The Congressional Pension Plan
October 21st, 2007By popular request, I’m doing a post explaining the Congressional Pension Plan. As you may not know, Congresspeople get an alternate to Social Security. They get their own Pension, if they serve in Congress five years or more.
Now, you may see that as a catch, but it’s not. Once in, it’s easy to get re-elected. In fact, over 90% of incumbents (those in Congress already) get re-elected. In some years, it’s significantly higher. For example, in 1998, it was 98%.
This is how it works. After serving in Congress for five years, you can start collecting at 62 years of age. If you have twenty years of service, you can start collecting at 50. With twenty-five years, you can retire at any time.
Congress members only have to waste half of the normal money paying into Social Security. The rest of the money is theirs to keep. Instead, they get this alternate Pension Plan where as of 2002, the average Congressperson got paid between $41k and $55k. On top of that, they get a sort of 401k plan where their employer (us) matches five percent.
To make it more confusing, Congresspeople before 1984 paid into the Civil Service Retirement System (CSRS) and now pay into the newer Federal Employees’ Retirement System (FERS).
This may not seem like a huge chunk of money, but it is. Let’s take a Congressman who was making $153,900 and worked for 22 years. His pension is $84,645 a year after he retires. Can you retire on that? Keep in mind, that doesn’t include his 401k, of which we matched him the first five percent he contributed.
Of course, if you only served three terms (six years), you’ll make a lot less, but you’ll make a decent chunk of change considering you get the Pension, the 401k matched at five percent, and whatever else you were doing before and after you served in Congress.
So why does Congress have any incentive to fix Social Security? You tell me. All I know is now I want to serve in Congress for three terms.
gees, i had no idea. yeah they are out of touch with reality.
Lime - I don’t know if they’re out of touch, or they don’t care.
I wonder if it would be political suicide to run on a platform to make Congress men and women actually rely on Social Security and dump the Congressional Pension Plan. I’d love to see someone do it - make that as their primary platform. Wonder what would happen.
Wow. I agree with Lime and JJ they need to see what its like knowing you have to live off your what ever a person can save and your 401K plans and such. They have it so nicely done for them they dont know there heads from there —–.LOL…
To go along with JJ’s idea - and put whatever monies is in their private plan into Social Security where it might benefit a less-paid person.
I didn’t realize they had that option. Meanwhile, those of use who are relatively young are paying into a system that probably will not be available to us when we retire. The baby boomers are starting to retire now. Do we even have the manpower to keep up? It’s pretty doubtful. At any rate, because things are so messed up, we’ve pretty much figured that we won’t have SS and have planned for our own retirement.
JJ - Do it! You have the time and money.
Tweety - If they knew what average people go through, I think this would be a much better country.
Kathleen - Agreed.
Notta - We’re actually doing the same thing. I’m not even factoring Social Security into my retirement. I’d strongly advise other people our ages to do the same.
I’m totally not counting on Social Security for my retirement. A friend of mine nagged me most of this year and I finally started a Roth IRA. I feel so grown-up. I also figure that the chances of me being able to afford to retire are slim to none - ah well!
“So why does Congress have any incentive to fix Social Security?”
You’re right about this, but in truth there is no motivation for Congress or any branch of government to ever do anything beneficial to society. Their is only motivation to get votes, not serve.
Kathleen - Put as much as you can into it every year. Retirement for people our age is going to be significantly harder than those a generation before us, I can almost guarantee that.
Scott - True.
Pretty nifty retirement plan, wouldn’t you say? Also while they are in office they get a pretty hefty chunk of change to run their office, all paid for by us as well. Finally they can vote themselves a pay raise every year if they so desire.
Wouldn’t it be nice to just walk into your bosses office and say, “I am giving myself a 15% pay raise and I need a budget of, oh say $20k a year to mangage my family and pay for gas and maintenance on my truck.”
These guys all talk a good game and are as slick as snake oil salesmen but if you do your research you can catch them in their lies. I have called my Congressman on his lies, as well as Senator Feinstein. I don’t get responses to those letters. Wonder why…