Thursday, August 29, 2013

Let's phase out the FERS annuity

Over at The Corner, I offer a suggestion for how budget negotiators can cut spending while inflicting minimal pain: Phase out the traditional pension (the "FERS annuity") for federal employees. They will still have a generous 401k-style plan, and their overall compensation will remain above market levels.
With both a government shutdown and a potential default looming this fall, Congress and the White House are gearing up for another round of budget negotiations. In searching for ways to save, both sides should take a close look at federal-employee benefits.

Federal employees receive greater compensation than comparably skilled private-sector workers. Reducing federal compensation to market levels should therefore have only a minimal effect on recruitment and retention of qualified workers. It would save money without a significant reduction in services.

But what is the best way to pursue reform?
Read the rest here. And for lots of data comparing federal and private compensation, see my 2011 report coauthored with AEI's Andrew Biggs.

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