Congressional Pensions Update
FULL QUESTION
Do the members of Congress get cover having served one term in office?
FULL ANSWER
We last wrote about congressional pensions in 2007. Nevertheless, it’s one of those topics.
With a new Congress starting and numerous members leaving office, we believed it was about time for an update on retirement and health benefits for former members.
As we mentioned seven years ago, members of Congress don’t receive their full pay for retirement upon leaving office. That is the case whether they served several or one terms.
The basic eligibility for collecting a pension is as follows, according to a June report by the Congressional Research Service, the nonpartisan research arm of Congress: CRS, June 13: Members of Congress are entitled to a pension at age 62 if they’ve completed at least five decades of service. Members are entitled to a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service. The amount of the pension is determined by the average of the highest three years and years of service. By law, the amount of a Member’s retirement annuity may not exceed 80 percent of their salary.
That means if they served one term that members of the House of Representatives — that are up for reelection every 2 years — would not have the ability to collect pensions of any amount. U.S. senators, on the other hand, serve six-year terms and will have the ability to collect pensions after one full term. But the pensions would not be equivalent to their wages.
Require Kay Hagan for instance. After completing only one six-year term in the Senate, Hagan, who will turn 62 in 2015, will be entitled to a pension of nearly $16,000, based on calculations accomplished by the conservative National Taxpayers Union. Hagan’s retirement could be more than 9 percent of $174,000, the sum of the latest salary.
Now, it’s possible that a longtime member of Congress retiring with a beginning pension near or equal to 80 percent of their final salary could — after several years of yearly cost-of-living adjustments — see pension rise to equal their final salary. Retiring Iowa Sen. Tom Harkin is somebody who comes to mind.
The 75-year-old Harkin, who served for 30 years in the Senate and 10 years in the House before that, will qualify for a beginning pension of $125,000, based on quotes from the taxpayer’s marriage. His retirement pay would be nearly 71 percent of his salary.
However, Harkin is an exception. Pensions for members are much less than that.
According to the Congressional Research Service, as of Oct. 1, 2013, there were 367 former members of Congress who had retired under the Civil Service Retirement System, the older system which was criticized for being overly generous. Those members received an average pension of $71,664. Those 250 members who retired under the Federal Employees Retirement System’s pensions, which started in 1987, average less. Their retirement was $42,048 in 2013, CRS said.
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Pelosi Won’t Get $803,700
A chain email we have received from time to time also asserts that House Minority Leader Nancy Pelosi will get”$803,700 dollars per year for the life including FREE medical.”
That is way off base. To get that figure, the email’s anonymous writer added together Pelosi’s old House speaker salary of $223,500, her current salary of $193,400, the $174,000 paid to most members of Congress, and then an additional $212,800 to get”free medical.”
That is just math. Pensions are not calculated that way, and members of Congress do not get health care while in office or upon retirement.
Under the Affordable Care Act, beginning in 2014, insurance policy for members of Congress changed in the Federal Employees Health Benefits Program, the government’s employer-subsidized private insurance programs that pay over 8 million federal workers and retirees, to the medical care exchanges generated by the law. Members that are active must buy a plan on the market so as under the small-business health choices program to be given a government contribution.
But moving if they meet specific criteria congressional retirees, according to an October 2013 rule will be eligible to buy insurance. The standards, based on CRS, are eligible for retirement in the national government, and continuous enrollment in a health plan provided under FEHB or the trades for the five years of service immediately before retirement.
In either instance, health coverage for retirees is not free. The authorities and enrollees both cover the insurance coverage. Normally, the government pays 72 percent of their premiums for its employees, up to a maximum of 75 percent based on the coverage chosen. As national retirees, former members of Congress would continue to be responsible for paying the same share of premiums as active federal workers.
Also, adding together salary amountsn’t calculates pension benefits for members. Benefits are determined by the average yearly salary for the three consecutive years of highest pay, the number of years served under a member’s pension program, and the”accrual rate” where benefits accumulate for every year of service.
If she decided to participate, Pelosi, who has served in Congress would get her retirement through the FERS plan. The accrual rate for service under FERS is 1.7 percent for its first 20 years, and one percent for every year after.
But, based on CRS, it might take at least 66 years of support before Pelosi, who will turn 75 in 2015, could retire and immediately start receiving even 80 percent of $221,467, that’s the average of her greatest three years of salary.
Pelosi, who’s already among the wealthiest members of Congress, would be eligible for generous retirement whenever her congressional ceremony ends. But it will not be anywhere near the $803,700 a chain email asserts she will get.