Congressional pensions fall on high end of scale

Some members of Congress haven’t been shy about criticizing underfunded state and local pension plans, even though they themselves enjoy much heftier retirement packages than most private-sector employees and state workers do.

Budget battles in Illinois, New Jersey, Ohio and Wisconsin have captured headlines of late as lawmakers struggle over how to pay retirement benefits for state and local government workers. Some Washington lawmakers have jumped into the national debate.

Loading...

Comments

• Weigh In
• Corrections?

Personal Post

In a recent speech to South Carolina Republicans, for example, Rep. Michele Bachmann (R-Minn.) said, “We’ve got to get real about what we can and cannot afford” in state pensions.

On the other side, Ohio Democratic Sen. Sherrod Brown linked opponents of public-sector unions to Nazi Germany.

For all the theater, members of Congress, regardless of party, aren’t saying much about their own retirement plans, which are much more generous than those held by most Americans. In fairness, the nation’s lawmakers carry out responsibilities more comparable to top corporate executives than those of average workers, but there’s no available data on CEOs’ retirement packages, which often feature forms of compensation other than pensions, such as stock options.

Lawmakers also pay less into their pensions, and get a better match from taxpayers, than most state employees do across the nation.

“They still reserve to themselves a more generous formula than rank-and-file members of the federal government,” said Peter Sepp, executive vice president of the National Taxpayers Union, which long has charged that U.S. lawmakers’ retirement benefits are too generous.

Since 1984, members of Congress have enjoyed both a defined-benefit plan and a defined-contribution plan. The defined-benefit plan gives them a fixed pension in retirement that’s scaled to their number of years in office.

By McClatchy Newspapers’ calculation, 13 sitting senators and 31 members of the House of Representatives — about 8 percent of the Congress — have served at least 25 years and accrued annual pensions worth at least $50,000. By comparison, for average U.S. retirees 65 or older who receive private pension payments, the median annual amount is $8,016, according to the nonpartisan Employee Benefits Research Institute.

As long as they’ve served five years, lawmakers can collect their pensions starting at age 62; if they’ve served 20 years, they can collect them at age 50; and if they’ve served 25 years, they can collect them no matter how old they are. Their annual pension annuities cannot exceed 80 percent of their final salaries.

Only 30 percent of active workers in the country had defined-benefit plans last year like the one available to lawmakers, according to the Employee Benefits Research Institute.

Lawmakers also can contribute up to $16,500 every year to a 401(k) retirement plan on a tax-deferred basis, or about 9.5 percent of their pay. Taxpayers match them up to the first 5 percent of a representative’s or senator’s salary, which has been $174,000 since 2009.