Tags: Congress | pension | benefits | retirement

Congress Keeps its Lucrative Retirement Benefits

By    |   Friday, 15 March 2013 12:45 PM

While Congressmen are busy cutting government spending, they’re not busy cutting spending on their own retirement packages.

While more Americans are seeing defined-benefit pension plans disappear, Congressmen remain covered by pensions. And they get larger retirement benefits than most Americans do, including most other federal government employees.

“It’s not keeping pace with what’s happening in the private sector,” Veronique de Rugy, a senior researcher with George Mason University’s Mercatus Center, told CNBC. “It’s not sustainable.”

Editor's Note:
Economist Warns: 50% Unemployment, 100% Inflation Possible

Congressmen elected after 1986 can receive Social Security, a 401(k) with 5 percent of contributions matched up to $17,500 and a pension through the Federal Employees’ Retirement System (FERS), according to CNBC.

A Congressman retiring at age 62 after 10 years of service would receive a retirement benefit of $26,600 in the first year of retirement, Pete Sepp, executive vice president of the National Taxpayers Union, told CNBC. That compares with a first-year retirement benefit of $15,600 for an executive branch employee with the same age and length of service

Proponents of the current system argue that elected officials have less job security. But Sepp points out that cabinet secretaries hold their posts for less than eight years.

Even some Congressmen object to the pension. Reps. Mike Coffman, R-Colo., and Jared Polis, D-Colo., have proposed a bill 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 401(k),” Coffman said in a statement earlier this year.

Former Congressmen are among the federal employees receiving pensions over $100,000 a year, according to Bloomberg. About one out of every 125 retired federal employees receives over $100,000 in benefits a year.

Meanwhile, the federal pension system expects a $674.2 billion shortfall.

About half of all private-sector workers don’t have a retirement plan except for Social Security, Bloomberg reports, citing figures from the Employee Benefit Research Institute. About 16 percent have pensions guarantee payouts based on workers’ earnings.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

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While Congressmen are busy cutting government spending, they’re not busy cutting spending on their own retirement packages.
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Friday, 15 March 2013 12:45 PM
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