Thursday, April 23, 2009

Myths about Congressional Retirement

There are so many emails going around the Internet right now complaining about government, and that's understandable. I'm mad, too! However, I also want to argue with the facts, not myths or rumors. Much of what you read is simply not true, and we appear ignorant and lose credibility if we spout information that is just wrong. I always try to check these emails by doing a simple search to find more reliable information. I also check Snopes.com, which is a web site set up just to check the facts behind "urban myths." I highly recommend it.

Just today, I got an email about the "outlandish" retirement benefits received by our United States congressmen. I checked it out, and it was way off base. Here is an excerpt from a government site that explains the benefits paid to Congressmen.

"Congress: Benefits

You may have read that Members of Congress do not pay into Social Security. Well, that's a myth.

Prior to 1984, neither Members of Congress nor any other federal civil service employee paid Social Security taxes. Of course, the were also not eligible to receive Social Security benefits. Members of Congress and other federal employees were instead covered by a separate pension plan called the Civil Service Retirement System (CSRS). The 1983 amendments to the Social Security Act required federal employees first hired after 1983 to participate in Social Security. These amendments also required all Members of Congress to participate in Social Security as of January 1, 1984, regardless of when they first entered Congress. Because the CSRS was not designed to coordinate with Social Security, Congress directed the development of a new retirement plan for federal workers. The result was the Federal Employees' Retirement System Act of 1986.

Members of Congress receive retirement and health benefits under the same plans available to other federal employees. They become vested after five years of full participation.

Members elected since 1984 are covered by the Federal Employees' Retirement System (FERS). Those elected prior to 1984 were covered by the Civil Service Retirement System (CSRS). In 1984 all members were given the option of remaining with CSRS or switching to FERS.

As it is for all other federal employees, congressional retirement is funded through taxes and the participants' contributions. Members of Congress under FERS contribute 1.3 percent of their salary into the FERS retirement plan and pay 6.2 percent of their salary in Social Security taxes.

Members of Congress are not eligible for a pension until they reach the age of 50, but only if they've completed 20 years of service. Members are eligible at any age after completing 25 years of service or after they reach the age of 62. Please also note that Member's of Congress have to serve at least 5 years to even receive a pension.

The amount of a Congressperson's pension depends on the years of service and the average of the highest 3 years of his or her salary. By law, the starting amount of a Member's retirement annuity may not exceed 80% of his or her final salary.

According to the Congressional Research Service, 413 retired Members of Congress were receiving federal pensions based fully or in part on their congressional service as of Oct. 1, 2006. Of this number, 290 had retired under CSRS and were receiving an average annual pension of $60,972. A total of 123 Members had retired with service under both CSRS and FERS or with service under FERS only. Their average annual pension was $35,952 in 2006."

Doug and I are well aware of the CSRS plan because that is what Doug is covered by as a former federal employee. The government really pushed him to change to the newer FERS plan in 1983, and boy is he glad he didn't! He would have lost much of his retirement in this bear stock market like so many others have. Instead, he has a regular pension. Pensions are almost a thing of the past, with 401K plans taking their place. Many people are now putting off retirement because those plans have taken such a hit in the market.