Setting the Record Straight: do Congressmen pay Social Security taxes?

The average American worker contributes 6.2% of their yearly income to the Trust Fund.  For a smaller number of workers who own their own businesses or are self-employed, it’s 12.4% (each worker is required to contribute 12.4%, but if you work for someone else, your employer is responsible for half that percentage).

Most workers don’t have much of a say in the matter.  Most jobs are covered under Social Security, therefore FICA taxes come out of our paychecks before we even see them.  But there are some notable exceptions to the rule.

Some state and municipal employees, for example, are NOT eligible to receive Social Security benefits.  This group includes public school and university workers who do not pay FICA taxes and have their own employer-sponsored pension plans.

Historically, this group also included U.S. federal workers.  These workers were covered under the Civil Service Retirement System (CSRS).  Like municipal workers, Congressmen had their own pension and benefit plans, so they didn’t contribute to Social Security.

But there are many people who believe Congressmen are still contributing nothing to Social Security.  And since these are the people tasked with making the rules that guide our own benefit amounts, naturally, the idea of every member of Congress getting their own “Cadillac” pension with no personal Social Security experience is upsetting, to put it politely.

So what is Congress’ relationship with Social Security, if any?  Do they get to step away from the program we all rely on in favor of a much more generous pension system?

Claim: Congressmen don’t contribute to Social Security.

This claim WAS true prior to 1984.  For most of the time Social Security has existed, neither Senators nor House Representatives paid into the Trust Fund.  This likely explains why so many people believe this to be true today.

CSRS was the federal retirement plan federal workers used even before the Social Security Act was passed.  By the time FDR signed off on Social Security, federal employees had already been using CSRS for 15 years.  Because they already had their own pension system, federal employees were excluded from contributing to or collecting from the new Social Security program.

But in 1987, the federal government officially flipped from CSRS to the Federal Employee Retirement System (FERS).  Every federal employee hired after 1983 was strictly a FERS-covered employee, with those hired before being grandfathered into CSRS.

Though FERS is generally much more generous than private pensions, compared to CSRS, it’s not the Cadillac plan it used to be (CSRS was never completely funded and still represents over a $950 billion unfunded liability on the federal budget).

The FERS plan consists of three major elements:

  1. The Basic Benefit Plan.  This is a benefit a federal worker contributes toward on each paycheck, like Social Security.
  2. The Thrift Savings Plan (TSP).  This benefit functions sort of like an employer-sponsored Health Savings Account.  A worker’s agency sets up an account in their name and contributes the equivalent of 1% of each paycheck into that account.  Employees can contribute personally to that account with a matching contribution from their agency.  All of these contributions are tax-deferred.

And 3.

…Social Security!

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YES, Congressmen DO contribute to Social Security.  Social Security payroll deductions and Social Security benefits are built into the FERS.  This is the biggest difference between FERS and CSRS.

Not every Congressman is currently under the FERS system, though.  Those who entered Congress prior to 2003 had the option to decline FERS coverage if they preferred to keep CSRS or strictly use Social Security as their retirement supplementation.  But all Congressmen who entered office after 2003 have FERS coverage and therefore pay into Social Security.

Under FERS, not only are payroll tax deductions coming out of each paycheck, but so are contributions toward the Basic Benefit Plan.  Today’s Congressmen are no strangers to seeing that 6.2% coming out of their pay—they contribute the same amount the rest of us do.

But the average Congressman makes around $174,000 per year, putting them tens of thousands of dollars beyond the maximum taxable wage cap.  Though they definitely contribute to the program, they aren’t contributing on 100% of their earnings.  Members in leadership roles, such as House Speaker, Whips, and Majority and Minority Leaders make much more than that.

Their highest earning years—especially if they spend many years in Congress—would get them a significantly higher benefit than most Americans.  They would also receive additional benefits through FERS that wouldn’t mean they’d have to live on Social Security alone.

Knowing this, we can’t say thinking lawmakers might be out of touch with the public on Social Security isn’t valid.  Forty percent of Americans only really have Social Security for retirement income—and they’re not getting the maximum benefit amount their legislators might be getting.  Add to that the fact most legislators don’t contribute on all of their earnings—something most Americans no longer agree with—and we can see why many people feel as though Congressmen have advantages and privileges they don’t get to have.

But NOT having to pay 6.2% into Social Security isn’t one of those privileges.  This claim is false.

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