Weekly Column: Fact vs. Fiction: Congressional Pensions

I often have South Dakotans ask me if Members of Congress get special retirement benefits that other citizens don’t receive. This is largely due to myths and misinformation distributed over the Internet, which greatly distorts the truth about these benefits. Specifically, they ask if senators and representatives are exempt from Social Security and can retire after serving just a few years and receive their full paycheck for the rest of their life. The answer, simply, is no.

The first myth that Members of Congress don’t have to pay into Social Security is false. While it is true that prior to 1984 they didn’t pay Social Security taxes, they also weren’t eligible to receive Social Security benefits. Today all senators and representatives are required to pay them. The Social Security tax rate for 2015 was 6.2 percent of the first $118,000 of one’s salary, which is taken directly out of the paychecks of all Americans, including senators and representatives. Members of Congress are also subject to the same benefit eligibility and payment formulas as all other Social Security recipients across the country. 

Another myth I hear is that when Members of Congress leave office, they continue to receive their same pay for the rest of their lives. This is also false. When Members lose an election, retire or resign from office, they no longer receive a salary, period. However, if they are eligible, they may receive benefits under the Federal Employees’ Retirement System (FERS). FERS is the retirement plan offered to all federal employees in the United States and is made up of three components: a defined benefit plan, mandatory participation in Social Security and a defined contribution plan similar to a 401(k). The benefits offered through FERS are comparable to the retirement plans South Dakotans receive in the private sector.

Legislation passed by Congress in 2012 made additional changes to FERS for Members of Congress. According to the non-partisan Congressional Research Service, the legislation decreased the benefit accrual rate for Members of Congress covered under FERS to make it equal to the accrual rate for all other federal employees. The previous pension plan was designed to provide a larger benefit for each year of service to Members of Congress—more than regular federal employees. Second, it required all Members, including myself, who pay into FERS to increase their contributions to 4.4 percent of their total pay.

So what does all of this mean in actual numbers? Today, for example, under the FERS retirement program, a rank-and-file 60-year-old Member of Congress retiring this year after 10 years of service, earning a $174,000 annual wage during his or her three consecutive highest earning years, would receive an annual pension of approximately $29,580. This doesn’t include deductions for federal or income taxes, but it may periodically include a cost-of-living adjustment, a common tool used to protect against inflation.

I hope this helps set the record straight for those who continue to hear myths about lavish retirement plans for Members of Congress. The truth is, our retirement plan is not much different from the retirement plans of other South Dakotans. And that is how it should be.

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