Pensions support Congress retirees

NASHVILLE -- Dozens of defeated or retiring U.S. congressmen and senators are leaving Washington, but their taxpayer support will go on in the form of federal pensions.

And it's a "sweet" deal, says National Taxpayers Union Executive Vice President Pete Sepp.

The private sector mostly has slashed defined-benefit plans for retired workers. But federal lawmakers still have them, financed through a combination of taxpayer and lawmaker contributions. Lawmakers also can pay into a supplemental defined-contribution plan, similar to a private-sector 401(k).

"It's hard enough to justify in good times because they [congressional retirement benefits] are becoming increasingly out of touch with the reality of the private sector," Sepp said, alluding to a drop in traditional company pensions. "In a bad economy like this, they are almost unconscionable."

CURRENT LAWMAKERSHere is what the National Taxpayers Union projects retiring lawmakers from Tennessee and Georgia are eligible to receive from the defined-benefit plan offered to members of Congress and the U.S. Senate.* Zach Wamp: 16 years service in Congress. Estimated pension of $42,000 a year in 2019 when he turns 62 or early pension in 2013 that would be reduced by 30 percent (about $29,000).* Lincoln Davis: Eight years in Congress. Estimated pension of $21,000 in 2011. (A a former Tennessee legislator, Davis collects a state pension valued at $9,747 by the state in 2009.)* Bart Gordon: 26 years in Congress, two years in Army. Estimated pension of $65,000 in 2011.* John Tanner: 22 years in Congress, four years in Navy. Estimated pension of $62,000 in 2011. (Tanner's office could not confirm he signed up for the federal pension. A former Tennessee legislator, his state pension was valued at $12,525 in 2009).* Jim Marshall: Eight years in Congress, two in the military. Estimated pension of $26,000 in 2011.RETIRED LAWMAKERSHere are National Taxpayers Union estimates for several previously retired lawmakers. Except for Deal, all receive benefits under a more generous plan open to lawmakers elected before 1984:* Nathan Deal: 17.25 years in Congress. Estimated pension of $45,000. (Deal was elected Georgia governor Nov. 2)* Don Sundquist: 12 years in Congress. Estimated pension of just under $42,000 in 1996. Current value with cost of living adjustments estimated at $60,000. (A former governor, Sundquist also receives an $83,786 state pension.)* Marilyn Lloyd: 20 years in Congress. Estimated pension of $66,000 in 1995. Current value with cost of living adjustments estimated at $97,000.* Sam Nunn: 20 years in U.S. Senate. Estimated pension of nearly $72,000 in 1997. Current value with cost of living adjustments is just under $100,000.

According to the Employee Benefit Research Institute, the private sector's use of defined-benefit plans plummeted between 1979 and 2008. In 1979, the percentage of all private-sector workers receiving only a traditional defined-benefit pension fell from 28 percent to just 3 percent. At the same time, 401(k)-type plans soared from 7 percent of workers to 31 percent.

Meanwhile, the percentage of employees receiving a pension and a 401(k) style plan grew from 10 percent to 12 percent.

But Dallas Salisbury, president of the Employee Benefit Research Institute, said congressional pensions are not that out of line when compared with benefits offered by some major corporations.

He argues that tax-supported pensions help encourage participation by talented leaders from all walks of life and not just the wealthy.

"It helps real people [serve]," Salisbury said.

Among those expected to qualify for a pension is U.S. Rep. Zach Wamp, R-Tenn., 53, who chose not to run for re-election after 16 years to make an unsuccessful bid for governor.

Sepp estimates that Wamp, whose congressional salary is $174,000, will be eligible for a $42,000-a-year pension when he turns 62 in 2019. He could chose to collect a reduced pension of $29,000 when he is 56, Sepp said.

Sepp noted that congressional pensions are adjusted for inflation while most private-sector pensions are not.

"If he were to collect that for a typical retired life span, somewhere between 70 to 80 percent is subsidized by taxpayers," Sepp said.

Wamp did not respond to an interview request. But his spokeswoman, Tara Schonhoff, said in an e-mail message, "There is a lot of misinformation about benefits" for members of Congress.

Schonhoff called it a "myth" that retiring lawmakers receive their full salaries for life.

Lawmakers' pension benefits depend on when they were elected. A more-generous plan created years ago was scaled back, so legislators elected after 1984 get more modest benefits.

In a 2007 report, the Congressional Research Service of the Library of Congress said lawmakers paid in 1.3 percent of their salaries to the pension plan and Congress put in 16 percent of payroll.

Lawmakers are vested in the Federal Employees Retirement System plan after five years, and pensions are based on the average of a member's three highest-earning years. Not all lawmakers participate in the plan.

They also may participate in the Thrift Savings Plan, a 401(k)-style defined-contribution plan for federal employees. They could contribute up to $15,550 a year in 2007, according to the Congressional Research Service.

The government contributes 1 percent of salary whether lawmakers do or not, and up to 5 percent more for those who do participate.

Schonhoff said congressmen also pay the "full amount of Social Security taxes that every other citizen pays."

U.S. Rep. Bart Gordon, D-Tenn., the dean of Tennessee's congressional delegation, represents the 5th District. The Murfreesboro Democrat, the chairman of the House Science and Technology Committee, was first elected in 1984 and chose not to seek re-election this year.

The National Taxpayers Union estimates that with 26 years in the House along with two years of Army service, Gordon would be eligible for a $65,000 annual pension when he turns 62 next year.

"You have to keep in mind this is not a 'free pension,'" Gordon said. "We pay into it."

An attorney before being elected, Gordon said that serving in Congress was a lifelong dream for him.

"I would have paid to have been here," he said. "The pension I paid into was a bonus, but it was not necessary."

If not for pay and benefits, he said, "you would only have wealthy people run. You really want to have the kind of people that have all kinds of life experience."

TRIMMED BACK

Present congressional retirement benefits under the Federal Employees Retirement System are less generous for lawmakers elected in 1984 and later.

Under the former Civil Service Retirement System, a retiring lawmaker with 30 years service and a three-year average salary of $161,800 would be eligible for a $121,350 pension, according to the Congressional Research Service.

Now the same lawmaker's pension would be $55,012.

A number of Tennessee and Georgia lawmakers retired under the old system or a hybrid plan.

Marilyn Lloyd served Tennessee's 3rd Congressional District from 1975 to 1995.

Sepp estimates Lloyd began drawing a pension of $66,000 a year in 1995. With cost-of-living adjustments, that should have grown to about $97,000.

He believes Lloyd this year will have collected some $1.2 million since her retirement.

David John, a senior fellow at the Heritage Foundation, a conservative Washington-based think tank, said more reforms are in order.

He said lawmakers get pension credits much more rapidly than the "typical" federal employee.

The Congressional Research Service report states that lawmakers also contribute a larger share of their salary than other federal employees do. Because of the "uncertain tenure of congressional services," both defined benefit plans were designed to give a larger benefit for each year of service to lawmakers than other federal employees, the report states.

"This is something we tried to change with Republicans in 1995," John said. "For some strange reason, that didn't get very far."

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