National Active and Retired Federal Employees

In recent years, the Internet has provided a new medium for malcontents and maligners to spread fiction as fact to a wide swath of the public through mass-distributed e-mails. These messages have become known as “urban legends." One recurring “legend,” which is particularly popular in election years and has generated numerous inquiries, distorts the retirement benefits of members of Congress. Among other things, it claims legislators are exempt from Social Security and enjoy full pay for life. The senators/representatives cited as examples change from time to time, but the gist of the charges remain the same. In an attempt to set the record straight, NARFE’s legislative department has responded to the most prominent and preposterous of the assertions.

1. “Our senators and congressmen don’t pay into Social Security and, of course, they don’t collect from it.”

FALSE. Public Law #98-21 required Social Security coverage for all federal employees, including members of Congress, who entered federal service after 1983. The law also required all incumbent representatives and senators to be covered by Social Security regardless of when they entered Congress. Like all other workers covered by Social Security, members of Congress have Social Security taxes withheld from their paychecks (6.2 percent of the first $102,000 of salary). Members of Congress also are subject to the same benefit eligibility and payment formulas as other Social Security beneficiaries.

2. “When they (members of Congress) retire, they continue to draw their same pay until they die, except that it may be increased from time to time by cost-of-living adjustments.”

FALSE. When members of Congress retire, resign or are not reelected, they no longer receive a salary. However, if eligible by age and years of service, they may receive a retirement annuity like other federal employees. Annuities are calculated by a formula using their highest three years of salary, years of service and an accrual rate. As for other federal retirees, the annuities of members of Congress are less than the salary they received while in office. According to the nonpartisan Congressional Research Service (CRS), a member of Congress who retired at age 50 with 20 years of service would receive 42.5 percent of salary from a Civil Service Retirement System (CSRS) annuity. The annual salary of a member of Congress in 2008 is $169,300. At the end of FY 2006, there were 413 former members of Congress on the civil service retirement rolls: 290 retired under CSRS; 123 retired under FERS. (Some of those retiring under FERS had switched from CSRS to FERS during the 1987 open season.) The FY 2006 average annual annuity paid to those retired under CSRS was $60,768, or $22,908 under FERS. (Note: FY 2006 data are the latest data available from the Offfice of Personnel Management.)

Since 1962, CSRS annuities for all retired federal employees–including members of Congress–have been protected from inflation through periodic cost-of-living adjustments (COLAs), determined by the Consumer Price Index (CPI). Retired members of Congress receive the same COLAs as other federal annuitants.

3. …he or she (the named senator or representative) paid nothing in on any kind of retirement, and neither does any other senator or congressman.”

FALSE. Although members of Congress participate in the same retirement systems as all other federal civilian employees, their contribution requirements are higher than for other civil service workers, and their retirement computation formulas are more liberal than most others. That is because the average tenure of a member of Congress is significantly shorter than other federal employees. However, members of Congress under CSRS are required to contribute 1 percent more of their salaries than General Schedule employees to the Civil Service Retirement and Disability Fund (CSRDF), while those covered by FERS are required to contribute 0.5 percent more. CSRS-covered members of Congress presently contribute 8 percent of total salary to CSRDF, and FERS-covered members contribute 1.3 percent. This is in addition to the 6.2 percent of the first $102,000 of salary they all pay to Social Security.

4. “This fine retirement comes right out of the general fund: our tax money.”

This statement omits crucial information about the financing of the federal retirement system. When federal employees and their employing agencies make contributions to the CSRDF, such money is deposited in the general fund, and a government security of equal value is created and credited to the CSRDF. These securities are backed by the full faith and credit of the U.S. government and have the same standing as U.S. Savings Bonds. When funds are needed to pay retirement benefits, securities credited to the CSRDF are converted to cash with money from the general fund.

This assertion also attempts to make the reader forget that U.S. taxpayers are the employers of members of Congress and other federal employees. The Bureau of Labor Statistics reports that 97 percent of all medium and large employers in the United States pay for their employee retirement pension benefits without worker contributions.

Finally, many of the same false claims and arguments being circulated about members of Congress also have been used against federal retirement and health benefits in general. Perpetuation of these false claims undermines NARFE’s efforts to preserve our earned compensation. NARFE members also should recognize that there are a number of lawmakers—past and present—who are fellow members of NARFE.