Congressional Pensions Explained

Recently I wrote a column about health insurance benefits for members of Congress and how much of what the public believes on the subject is not true

Quite a few readers sent me emails asking that I explain the Congressional pension plan — another subject where there is all kinds of misinformation floating around.

Here are the basics:

Members of Congress (House and Senate) take part in a defined benefit plan (once retired, they receive a specific monthly benefit based on years of service). They do not retire at full pay and their pension is a contributory plan — that is, they have a significant amount deducted from their salary each month to help defray the cost of their pension benefits. This defined benefit plan is comparable to pensions offered by big companies like General Motors except that in some instances the companies underwrite the entire cost of the plan.

Members of Congress are eligible for one of two plans, depending on when they were first elected. Members elected before 1983 take part in the CSRS plan which has more generous defined benefits. Members elected after 1983 take part in the FERS plan available to all federal employees. It has a smaller defined benefit but a more generous 401(k) (described more fully below).

Members under the old CSRS plan receive a pension equal to 2.5 percent of their highest salary for each year of service. Thus, a member who serves 10 years would receive a pension equal to 25 percent of his salary. Members under the new FERS plan receive pension equal to 1.5 percent of their highest salary for each year of service. Thus a Member serving 10 years would receive a pension equal to 15 percent of his salary.

In addition, all members, starting in 1983, now pay into Social Security and receive Social Security benefits. For members under the old CSRS plan, their Social Security benefits are offset (subtracted from) their pension. For members under the new FERS plan, there is no Social Security offset. It is not unusual for retired workers to receive a pension from their private employer and to also receive Social Security. Somehow, many people think members of Congress should not be eligible for the exact same treatment that employees in private industry receive.

Members under the old more generous CSRS plan are eligible for participation in a separate 401(k) plan under which a certain amount is deducted from their salary each month and is not taxed until after they retire. This 401(k) deduction is not matched by their employer, the federal government. Members under the new FERS plan also can take part in a 401(k) plan and they receive a partial match from their employer.

Generally, members are not eligible to receive their pension until age 60 and their pensions vest after five years of service.

I know this is a lot of information but don’t be afraid of being armed with the facts. The misconceptions that float around on the internet — retirement at full pay after one term and no payment into Social Security — are false and unfair to public servants who devote a significant amount of their lives to making this a better country.

Having said all this, I realize that some people will resent the fact that members of the House and Senate receive any pension at all. I can’t do anything for people who take this view.

I can, however, give you information about what is true and what is false. You can then at least make a rational judgment on whether or not you approve of the Congressional pension system. Improvements can be made. Convicted criminals like former Rep. Duke Cunningham (R-Calif.) should forfeit their pensions when they are convicted of felonies like taking a bribe.

Also, it is legitimate to question whether or not these pensions should be indexed for inflation each year. Many private pensions are not indexed though military pensions and Social Security are.

I hope this answers your questions.

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Martin Frost served in Congress from 1979 to 2005, representing a diverse district in the Dallas-Ft. Worth area. He served two terms as chairman of the House Democratic Caucus, the third-ranking leadership position for House Democrats, and two terms as chairman of the Democratic Congressional Campaign Committee. Frost serves as a regular contributor to FOX News Channel and is a partner at the law firm of Polsinelli, Shalton, Flanigan and Suelthaus. He holds a Bachelor of Journalism degree from the University of Missouri and a law degree from the Georgetown Law Center.