Assuming that former Vice-President Joe Biden is inaugurated in January as president of the United States, what will his status be as a former federal employee?
Former VP is A Qualified Federal Retiree
We know that the former vice-president has worked in the federal government for about 47 years. He has qualified to be a retired federal employee.
The retired federal employee designation comes about because of the time he was in the Senate. Biden was elected to the U.S. Senate in 1972 when he was 29. He was there for 36 years. It is not clear if he transferred to the FERS retirement system. Most of the older Senators who were originally under the CSRS system remained under that retirement program.
Pension Payment of $160,908
The former vice-president now receives a pension from the federal government. In 2019, he was paid $160,908 by the Office of Personnel Management (OPM). $8,029 of that amount was not taxable—presumably because that was the amount determined by OPM on which taxes had already been paid.
His total taxable income for 2019 was $944,737 as reported on his federal income tax form and with total income of $517,334. The financial reality is that the family income was considerably higher right after his term as vice-president, according to the Wall Street Journal.
Big Jump in Income After Leaving Government
The Journal reported the former vice-president earned $15.6 million in the two years after he leaving the Obama administration. His total income in 2017, according to the amended tax return, was $11,031,309. $21,539 of that income came from his federal employee pension.
The total taxable income for the Bidens, according to the amended 2018 federal income tax return, was $4,255,086. That included a federal employee pension of $156,528 from OPM.
The Bidens set up S corporations to receive money from book deals and speeches. High net worth individuals sometimes use these vehicles as a legal way to avoid paying some taxes and the source of the money is also less transparent. According to the Journal, the Bidens reported the money was from speaking engagements, book revenue, and writing engagements.
As president, Joe Biden would have a salary of $400,000 per year. What about his federal employee pension payments from having been in the Senate for several decades?
The following information is compiled from comments from several experts on the federal employee retirement system.
After leaving office, former presidents receivable a taxable lifetime pension equal to the annual rate of basic pay for the heads of executive branch departments, like the Cabinet Secretaries. This amount is set annually by Congress and as of 2020 the amount is $210,700 per year.
A vice-president does not receive a similar pension for life. Former vice-presidents do receive a federal pension if they served in the House or Senate for at least two years. That is the situation for former Senator and Vice-President Joe Biden.
Joe Biden: Reemployed Annuitant?
While he was vice-president, his most recent tax returns available do not show a pension payment to Mr. Biden from OPM.
Perhaps, while serving as president, Joe Biden would be considered to be a reemployed annuitant. A reemployed annuitant is a former federal employee who has returned to work for the federal government. According to an OPM manual on reemployed annuitants, “Reemployment will cause your annuity to stop if…You receive a Presidential appointment subject to retirement deductions.”
Presidential Retirement Payments
There are no apparent retirement deductions from the president’s salary. The retirement income paid to a former president is not part of the usual federal employee retirement program. A retirement payment for a former president was created in the Former Presidents Act. It was passed to “maintain the dignity” of the Office of the President by providing a pension, support staff, Secret Service protection, and travel funds, among other benefits.
It is also possible the job as president qualifies for a waiver of the salary/pension offset. Waivers can be granted for hard-to-fill positions. Perhaps the job of president would be considered a job that is hard to fill. (It is certainly hard to get the job although there always seem to be plenty of applicants.)
If the job does qualify, a President Biden could receive the legislated salary amount for a president and the annuity he earned from working in the Senate.
It is also possible a president would not receive his federal retirement payment while holding the office. That appears to be how his retirement payment was handled while he was vice-president as no payments from the Office of Personnel Management were reported on the most recent tax returns during his term of office.
In short, there is no definitive answer to how a President Biden’s federal employee pension will be handled. The Office of Personnel Management is responsible for administration of the federal employee retirement program. Attempts to determine how OPM would handle this unusual scenario were not successful. Despite several queries, the agency did not respond.