

The legislation (S. 644) -- the Public-Private Employee Retirement Parity Act -- would leave in place other components of FERS, such as Social Security and access to the Thrift Savings Plan with a government match in contributions of up to 5 percent.

The bill would not affect current federal employees and retirees as well as those hired in 2011 and 2012. The legislation also would apply to new members of Congress in 2013 and after.

The lawmakers argue that federal pensions should be more in line with the private sector, where the average employee gets a 401(k) plan with a 3 percent employer match and no pension.

"Right now, federal government workers receive far more generous retirement benefits than private sector employees," Burr said. "The cost to taxpayers of these benefits is unsustainable and we simply cannot afford it. We cannot ask taxpayers to continue to foot the bill for public employee benefits that are far more generous than their own."

So what would the government be up against in the IT sector if it slashed retirement benefits? At Google, employees can contribute up to 60 percent and receive a match of up to the greater of: 100 percent of an employee's contribution up to $3,000, or 50 percent of their contribution up to $8,250 per year. Microsoft also has a 401(k) plan that includes a company match on contributions as well as a program that allows employees to buy shares of Microsoft stock at a discount.

What impact would the bill have on the recruitment of the next generation of federal workers, many of whom are slated to replace the thousands projected to retire in the coming years? Could slashing federal retirement benefits -- often are touted as some of best perks of government work -- put the government at a serious disadvantage when competing for workers, particularly in IT?