Joined: Mar 17, 2005
Location: Staten Island
|Posted: Wed Nov 14, 2007 7:15 pm Post subject: CONGRESS AND SOCIAL SECURITY
From Wed Nov 14, 2007 3:00 am to Mon Nov 19, 2007 2:59 am (included)
|In response to an e-mail that has been circulating for a while. This is the true story about Congress and although it is a much better deal then any of us will see it is still not as outrageous as the circulated e-mail made it out to be.
The information below is from snopes.com C-SPAN and the National Taxpayers Union
Do Members of Congress Pay Social Security Taxes?
Lawmakers do pay 8 percent of their salaries into their pension system, although this only compensates for about 1/5 of the typical lifetime benefit. We cover the rest as taxpayers.
Member of Congress began to pay into Social Security in 1983, as part of a government-wide pension overhaul.
In addition, Members of Congress DO NOT draw the “same pension” as their pay in the last year of office, only federal judges do that under the term “retirement pay.” Still, the formula is quite generous, and, with 20-25 years, a Member of Congress could retire with up to 80 percent of his or her salary replaced. Of course, the only cap on how fast their benefits rise is the rate of increase in CPI. For this reason, Congressional pensions can and frequently do exceed a Member’s final salary, but only after a few years in retirement, when COLAS begin to kick in.
Members who were elected after 1984 are automatically part of the FERS, or Federal Employees' Retirement System. Members elected before 1984 were in the CSRS, or Civil Service Retirement System. In 1984, those Members in CSRS had to choose to remain with CSRS, or switch to FERS. The Members elected before 1984 could further choose between full CSRS benefits, plus Social Security or CSRS benefits offset by Social Security.
A further variant in the amount of retirement benefits received is whether or not Members under either system choose to participate in the voluntary Thrift Savings Plan (TSP) open to all federal employees. Members under CSRS may contribute up to 5% of their salary and FERS Members 10% of their salary into this tax-deferred retirement investment fund. The differential favoring FERS Members is because pension benefits paid out under the old CSRS system are higher than those paid out under the current FERS system.
Both CSRS and FERS have differing formulas combining age and service factors which further affect how much a specific Member's pension will pay out. Therefore, the only solid averages concerning benefit payments are those that come from the just over 400 retired Members now actually drawing pensions.
The average annuity for retired Members, as of 1998, was either $50,616 [for those that retired under CSRS] or $46,908 [for Members that retired under FERS]. However, these averages don't take into account any additional funds these Members may have also accrued through investments in the Thrift Savings Plan described above.
Congressional pensions are funded the same way as those of other federal employees: through a combination of general tax provisions and contributions from the participants. Members of Congress in the FERS plan must pay 1.3% of their salary to FERS and 6.2% in Social Security taxes.
For more detailed information concerning pension benefits and age and service formulas under both CSRS and FERS, I recommend you obtain a copy of "Retirement Benefits for Members of Congress", a report by Patrick Purcell of the Congressional Research Service. [CRS Report RL30631, July 31, 2000]. CRS reports are free, but can only be obtained by requesting them through the office of a Member of Congress.
In the final analysis, Congressional pension benefits are 2-3 times more generous than what a similarly-salaried executive could expect to receive upon retiring from the private sector. That ought to be enough to concern any taxpayer.