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Letter

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Congressional Retirement Age Act of 2011

May 20, 2011
By Pete Sepp

The Honorable Sherrod Brown
United States Senate
Washington, DC 20510

Dear Senator Brown:

            On behalf of the 362,000-member National Taxpayers Union (NTU), I write to offer our strong support for your legislation, S. 742, the Congressional Retirement Age Act of 2011. If enacted, your sensible bill would link the eligibility age of defined-benefit pensions for Members of Congress to the retirement age for Social Security.

            NTU has long taken an interest in reforming Congress’s retirement system, which is among the most generous offered at any level of government. As a Congressional Research Service (CRS) report from 1993 demonstrated, lawmakers could, under some circumstances, enjoy a replacement rate of “high-three” salary averages that bested those for a similarly-salaried executive branch employee, by 50 percent or more. This difference aside, the very structure of the plan has incited the public’s ire to a degree matched only by Congress’s provision for automatic salary adjustments.

            Over the past several decades, we have advocated for policies such as limiting the Congressional plan’s Cost of Living Adjustments, harmonizing the accrual rate of the benefit formula with that of rank-and-file federal employees, or eliminating the defined benefit portion altogether in favor of a modified defined contribution arrangement under the federal Thrift Savings Plan (our preferred option). Your legislation would approach reform in a novel and commendable way, by setting a new retirement age for the system based on that of Social Security’s. This one change, while seemingly small, would actually make a great deal of progress toward the more equitable outcomes taxpayers seek.

            Throughout its institutional history of pursuing greater accountability for Congressional perquisites, NTU has provided detailed projections of individual lawmakers’ retirement benefits as a public service, owing to federal officials’ refusal to do so by invoking privacy concerns. During this time, we have discovered that multi-million-dollar lifetime payouts for Members of Congress are not solely the result of high accrual rates applied to extraordinary lengths of service. In many cases, they are the product of an extremely lucrative early retirement option. For example, although Executive Branch workers under the Federal Employees Retirement System can look forward to an unreduced pension at age 60 after 20 years of service, Members of Congress may do so as early as age 50.

            The time has come for a substantial overhaul of the Congressional retirement package, and S. 742 is the ideal tool with which to begin the task. CRS estimated that at the beginning of October 2009, defined benefit payments to former Senators and Representatives would amount to more than $26 million for the year ahead. The typical Congressional retiree’s lifetime payout far exceeds his or her contributions into the plan, creating a significant subsidy from taxpayers – many of whom, in turn, must fund their own retirements to a large degree. Your legislation would help to relieve part of this burden, and provide leadership-by-example on one of the most important issues facing America today: retirement funding.

            To be clear, NTU believes that fundamental changes to Social Security are necessary for the program’s (and the nation’s) future survival, including acceleration of the retirement age, more realistic benefit-calculation processes, and means-testing. Our members are also greatly concerned about the sustainability of government employee retirement plans, and have been among the most vocal proponents of introducing “pay up-front” defined contribution systems at the state and local level. In our view such proposals (even in the presence of the Thrift Savings Plan) deserve consideration at the federal level too. 

            We understand that you may not share these goals, but whatever our respective aims may be, we can agree that Congress should strengthen its fiscal and moral credibility with the American people by bringing an appropriate measure of restraint to its own retirement system. Likewise, we hope that all of your colleagues, regardless of their philosophies toward Social Security and other government retirement programs, can see the wisdom in cosponsoring and passing S. 742. You have offered one of the few serious attempts to reform Congressional pensions in recent memory, and our members look forward to helping you enact your legislation in this session. A roll call vote in favor of the Congressional Retirement Age Act of 2011 will be included as a pro-taxpayer vote in NTU’s annual Rating of Congress.

Sincerely,

Pete Sepp

Executive Vice President