MetroRetro
04-20-2006, 07:09 AM
AP
Updated: 8:50 p.m. ET April 19, 2006
WASHINGTON - Members of Congress occasionally lose elections, but they never lose retirement and health benefits that most Americans can only envy.
A lawmaker who retires at 60 after just 12 years in office can count on receiving an immediate pension of $25,000 a year and lifetime benefits that could total more than $800,000.
That doesnÂ’t include 401(k) benefits. And any member who lasts five years in office also can get taxpayer-subsidized health care until he or she reaches Medicare age.
Congressional pensions tend to be far more generous than those offered in the private sector. Benefits start earlier and — unlike most private pension plans promising a fixed monthly payment based on years worked and pay — come with annual cost-of-living increases. They also accrue a third faster than the average plan offered by private companies.
Any member of Congress with five years of service is eligible for full benefits at 62. Those with 20 years in office can get full benefits at 50, younger than most workers.
Cost-of-living adjustments, a shield against inflation, “haven’t been slightly common since the 1980s” in the private sector, said John Ehrhardt, an expert in corporate retirement programs at the Seattle-based consulting and actuarial firm Milliman. He said COLAs could add 25 percent to the value of a congressional plan over its lifetime.
It doesn’t matter what a lawmaker does before or after leaving office. Former Rep. Randy “Duke” Cunningham, R-Calif., who was sentenced to eight years and four months in jail after pleading guilty to bribery charges this year, is still entitled to an annual pension of about $36,000 for his 15 years in the House. That doesn’t include his military pension or 401(k) benefits.
DeLay could get nearly $2 million
Former House Majority Leader Tom DeLay, R-Texas, who is resigning after 22 years, will qualify for an initial pension of $56,000. DeLay could get pension payments of nearly $2 million over his expected lifetime, according to the National Taxpayers Union, which tracks congressional pension issues.
Lawmakers also have the peace of mind of knowing their federally backed plan will be there when they retire.
“I don’t think that many people in Congress would be quite so indifferent to the demise of the defined-benefit plan if they didn’t have such a robust plan themselves,” said James Klein, president of the American Benefits Council, which represents companies with pension plans.
Congress is now working on pension legislation aimed at shoring up the defined-benefit plans available to some 44 million employees and retirees, but thereÂ’s no stopping the trend of companies shrinking their plans or not letting new hires join them.
Employers also are switching to less costly cash balance plans, under which employees generally receive one lump-sum payment when they retire or leave the company.
Rep. Bernard Sanders, I-Vt., is a critic of the cash balance plans that the House bill would encourage. In 2003 he asked the Congressional Research Service to see what would happen to lawmakersÂ’ benefits under such an approach.
“The result would have been huge cutbacks for some members,” Sanders said in a recent interview.
For example, say a representative retired at 56 at the end of 2002 with 18 years of service. At 62 he or she would have a defined benefit plan worth $608,000. A comparable cash balance plan would be worth $251,000.
Under current rules, lawmakers who serve 30 years will receive a yearly pension of 44 percent of their annual pay, which this year is $165,200. That doesnÂ’t include their Social Security benefits and what they get back from their 401(k) plans. Like other federal workers in the Thrift Savings Plan, the governmentÂ’s equivalent of a 401(k), lawmakers may invest up to $15,000 yearly, more if theyÂ’re over 50, and receive a contribution from the government equal to 5 percent of their pay.
CONTINUED
[Only registered and activated users can see links]
Updated: 8:50 p.m. ET April 19, 2006
WASHINGTON - Members of Congress occasionally lose elections, but they never lose retirement and health benefits that most Americans can only envy.
A lawmaker who retires at 60 after just 12 years in office can count on receiving an immediate pension of $25,000 a year and lifetime benefits that could total more than $800,000.
That doesnÂ’t include 401(k) benefits. And any member who lasts five years in office also can get taxpayer-subsidized health care until he or she reaches Medicare age.
Congressional pensions tend to be far more generous than those offered in the private sector. Benefits start earlier and — unlike most private pension plans promising a fixed monthly payment based on years worked and pay — come with annual cost-of-living increases. They also accrue a third faster than the average plan offered by private companies.
Any member of Congress with five years of service is eligible for full benefits at 62. Those with 20 years in office can get full benefits at 50, younger than most workers.
Cost-of-living adjustments, a shield against inflation, “haven’t been slightly common since the 1980s” in the private sector, said John Ehrhardt, an expert in corporate retirement programs at the Seattle-based consulting and actuarial firm Milliman. He said COLAs could add 25 percent to the value of a congressional plan over its lifetime.
It doesn’t matter what a lawmaker does before or after leaving office. Former Rep. Randy “Duke” Cunningham, R-Calif., who was sentenced to eight years and four months in jail after pleading guilty to bribery charges this year, is still entitled to an annual pension of about $36,000 for his 15 years in the House. That doesn’t include his military pension or 401(k) benefits.
DeLay could get nearly $2 million
Former House Majority Leader Tom DeLay, R-Texas, who is resigning after 22 years, will qualify for an initial pension of $56,000. DeLay could get pension payments of nearly $2 million over his expected lifetime, according to the National Taxpayers Union, which tracks congressional pension issues.
Lawmakers also have the peace of mind of knowing their federally backed plan will be there when they retire.
“I don’t think that many people in Congress would be quite so indifferent to the demise of the defined-benefit plan if they didn’t have such a robust plan themselves,” said James Klein, president of the American Benefits Council, which represents companies with pension plans.
Congress is now working on pension legislation aimed at shoring up the defined-benefit plans available to some 44 million employees and retirees, but thereÂ’s no stopping the trend of companies shrinking their plans or not letting new hires join them.
Employers also are switching to less costly cash balance plans, under which employees generally receive one lump-sum payment when they retire or leave the company.
Rep. Bernard Sanders, I-Vt., is a critic of the cash balance plans that the House bill would encourage. In 2003 he asked the Congressional Research Service to see what would happen to lawmakersÂ’ benefits under such an approach.
“The result would have been huge cutbacks for some members,” Sanders said in a recent interview.
For example, say a representative retired at 56 at the end of 2002 with 18 years of service. At 62 he or she would have a defined benefit plan worth $608,000. A comparable cash balance plan would be worth $251,000.
Under current rules, lawmakers who serve 30 years will receive a yearly pension of 44 percent of their annual pay, which this year is $165,200. That doesnÂ’t include their Social Security benefits and what they get back from their 401(k) plans. Like other federal workers in the Thrift Savings Plan, the governmentÂ’s equivalent of a 401(k), lawmakers may invest up to $15,000 yearly, more if theyÂ’re over 50, and receive a contribution from the government equal to 5 percent of their pay.
CONTINUED
[Only registered and activated users can see links]