Member of Congress Convicted of Corruption Could Be First to Forfeit Pension Perk

Representative Chaka Fattah (D-PA) was found guilty this week on 23 charges of corruption and fraud. He was set free on bail to await his sentencing on October 4th where he faces up to 20 years in prison just for the bribery charge alone. He announced his resignation, effective immediately. While he will no longer be able to collect on his annual $174,000 salary, upon leaving office, Members may be eligible for a generous pension. Fattah could be the first convicted Member of Congress to lose his Congressional pension under a reform enacted in 2007.

According to the Congressional Research Service, Members of Congress with at least five years of service are eligible for a pension at the age of 62. Members are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service. While the retirement program they can join and the amount of salary that they contribute varies depending on when they enroll, Congressional pensions are typically 2-3 times more generous than those offered to similarly-salaried workers in the private sector. Plus, the Congressional benefit is protected from inflation with cost-of-living-adjustments, a feature that fewer than 1 in 10 private plans offer. Lawmakers also pay into and collect Social Security.

Before 2007, Members would only be barred from collecting their pension if they were convicted of a crime that endangered national security. After public outrage over a series of corruption cases involving high-profile Representatives including Jim Traficant (D-OH), Dan Rostenkowski (D-IL) and Randy "Duke" Cunningham (R-CA), who all remained eligible for their pension, Congress passed the Honest Leadership and Open Government Act of 2007 (HLOGA). The law would deprive pensions for Members convicted of certain crimes related to corruption, but only for offenses committed after the passage of the law.

National Taxpayers Union estimates that Fattah would be eligible for a $55,000 pension, assuming he opted for the maximum level of benefits. He is the seventh Member of Congress since 2007 to either be convicted or plead guilty to a crime, but none of the other six who were eligible lost their pension as a result of their offenses:

  • Reps. William Jefferson (D-LA) and Rick Renzi (R-AZ) and were both convicted of crimes committed before 2007 and remained eligible for their pension. Senator Ted Stevens’ conviction was later vacated.

  • Representative Michael Grimm (R-NY), guilty of tax evasion (added in 2012 as a crime that would result in forfeiture), and Trey Radel (R-FL), cocaine possession, did not serve long enough to be eligible for a pension.

  • Jesse Jackson, JR (D-IL) plead guilty to conspiracy to commit wire fraud – a violation included in the HLOGA – but given his age, he would not be eligible to collect his Congressional pension (estimated at $45,000) for several years and a decision on his eligibility likely won’t be made until then.

The law states that Members would not be disqualified from their pension until a “final” conviction after all appeals. If Fattah appeals the verdict, the process can take several years of litigation. There is no provision in the law that prevents Fattah from collecting his pension while the case proceeds.

A reform passed in 2012 expanded the taxpayer protections in HLOGA by including additional crimes that would result in forfeiture. The reach would extend to cover crimes committed by Members regardless of what public office they held in the federal or state government.

Along with the concern that taxpayers are funding pensions for politicians convicted of corruption, is that legislators are eligible for benefits unavailable to many in the private sector. Moreover, they tend to be wealthier than the average Americans. The median net worth of a member of Congress in 2013 was $1,029,505 – nearly twice as high as that of the average household.

Legislation has been introduced to end Congressional pensions for newly elected Members. While this is unlikely to become law, additional reforms were enacted in the Middle Class Tax Relief and Job Creation Act of 2012 which (primarily for newer Members) equalized the congressional benefit formula with that of rank-and-file federal employees. Longer-serving members are “grandfathered” into their more generous plans. Further reforms could be pursued to align Congress’s pension plan with the private sector, which thanks to IRAs and other savings and investment vehicles, have shifted away from defined benefit plans to defined contribution plans. 

Additional information on the benefits that Members of Congress have enjoyed is available in NTUF’s policy paper, “Congressional Perks:  How the Trappings of Office Trap Taxpayers.”