Mandatory Spending
Function 600 - Income Security
Reduce the Amounts of Federal Pensions
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
| Billions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2015-2019 | 2015-2024 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change in Outlays | ||||||||||||||
| Military retirement | 0 | * | -0.1 | -0.1 | -0.2 | -0.2 | -0.3 | -0.5 | -0.5 | -0.6 | -0.3 | -2.5 | ||
| CSRS and FERS | 0 | * | -0.1 | -0.1 | -0.2 | -0.3 | -0.4 | -0.5 | -0.6 | -0.8 | -0.4 | -3.1 | ||
| Total | 0 | * | -0.1 | -0.2 | -0.4 | -0.6 | -0.7 | -1.0 | -1.2 | -1.3 | -0.8 | -5.6 | ||
Notes: This option would take effect in January 2016. Estimates are relative to CBO’s August 2014 baseline projections.
* = between -$50 million and zero; CSRS = Civil Service Retirement System; FERS = Federal Employees Retirement System.
In fiscal year 2013, the federal government paid pension benefits of about $75 billion to civilian retirees and their survivors and roughly $55 billion to military retirees and their survivors. For civilian retirees, the size of an individual’s annuity is based on the average of his or her earnings over the three consecutive years with the highest earnings. Similarly, the size of a military retiree’s annuity is based on the average of his or her basic pay (not including special types of pay and allowances) over the 36 months of his or her career with the highest pay. This option would use a five-year average for civilian retirees and a 60-month average for military retirees—instead of the three-year and 36-month averages used under current law—to compute benefits for federal workers who retire beginning in January 2016.