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SUBJECT: This crook made out like a bandit
Submitted by
Fshfndr from KANSAS on
David Freddoso: Your congressman's padded retirement plan
By: David Freddoso
Commentary Staff Writer
November 19, 2009
After serving 18 years in Congress, former Rep. William Jefferson of Louisiana, a Democrat, will continue his service in a different federal institution -- prison. He was sentenced recently to serve 13 years for bribery.
But his fellow prisoners will have to forgive Jefferson if he grins and whistles as he stamps out license plates. That's because he is still eligible for a guaranteed $50,000 pension in his first year of retirement, which will increase each year thereafter with the cost of living.
Opinion polls show that Americans today have a special contempt for Congress. They might be even more upset if they knew what kind of retirement deal congressmen have given themselves at the taxpayers' expense. It's a much better deal than the taxpayers are getting as they watch their retirement savings collapse in the bear stock and real estate markets.
Congressmen who serve for at least five years get a very generous defined benefit pension plan in retirement -- the kind that doesn't exist anymore in the private sector because it's impossible to fund. It's far more generous than that of even the longest-serving federal employees.
Members who took office before 1984 get the best deal -- a generous 2.5 percent of the average of their top three years' salary for each year of service. Their total includes years of military and other government service.
Although the payout in the first year of retirement is limited to 80 percent of their last year's salary, it grows automatically each year with the cost of living. Appropriations Chairman David Obey, for example, could quit his job this January and take home $139,200 in 2010. In a decade or so, with cost-of-living adjustments, he could be making more than his current salary of $174,000. He isn't the only one.
To get that kind of deal in retirement, you would need at least $2 million in your 401(k) and a healthy bull market from now until you die.
In the 1980s, congressional pensions were reformed along with the rest of the federal retirement system. That means that congressmen elected in 1984 and later don't get a deal quite so sweet. They take home 1.7 percent of their "high three" for each of the first 20 years, and 1 percent for each year thereafter.
But on top of their defined benefit plan, these newer members of Congress still get the ordinary man's retirement -- a 5 percent match on contributions to the Federal Thrift Savings Plan (much like a 401(k)), plus Social Security.
The corrupt Jefferson is a special case. He can exploit a loophole in the 2007 law supposedly depriving corrupt members from taking home their pensions. Because he took all of his bribes before the law was signed that September.
Jefferson might not be the last to find the loophole. In July 2007, the Wall Street Journal reported that Republican Rep. Don Young of Alaska, was under investigation for possibly taking unreported gifts from lobbyists up until 2006.
And Rep. Charlie Rangel, D-N.Y., has admitted to under-reporting his outside income and assets on his congressional disclosure forms between 2002 and 2006, which could constitute perjury. (Rangel claims it was just an oversight -- he forgot about millions of dollars in business transactions over that period.)
If they ever face legal problems, both Rangel and Young have a strong case for defending their pensions, based on the timing of any alleged wrongdoing. Both of these very senior members of Congress are eligible for $139,200 in their first year of retirement.
Even if we don't begrudge them their oversized paycheck, do our congressmen -- even the bad ones -- deserve a retirement that is more than twice as nice as most ordinary working people enjoy?
David Freddoso is an editorial page staff writer who can be reached at dfreddoso@dcexaminer.com.
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PJzaBruin #10908 from CALIFORNIA says Another case of what's good enough for America is NOT good enough for Congress...
most Americans have their 401(k) plans and Social Security to rely on as their primary sources of income in retirement.
Members of Congress have one of the most generous defined benefit plans ever devised.
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