Instant full-pay pensions, Cadillac benefit plans, no Social Security enrollment – there are a lot of rumors floating around the web as to perks lavished on members of Congress. First let's address the pension misconception. Members of Congress elected after 1984 are covered by the Federal Employees Retirement System. They are fully vested once they've served 5 years, but that doesn't mean they get “full pay.”

Their “full retirement” is based on a number of factors including length of service, as well as options that they select when enrolling. They must be 62 before they can begin receiving the benefits, 50 if they've served 20 years and benefits can be received at any time after retirement, regardless of age, if they've served 25 years. The typical pension range is between $35-60,000 and by law cannot exceed 80 percent of whatever their pay was at the time they retired. Serving the minimum five years will only secure an annual pension of around $15,000 once the retiree reaches 62.

Not that that's anything to sneeze at. Military service members have to serve a full 20 years to get a dime of retirement pay and even then it's only 40 percent of their base pay (about a quarter of what they typically earned in service). The Congressional pension benefit also has automatic cost-of-living adjustments, which only 1 in 10 private sector retirements feature. Members of Congress only have to contribute 1.3 percent of their salary to FERS. Also, as federal employees, they can contribute up to 10 percent of their pay (with a 5 percent match) to what amounts to a sweet 401k plan.

Perhaps the most egregious part of the congressional pension is the fact that even criminals get to keep it. Whereas many public sector retirements can be lost for certain offenses, a federal pension can only be revoked if that employee is found guilty of treason, perjury or trading secrets with the enemy! When Democratic Congressman James Traficant was convicted of bribery and a host of other related charges in the early 1980's, he was evicted from Congress, but allowed to keep his pension. A bill to prevent expelled members from collecting their pension benefit was proposed, stalled and then dropped in committee.

When Republican Congressman Randy "Duke" Cunningham admitted to taking millions in bribes from defense contractors in 2005, and was also allowed to keep his pension, another law sought to expand the revocation to include bribery of public officials or witnesses, conspiracy to commit offense or to defraud the United States, perjury while denying the commission of bribery or conspiracy, or subornation of perjury committed in connection with false denial or false testimony of another individual. Congress has proven equally reluctant to police themselves this time around. The bill, originally introduced by Senator John Kerry in 2006, passed the Senate 87-0 before quietly dying in committee the way bills that politicians don't want to be caught voting against, yet don't want to pass, often have a way of doing. It's been reintroduced several times since, including this year, but still remains in legislative Purgatory where it is expected to meet the same fate once more.

 

Social Security

Yes, all members of Congress do pay into Social Security and are eligible to receive benefits (though they are offset against their federal pension benefit), despite persistent internet rumors and urban myths stating otherwise. The confusion is related to the Civil Service Retirement System that covered many federal employees from its inception in 1920 and ran parallel to Social Security until 1984. In January of 1984, all members of Congress, the President and Vice President, Federal judges, etc. were moved over to Social Security and have been there since. There are still some federal employees, hired before 1984, that are not enrolled in Social Security, but none are members of Congress.

 

Health Care

While health care is not free, it is pretty plush. There are a variety of PPO and HMO health care plans available to Congress and their families, as well as other federal employees. The government's contribution is the lesser of 1.) 72 percent of the overall weighted average, or 2.) 75 percent of the total individual or family premium for the plan they select. There are options for health, vision, dental, life, long term care, etc. Like the retirement plan, it is generally much better than what the vast majority of Americans in the private sector get, where increasingly, employers have reduced their contribution percentage, especially for family members enrolled in an employee's plan.

While health insurance for Congress is not totally free and is available to other federal employees, House and Senate members are uniquely eligible to receive care at military hospitals. For outpatient procedures, there is no charge at the Walter Reed National Military Medical Center (WRNMMC) in nearby Bethesda, MD. They can also visit the Office of the Attending Physician of the U.S. Capitol for certain outpatient services (with referral to WRNMMC for inpatient), if they pay a modest annual fee of around $500.

 

Pay

Then there's the pay, which in 2011 is $174,000 for rank and file, $193,400 for Majority and Minority Party Leaders in both chambers, and $223,500 for Speaker of the House. That's up from $98,400 in 1990 and there's a good reason. Since 1989, salaries have been set to an automatic annual increase in order to spare them the politically awkward effort of voting themselves more pay hikes, especially in times like this when their approval rating is at historic lows and they're busy cutting payments to anyone else. They can vote to block the scheduled jump, which they did in 2010 and 2011, after a healthy raise during the financial crisis of 2009 sparked public outcry. Don't feel too bad though, 46 percent of Congressional members are millionaires (perhaps why they're so averse to taxing them), as opposed to 1 percent of the general population. And that's before they use the connections they've made in Washington to pull down big bucks in the private sector for industries they've overseen (perhaps favorably) while in office.

 

Swag

There are other minor perks like a heavily subsidized membership to their own private health club, free parking on Capitol Hill and at the airports, lavish offices with budgets to cover art and fine furnishings (they can even borrow some pieces from the Smithsonian!) and of course the special interest-sponsored golf trips to Scotland and other 5-star international travel junkets that they routinely take for free, like the ones that 81 House members took to Israel over this past summer. Plus, they seem to gain tremendous insight into market forces while on the hill. Either that or they trade on the inside information they gain, which isn't exactly illegal for them either (perhaps the best perk), leading to returns that are significantly larger than average investors. So, while members of Congress don't actually enjoy most of the mythical spoils that they're often ascribed, it's clearly safe to say that they've still got it sweeter than the vast majority of their constituents.

*It's worth noting that Congressman Ron Paul has never participated in the Congressional retirement plan, describing it as “immoral.” Paul is one of the 46 percent in the millionaires' club, with a disclosed net worth of between two and a half and five million dollars, which ranks him 77th in the U.S. House.

 

related:

When it Comes to Investments, Why Can't We Be as Shrewd as Our Congressman?

 

Dennis Maley is a featured columnist and editor for The Bradenton Times. An archive of his columns is available here. He can be reached at dennis.maley@thebradentontimes.com.