always check out urban legends.com -- they're great for this crap!
Claim: Members of Congress receive lavish pensions but are not required
to contribute to the Social Security fund.
Status: False.
Origins: Before we launch into this latest piece of moral outrage, let's
synchronize our glossaries:
A pension is money (generally sent in monthly payments of a fixed amount)
paid by employers to retired or disabled workers (generally for the rest of
their lives) as a reward for their years of service.
A retirement plan is an account into which a person himself pays (sometimes
supplemented by contributions from his employer) in order to provide funds
for his own retirement.
Social Security benefits are technically neither pensions nor retirement
plans. Social Security is paid out of funds collected from other taxpayers
(and their employers) and was intended to be a supplement to whatever other
retirement assets an individual might have.
These items are not mutually exclusive. For example, a retiree might live
off of funds drawn from his own retirement account and still receive
monthly pension payments from his employer or monthly benefits from Social
Security (or both).
It was true that (prior to 1984) members of Congress were exempt from
having Social Security deductions taken out of the salary they received as
Congressmen. (Monies earned in addition to their salaries were not exempt.)
The exemption of Congressional salaries from the Social Security
Administration's definition of employment (which determines whether or not
one's income is subject to Social Security withholding) was eliminated
after 1983 by a law detailed in Congressional Research Service Report
94-969 EPW, "Retirement for Members of Congress":
In 1983, P.L. [Public Law] 98-21 required Social Security coverage for
federal civilian employees first hired after 1983 and closed the CSRS
[Civil Service Retirement System] to new federal employees and Members of
Congress. All incumbent Members of Congress were required to be covered by
Social Security, regardless of when they entered Congress. Members who had
participated in CSRS before 1984 could elect to stay in that plan in
addition to being covered by Social Security or elect coverage under an
'offset plan' that integrates CSRS and Social Security. Under the CSRS
Offset Plan, an individual's contributions to CSRS and their pension
benefits from that plan are reduced ('offset') by the amount of their
contributions to, and benefits from, Social Security."
(Section 941(d) of the Social Security Administration handbook also
explains that "Legislation provides Social Security coverage for all
members of Congress, including Delegates and Resident Commissioners of or
to the Congress.")
Under the Federal Employees Retirement System (FERS) that went into effect
in 1987, civilian federal employees (including Congressmen) both pay into
and receive monies from the Social Security system; contribute towards a
basic benefit fund (with the rest of the fund being supplied by the
government); and can contribute to the Thrift Savings Plan, a 401(k)-like
program.
Members of Congress currently receive an annual salary of $133,600. Upon
retirement, they may receive pensions that pay up to $60,000 more than the
amount they were paid as annual salary. (That is, a current Congressman
with many years of service could conceivably receive an annual pension
worth $193,600). Not all Congressmen will receive this much in pension, as
the amount is based upon years of service (among other factors). It's fair
to say, however, that most Congressmen will receive pensions far higher
than any of us will ever see, and a few hundred current and former
Congressmen are set to receive over $1 million in pension payments over
their lifetimes. As well, both Congressional salaries and Congressional
pensions are subject to cost of living adjustments, another benefit few of
us enjoy. Needless to say, all this money is paid out from taxes collected
from the rest of us, but in a sense, what is discussed in the opening of
the piece quoted above is a red herring, because it speaks of the pensions
received by members of Congress, which is something distinctly different
than (and not necessarily a substitute for) Social Security benefits or
retirement plans.
The issue raised by the original piece is whether this is a situation the
public can or should do anything about. It contains several suppositions
which may or may not be true:
That public pressure can bring about the desired change.
Congressional pay and pension are subject to laws introduced and voted upon
by . . . Congress. The last attempt at reform in this area, H.R. 436
(introduced 01/09/97) died in committee. Forcing Congress to abjure their
own benefits would almost certainly mean the voting public would have to be
ready to toss out incumbents by not voting for them and continue to do so
for as long as required. Assuming responsibility for their own voting
habits is something that the public has continually demonstrated they are
unwilling to do, hence the current high re-election rates for Congressmen
and the recent movements for mandatory term limits.
That altering or eliminating the Congressional pension plan will coerce
Congress into "fixing" the Social Security system.
First of all, eliminating or reducing Congressional pensions wouldn't
necessarily make Congressmen dependent upon Social Security benefits,
thereby sending them scurrying to "fix" the Social Security system before
they retired. They'd still have the various retirement plans offered to
federal employees as well as any other private retirement plans, savings,
or investments to live off of in their "golden years." More importantly,
Congressmen can't collect their pensions unless they manage to get elected
and stay in office. Presumably, they accomplish this by responding to what
their constituents want them to do; otherwise, those constituents wouldn't
continue to vote for them. If the public really wants Social Security
reform but Congress has consistently been unwilling to effect such reform,
then how come these Congressmen hold onto their seats year after year?
Because the public keeps voting for them anyway. (See previous entry.)
"That is how good Social Security could be, if only one small change were
made."
One "small change" -- a complete overhaul of the Social Security system --
could indeed turn Social Security from a defined benefit plan into a
defined contribution plan. That means people would be able to decide how
much money to contribute to their own retirement plans and where to invest
it, rather than having the government take it and save it for them. It
wouldn't mean that the general public would have pensions comparable to
those of Congressmen, however. Pensions and Social Security benefits are
two completely different things, and the article misleadingly starts off by
talking about Congressional pensions and then comparing them to Social
Security. The more appropriate comparison would be one between Social
Security and the federal employees' Thrift Savings Plan.
As with most political issues, results are proportional to effort. If the
only effort the public makes towards getting Social Security changed is
forwarding an e-mail message around, don't be surprised when nothing happens.
Last updated: 25 April 2000
http://www.snopes2.com/inboxer/outrage/pensions.htm
