Retirement Benefits For Members Of The Elected Class

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Download or read book Retirement Benefits for Members of Congress written by and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior to 1984, neither federal civil service workers nor Members of Congress paid taxes to Social Security, nor were they eligible for Social Security benefits. Members of Congress and other federal employees were instead covered by a separate pension plan called the Civil Service Retirement System (CSRS). The 1983 amendments to the Social Security Act (P.L. 98-21) required federal employees first hired after 1983 to participate in Social Security. These amendments also required all Members of Congress to participate in Social Security as of January 1, 1984, regardless of when they first entered Congress. Because the CSRS was not designed to coordinate with Social Security, Congress directed the development of a new retirement plan for federal workers. The result was the Federal Employeesâ€TM Retirement System Act of 1986 (P.L. 99-335). Members of Congress first elected in 1984 or later are covered automatically under the Federal Employeesâ€TM Retirement System (FERS), unless they decline this coverage. Those who already were in Congress when Social Security coverage went into effect could either remain in CSRS or change their coverage to FERS. Members are now covered under one of four different retirement arrangements: Full coverage under both CSRS and Social Security; The “CSRS Offsetâ€ŗ plan, which includes both CSRS and Social Security, but with CSRS contributions and benefits reduced by Social Security contributions and benefits; FERS plus Social Security; or Social Security alone. Congressional pensions, like those of other federal employees, are financed through a combination of employee and employer contributions. All Members pay Social Security payroll taxes equal to 6.2% of the Social Security taxable wage base ($97,500 in 2007). Members covered by FERS also pay 1.3% of full salary to the Civil Service Retirement and Disability Fund. Members covered by CSRS Offset pay 1.8% of the first $97,500 of salary, and 8.0% of salary above this amount, into the Civil Service Retirement and Disability Fund. Under both CSRS and FERS, Members of Congress are eligible for a pension at age 62 if they have completed at least five years of service. Members are eligible for 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 depends on years of service and the average of the highest three years of salary. By law, the starting amount of a Memberâ€TMs retirement annuity may not exceed 80% of his or her final salary. As of October 1, 2006, 413 retired Members of Congress were receiving federal pensions based fully or in part on their congressional service. Of this number, 290 had retired under CSRS and were receiving an average annual pension of $60,972. A total of 123 Members had retired with service under both CSRS and FERS or with service under FERS only. Their average annual pension was $35,952 in 2006.