Leadership in saving can transform us all.
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I've never had a pension plan.
It's always been employer-sponsored 401(k) plans for me: I save and my employer matches some portion. A couple of employers didn't have a 401(k), so I took advantage of tax-deferred savings in Individual Retirement Arrangements (IRAs). I like retirement savings plans because they put responsibility and control with me.
Eliminating its current plan and implementing a retirement savings plan for Congress will be the first piece of legislation I'll introduce as a Member of the 113th Congress. My tax proposal implements one $25,000-a-year personal (not employer) contribution to a tax deferred account and my Social Security proposal is based on need. Congress can make itself an early adopter of these proposals for all incoming Members.
Contrary to rumor, there is no salary-for-life for Congress. Because laws have changed over time, the Congressional pension plan is a combination of Civil Service Retirement System (CSRS), Federal Employees’ Retirement System (FERS), and Social Security. By law the starting amount of a Member’s retirement annuity may not exceed 80 percent of final salary. But it's still a pension plan that's based on years of service and average salary rather than prudent, committed savings.
Current pay for the House of Representatives is $174,000 a year for most of the 435 members; the Speaker of the House and other leaders make a little more. Whether you think that salary is appropriate is another discussion. But once Members leave Congress, taxpayer obligation must end.
All U.S. Government employees – civilian and military – should transition to a 401(k)-type, defined-contribution retirement savings plan that moves government finance to a cash basis. Congress can lead by example.
