From the editor:

According to the Congressional Research Service (CRS), all Members of Congress are covered under Social Security effective January 1, 1984.  Members of Congress also have their own federal retirement systems.  They are covered under either the Civil Service Retirement System (CSRS) or the newer Federal Employees Retirement System (FERS).

Congressional pension rules and benefits appear (to this editor at least) to be considerably generous, far more so than Social Security.  In 2001 to be eligible for full, unreduced Social Security benefits, one must have about 10 years of earnings and be age 65.  A Member of Congress needs only 5 years service to draw a full, unreduced congressional pension at age 62.

Congressional salaries are high ($145,100 in 2001) and so are their congressional retirement benefits.  Congressional benefit formulas replace a higher percentage of income than does Social Security.  According to the CRS, a Member of Congress who retires under the older CSRS system at age 60 with 32 years of service may receive about 80% of final pay.  Under Social Security workers who pay on the maximum ($80,400 in 2001) may only receive about 27% of their wages.

Social Security is only paid on a certain amount earnings, ($80,400 in 2001).  No Social Security taxes are withheld on amounts over that amount.  That means after they pay the 6.2% Social Security tax on the $80,400, Members of Congress would not pay Social Security taxes on the remaining $64,700 of their earnings in 2001.  Their Social Security benefit will be based on the lower amount paid in.

Members of Congress do pay taxes on their earnings under CSRS and FERS systems and unlike Social Security, there is no maximum.  The amount they pay varies by the retirement arrangement they are under.  New Members of Congress in general are covered by FERS and Social Security.  They pay 1.7% of their salary in addition to Social Security.

The money members of Congress pay into their plans only covers a small portion of the cost.  In fiscal year 1998 for example, The Civil Service Retirement and Disability fund alone paid $42.7 billion in annuities to retired federal employees and received $4.2 billion from current federal employees.  Those generous pensions are covered by, you guessed it-taxpayers.

Source:  Congressional Research Service, "Retirement for Members of Congress, 2000.

September 2001