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How Much Do Senators Make When They Retire?
Prior to 1984, members of Congress received a pension from the Civil Service Retirement System, known as CSRS. This did not allow them to receive Social Security benefits In 1983, a law was passed requiring all federal employees to participate in Social Security beginning on January 1, 1984; therefore, a new retirement plan was introduced in Congress that allowed members to access both Social Security and their pension. The new plan was called the Federal Employees Retirement System (FERS), and is still in place today.
The amount of a U.S. Senators pension depends upon when they began serving, whether it was during the CSRS years or after 1984, when FERS was put in place. It also depends upon their number of years in Congress, their age at retirement, their salary during the time they served, and the accrual rate of their pension.
Congressional pensions are financed through both employee and employer contributions. All members today pay Social Security taxes equal to 6.2% of the taxable wage base of $132,900. They also contribute to the Civil Service Retirement and Disability Fund, with payments ranging from 3.1-4.4% of their pay depending upon their pension enrollment.
The easiest way to understand the various pensions Senators might receive is to divide them into groups of those first elected prior to 1984 and those elected since the passage of the law requiring participation in Social Security in 1984.
Senators Elected Before 1984
Members of Congress elected prior to 1984 are still allowed to access the pension put in place under the Civil Service Retirement System (CSRS). They may be covered under one of four plans:
- Dual Coverage with both CSRS and Social Security
- CSRS Offset Plan, which includes both CSRS and Social Security benefits, but the amount of contributions and benefits under CSRS are reduced by the amount paid into and received from Social Security
- FERS, which can be selected even by those who began serving before 1984 - includes a basic annuity, Social Security, and the Thrift Savings Plan
- Social Security only, which takes place if the Senator declines to participate in any other coverage
Members of Congress elected prior to 1984 can choose which of these plans they would like to participate in for their retirement planning.
Senators Elected After 1984
Members of Congress elected in 1984 or later are covered by the Federal Employees’ Retirement System (FERS). FERS is made up of three components, all of which are included in the standard plan:
- Social Security
- A basic annuity based on years of service and the average of the three highest consecutive years of salary
- The Thrift Savings Plan, a private savings plan into which Senators can deposit up to $19,000, which is then matched by employer contributions up to 5% of salary
Senators elected after 1984 are all automatically enrolled in the FERS plan. Those entering office on or after September 30, 2003, may not elect to be excluded from participating in the pension plan, but those who began sooner may decline if they choose.
Under both CSRS and FERS, Senators are eligible for a pension at age 62 given they have completed at least 5 years of service, at age 50 after 20 years of service, or at any age after 25 years of service. However, there are a number of scenarios that may occur depending upon several factors.
Both Senators who are covered under CSRS and those covered under FERS may have retirement coverage occurring in four types of scenarios:
- Retirement with an immediate, full pension: Under CSRS, Senators must be aged 60 or older with 10 years of Congressional service or aged 62 with at least 5 years of civilian federal service, including service in Congress. Under FERS, retirement with an immediate, full pension is available to Senators aged 62 or older with at least 5 years of federal government service; age 50 or older with 20 or more years of service; or any age with at least 25 years of service.
- Retirement with an immediate, reduced pension: Under CSRS, members must be aged 55-59 with at least 30 years of service, or if the member leaves without resignation or expulsion after 25 years of service, or after age 50 with 20 years of service, or after being in nine Congresses. Under FERS, retirement with an immediate, reduced pension is available at age 55 to members born before 1948 with at least 10 years of federal service, with the minimum age increasing to 56 for members born 1953-1964 and to age 57 for those born 1970 or later.
- Retirement with a deferred, full pension: Under CSRS, this is available if the Senator leaves Congress before reaching the minimum age required for an immediate pension and delays payment until reaching the age of full benefits. Under FERS, a deferred, full pension is available at the age of 62 to those Senators with at least 5 years of federal service.
- Retirement with a deferred, reduced pension: Under CSRS, this is available to a Senator at the age of 50 if they retired before that age and had at least 20 years of federal service, including at least 10 years in Congress. Under FERS, this is available at the minimum age of 55 to 57 to a former Senator who has completed at least 10 years of federal service.
How are Pensions for Senators Calculated?
Pension benefits under CSRS and FERS are both calculated based on the retiree’s three highest consecutive years of annual salary, their years of service, and the accrual rate at which benefits accumulate. Essentially, the 3-year average is multiplied with the years of service and accrual rate, which results in the annual pension.
The accrual rate under CSRS is 2.5%, while the accrual rate under FERS is 1.7%. It is important to remember that this is the calculation for the annuity only; Senators may also receive benefits from Social Security and the Thrift Savings Plan under FERS. Senators who served during both periods may have part of their pension calculated under CSRS guidelines and part under FERS guidelines.
Examples of Retirement Pensions
So what does all of that mean? Here are some examples of exactly what calculations might result in for Senators seeking a pension.
- A member of Congress with 20 years of service under FERS and receiving a high three-year average salary of $174,000 would get an annual FERS pension of $59,160 upon retirement.
- A member of Congress retiring with five years’ service under CSRS flowed by 25 years under FERS given the same salary level would get an annual pension of $89,610 upon retirement.
- A member of Congress retiring with 30 years of service under the CSRS offset plan would initially receive a yearly benefit of $130,500. However, at age 62, this amount would be reduced by the amount received from Social Security for time given to federal service.
All of these benefits will change based on cost-of-living adjustments, which is an advantage over private pension plans. Cost-of-living adjustments are made using the same scale as adjustments to Social Security benefits.
What is the Thrift Savings Plan?
The Thrift Savings Plan is a standard part of the FERS pension plan, but Senators under CSRS also have access to it. The TSP is similar to a 401K plan in that it is a private retirement savings account with contributions from both employees and employers.
All federal employees participating in the TSP receive a 1% contribution from their employer - in the case of a Senator, this would be Congress. They receive this payment even if they do not contribute to the plan. Then, Senators may contribute up to $19,000 per year, with a match from their employer for up to 5% of their salary. Those under CSRS do not receive the matching benefit but may contribute more to compensate.
The advantage of the TSP over other private savings plans like 401K is that there are very low fees. As a result, those who invest in the TSP save 20% more compared with those who use private savings plans. This is a great way for members of Congress to save more for their retirement.
Can a Senator Lose Their Pension?
Yes, a Senator can lose their pension. Typically, a pension can only be lost under certain conditions involving criminal activity. Specifically, a Senator forfeits their pension if they are convicted of a felony including:
- Bribery of public officials
- Acting as an agent of a foreign principal while serving as a federal official
- Prohibited foreign trade practices
- Engaging in transactions in property derived from unlawful activity
- Tampering with a witness, victim, or informant
- Conspiracy to defraud the United States
- Perjury or subordination of perjury
- Corruption of elections