Automatic Pay Raises for Congressmen and Retirees–Guess Who Gets a Better Deal

Congressional pay raises are automatic and went up 3.1% in 2003.

With a sluggish economy and rising unemployment, a lot of Americans were just happy to keep their jobs last year.

Federal retirees and Social Security recipients got a 1.4% raise. (Unfortunately, Federal retireees also got a rate increase of about 11% in their health insurance coverage which in some cases exceeded the amount of the cost of living increase.)

Many Congressman who retire or get voted out of office don’t return to Birmingham or Peoria. They tend to stay in DC. There are a good reasons for staying–more jobs taking advantage of their contacts and knowledge of how to get to the money appropriated by Congress. And the living isn’t bad.

Retirees get automatic raises based on inflation which has been very low. Congress got a 3.1% raise in 2003. In fact, Congressional raises have totaled $18,000 in the past four years– more than the average married couple gets per year from Social Security. (Federal employees got a 4.1% raise as most readers will recall.) Congressional pay is now $154,700 per year.

Congressman also get automatic raises but it obviously isn’t based on inflation. Congress can vote to forgo their automatic raise but that doesn’t usually happen. The system for raising Congressional pay was changed a few years ago as it creates political problems during an election year to defend pay raises when Congressional salaries are so much greater than most Americans will ever get.

If you were wondering, Congressional retirement plans are sometimes touted as being the same ones that are available to Federal employees. There is no doubt that the Federal retirement plan is superior to that offered by most companies but elected representatives have a more generous version of the Federal retirement plan. The Congressional plan’s benefit is calculated on a more generous formula than that offered to most other government workers. The “accrual rate” is much higher, and lawmakers tend to be able to retire earlier with benefits than other federal workers (as early as age 50).

Members of Congress under CSRS have an accrual rate of 2.5 percent for all years served, while most Feds get a sliding rate of between 1.5 and 2.0 percent. For FERS, Members get a 1.7 percent initial rate, versus 1.1 percent or 1.0 percent for the more common Federal employee. Also, lawmakers with longer careers in Congress can generally collect pension benefits at a far earlier age than their counterparts with similar service elsewhere in the government.

With service of 20-25 years, a Member of Congress could retire and receive as much as 80 percent of his or her final salary.

In short, if you want to substantially improve both your current pay andyour retirement income, get elected to Congress.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47