Federal pensions called excessive Critics note that benefits rise sharply with inflation, pay increases

November 15, 1990|By John Fairhall | John Fairhall,Evening Sun Staff

WASHINGTON — An article on pensions in The Evening Sun Thursday gave a incorrect name for the Employee Benefit Research Institute.

The Evening Sun regrets the errors.

WASHINGTON -- First District Rep. Roy P. Dyson, who lost his seat in Congress last week, can find solace in the lucrative congressional pension system.

Dyson, who turns 42 today, is entitled to a pension of $26,355 a year at age 60, plus annual cost-of-living adjustments thereafter.


Dyson's pension is calculated on the basis of 10 years in Congress and 1 1/2 years of service as a congressional aide in the 1970s. The longer a member serves, the more he or she stands to receive in pension benefits.

Critics of the pension system say it's overly generous, unaffordable and becoming more of a burden on taxpayers as congressional pay rises. Since the pension is based on a lawmaker's last three years of salary, pension benefits of House members will start rising sharply after their pay goes up from $96,600 to an estimated $125,000 in 1991.

If House Minority Leader Robert H. Michel, R-Ill., had lost last week's election, for example, he would have started drawing a pension of $77,058 a year beginning in 1991, based on more than 45 years of government service.

Michel's pension would increase by $27,000, to $104,000 a year in 1993, as a result of the pay increase and an additional two years of service, according to the private, non-profit National Taxpayers Union.

Critics are concerned with the civilian and military pension system, not only the congressional system, which benefits House and Senate members. The annual cost of federal civilian and military pensions is $55 billion, up from $5.3 billion in 1970, says Hastings Keith, head of the private, non-profit National Committee on Public Employee Pension Systems.

The congressional pension system comes under the most fire because it is more generous than the regular federal-worker system, and far more generous than private-sector retirement plans, says William Pierce, a spokesman for the taxpayers union.

The median annual income of private-pension retirees is $4,208, reports the Employee Retirement Research Institute. That's less than 20 percent of the pension Dyson will get for 11 1/2 years of service.

Most private pension systems do not have cost-of-living increases (COLAs), nor do most follow the formula used by Congress.

A lawmaker's pension is calculated by multiplying the average annual salary in the last three years by 2.5 percent, then multiplying that result by the number of years of service. By contrast, most private pension systems use a multiplication factor of 1.5 to 1.74 percent, institute officials say.

Members of Congress say in their defense that they pay 8 percent of their salaries into their retirement system. But the taxpayers union says that covers only a fraction of their benefits, leaving taxpayers to foot most of the bill.

"The benefits are outrageously generous," said David Keating, executive vice president of the taxpayers union. "After 1993, 23 congressmen could receive annual benefits in excess of the 1989 $89,500 annual salary. One hundred could receive over $50,000."

Over a lifetime, a retired lawmaker could receive a few million dollars, Keating says.

Hastings Keith uses himself as a prime example of the need to reform the pension system, especially the COLAs. A former member of Congress from Massachusetts who served from 1958 to 1972, he says he receives $90,408 a year in ever-increasing federal pensions based on four sources: congressional and federal agency service, military duty, Social Security and an annuity from the federal pension received by his late wife.

His pension payments originally totaled $18,720, he says. COLAs keep driving up his income -- over his objections, he says.

"I don't think I should have COLAs on top of COLAs on top of COLAs when I'm getting more than one needs, more than one deserves," Keith says.

On Jan. 1, he'll receive $100 more a week, he says.

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