US Senator Mike Rounds’ Weekly Column – Fact vs. Fiction: Congressional Pensions

Rounds Logo 2016 MikeRounds official SenateFact vs. Fiction: Congressional Pensions
By Senator Mike Rounds

 

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.

###

7 thoughts on “US Senator Mike Rounds’ Weekly Column – Fact vs. Fiction: Congressional Pensions

  1. Anonymous

    Wow so you get almost thirty grand a year for a six year term.Why dont you put a bill in like that for everyone in their job .So are you a one term senator just to get the pension then.

    1. Troy Jones

      Can you read? It says one gets such a pension after serving 10 years in Congress. Senators only serve 6 year terms.

      Secondly, they get the same retirement system of all federal employees.

      Third, (while I agree with the change), the changes in 2012 turned the Congressional members contribution into a subsidy of the entire system for two reasons:

      1) Many members don’t serve 10 years and thus get a discounted retirement relative to the actuarial contribution they make.

      2) Many members stay in office beyond normal retirement age and don’t get the retirement benefits upon which their contribution is based.

      You really should find more legitimate reasons to express your hatred of Rounds.

    2. Jim K

      This is not the same as a federal employee pension, it is either way more generous or is wrong. The current FERs system is 1% for each year of service. Doing the math, a ‘hi three’ of $174,000 x 10% is $17,400. Then there would be a 5% per year penalty for having less than 20 years service and being less than age 62. 17,400 x 10% is 1,740 which is subtracted from the 17,400. This means the pension under these conditions for a federal employee would be $15,660, only about have of what the senator says he would get. The senator needs to check his facts or find someone that can do basic math.

  2. Anonymous

    So how much will Mike get for a six year term, a subsidy by the tax payers of South Dakota , and the rest of the country.

  3. Troy Jones

    You really are goofy.

    If Sen. Rounds serves as long as Tim Johnson is now getting, he will get the same retirement.

    But, to your point, I guess we could cut their pay and retirement so a higher percentage of Congress is rich and serving is less attractive for middle class candidates.