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How a Congress member's retirement package compares to yours

US Capitol building
Members of Congress can retire younger, having contributed fewer of their own dollars, than almost any worker in the country — even more than the generous terms other federal workers get.JEWEL SAMAD / AFP - Getty Images file

While extending the payroll tax cut through the end of last year, members of Congress last fall took what many feel was a long overdue whack at the cost of their retirement plan. They bumped up the share that their pension plan will take, saving taxpayers $15 billion.

They also made sure that none of it applied to themselves. Anyone elected before the law went into effect would pay in at the old rate.

For all the talk you hear from Capitol Hill about running government more like a business, Congress has a retirement plan that would make any Fortune 500 executive blush. Members can retire younger, having contributed fewer of their own dollars, than almost any worker in the country—even more than the generous terms other federal workers get.

"It's not keeping pace with what's happening in the private sector," said Veronique de Rugy, a senior researcher with George Mason University's Mercatus Center. "It's not sustainable."

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It's inaccurate, in fact, to refer a single retirement plan, since any senator or representative elected after 1986 has access to three: Social Security, a 401(k) program that matches 5 percent of their contributions up to $17,500, and a defined-benefit pension called the Federal Employees' Retirement System (FERS), which as the name implies covers anyone paid from the federal till.

FERS alone is a plan any worker would envy. As Jim Kessler, co-founder of the think tank Third Way and a former congressional aide, said, "It's not wrong to have three plans, but the matching is one-to-one for two of them and the other [FERS] is one-to-14."

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As a result, all federal employees get a return on their contributions at a rate that's almost double what other workers do. (See chart.) But thanks to a faster accrual rate on their savings — 1.7 percent as opposed to 1 percent for everyone else — members of Congress get an even better payout than other federal workers, even though their contributions are higher.


According to calculations by Pete Sepp, executive vice president of the National Taxpayers Union, who has been tracking congressional benefits for decades, an executive branch employee with 10 years of service and is retiring at age 62 this year would begin his pension at roughly $15,600. But a member of Congress of identical age, salary and service would begin at approximately $26,600, reflecting his higher contribution. But for his extra $11,000 in the first year's benefit, the lawmaker will have contributed only $8,350 more to the plan.

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Defenders of the system point out that elected politicians have less job security than appointees like our executive branch worker. Sepp doesn't buy it. "Not only do you get a lot more in benefits for the extra you pay," he said, "but how many Cabinet secretaries stay in government for even eight years?" The average recipient of FERS annuities served nearly 16 years, according to a recent report by the Congressional Research Service.

As traditional pensions become a thing of the past for most workers, some critics say congressional retirement plans are not only too numerous and too generous, but the wrong kind. One of them is Republican Rep. Mike Coffman, who has put forward a bill with a fellow Coloradan, Democrat Jared Polis, that would end FERS.

"It makes no sense for Congress to continue to reward itself using taxpayer dollars, with a defined benefit plan when ... much of the country has moved to a defined contribution plan like a 401K," Coffman said in a statement earlier this year.

But as Washington is consumed with the sequester, the chances that Coffman's bill, or the $25 million we spend to support our congressional retirees, will get much notice. More pundits have teed off on the fact that our senators and representatives—the very people charged with averting the automatic cuts to the federal budget—are among the few federal employees who won't be touched by them.

Congress didn't enjoy plush pensions until 1946, when it was thought that a gold-plated plan would induce members to cede their seats to young men who had been galvanized by the war. But if the current deal is no longer gold-plated, said Sepp, "it's silver-plated, and it hasn't been attractive enough to get them rotated out of office."

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