The Honorable Sherrod BrownUnited States SenateWashington, DC 20510
Dear Senator Brown:
On behalf of the362,000-member National Taxpayers Union (NTU), I write to offer our strongsupport for your legislation, S. 742, the Congressional Retirement Age Act of2011. If enacted, your sensible bill would link the eligibility age ofdefined-benefit pensions for Members of Congress to the retirement age forSocial Security.
NTU has long takenan interest in reforming Congress’s retirement system, which is among the mostgenerous offered at any level of government. As a Congressional ResearchService (CRS) report from 1993 demonstrated, lawmakers could, under somecircumstances, enjoy a replacement rate of “high-three” salary averages that bestedthose for a similarly-salaried executive branch employee, by 50 percent ormore. This difference aside, the very structure of the plan has incited thepublic’s ire to a degree matched only by Congress’s provision for automaticsalary adjustments.
Over the pastseveral decades, we have advocated for policies such as limiting theCongressional plan’s Cost of Living Adjustments, harmonizing the accrual rate ofthe benefit formula with that of rank-and-file federal employees, oreliminating the defined benefit portion altogether in favor of a modifieddefined contribution arrangement under the federal Thrift Savings Plan (ourpreferred option). Your legislation would approach reform in a novel andcommendable way, by setting a new retirement age for the system based on thatof Social Security’s. This one change, while seemingly small, would actuallymake a great deal of progress toward the more equitable outcomes taxpayers seek.
Throughout itsinstitutional history of pursuing greater accountability for Congressionalperquisites, NTU has provided detailed projections of individual lawmakers’retirement benefits as a public service, owing to federal officials’ refusal todo so by invoking privacy concerns. During this time, we have discovered thatmulti-million-dollar lifetime payouts for Members of Congress are not solelythe result of high accrual rates applied to extraordinary lengths of service.In many cases, they are the product of an extremely lucrative early retirementoption. For example, although Executive Branch workers under the FederalEmployees Retirement System can look forward to an unreduced pension at age 60 after20 years of service, Members of Congress may do so as early as age 50.
The time has comefor a substantial overhaul of the Congressional retirement package, and S. 742is the ideal tool with which to begin the task. CRS estimated that at thebeginning of October 2009, defined benefit payments to former Senators andRepresentatives would amount to more than $26 million for the year ahead. Thetypical Congressional retiree’s lifetime payout far exceeds his or hercontributions into the plan, creating a significant subsidy from taxpayers –many of whom, in turn, must fund their own retirements to a large degree. Yourlegislation would help to relieve part of this burden, and provideleadership-by-example on one of the most important issues facing America today:retirement funding.
To be clear, NTUbelieves that fundamental changes to Social Security are necessary for theprogram’s (and the nation’s) future survival, including acceleration of theretirement age, more realistic benefit-calculation processes, andmeans-testing. Our members are also greatly concerned about the sustainabilityof government employee retirement plans, and have been among the most vocalproponents of introducing “pay up-front” defined contribution systems at thestate and local level. In our view such proposals (even in the presence of theThrift Savings Plan) deserve consideration at the federal level too.
We understand thatyou may not share these goals, but whatever our respective aims may be, we canagree that Congress should strengthen its fiscal and moral credibility with theAmerican people by bringing an appropriate measure of restraint to its ownretirement system. Likewise, we hope that all of your colleagues, regardless oftheir philosophies toward Social Security and other government retirementprograms, can see the wisdom in cosponsoring and passing S. 742. You haveoffered one of the few serious attempts to reform Congressional pensions inrecent memory, and our members look forward to helping you enact yourlegislation in this session. A roll call vote in favor of the CongressionalRetirement Age Act of 2011 will be included as a pro-taxpayer vote in NTU’sannual Rating of Congress.
Sincerely,
Pete Sepp
Executive Vice President