By Andrew Mitchell
Federal News Radio

Sen. Barbara Mikulski is calling on Treasury Secretary Timothy Geithner to protect federal employee pensions in the face of the nation’s budgetary woes.

In a press release issued today, the Maryland Democrat divulged the contents of a letter she sent Geithner urging him to make every effort to block a current proposal to increase the amount that federal employees contribute to their own pension fund.

Presently workers who are covered by the Federal Employees Retirement System contribute only 0.8 percent of their salaries to their own pension fund. That amount, according to a proposal under consideration in Congress, would increase to 5.8 percent.

Mikulski says in her letter to Geithner that this proposal “would essentially lead to a 5 percent pay cut” for federal employees.

But in an appearance on this week’s edition of For Your Benefit, heard on Federal News Radio, registered employee benefit consultant Ed Zurndorfer pointed out that the proposal calls for the contribution to be made on an after-tax basis.

This means that you would pay tax on that additional 5 percent of your income that would now be deducted from your paycheck as a FERS contribution.

So, in reality, “you’re getting a 9 to 10 percent pay cut,” Zurndorfer said.

The proposal to raise federal employees’ contributions to FERS, while it is part of a package being considered by the budget committee headed by Republican Rep. Paul Ryan, was first crafted by the Washington think tank Third Way.

There are signs that the Obama administration is also sympathetic to the idea.

Mikulski, in her letter to Geithner, also expressed concern that the federal employee pension funds are being used to prop up the government’s finances in the period leading up to the raising of the nation’s debt limit.

“Right now,” Mikulski wrote, “the Department of Treasury is borrowing billions from these workers as part of a series of emergency measures to prevent the catastrophic consequences of hitting the debt ceiling.”

She noted that this is the fifth time in 15 years that this has occurred.

“Each time,” she wrote, “federal employees are told, ‘Don’t worry, your retirement savings aren’t at risk.'”

“But Congress has tested the faith of our federal workers repeatedly,” she said.

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