Rep. DeSantis, Claiming to “Reject” Federal Pension Benefit, Misleads and Exaggerates
FlaglerLive | January 29, 2013
On Monday, newly-elected U.S. Rep. Ron DeSantis, the Republican who represents all of Flagler County, announced that he was “rejecting the taxpayer-subsidized benefits offered to Members of Congress by turning down his congressional pension and federal health insurance benefits.” The announcement was made through a press release at DeSantis’s website, under a big headline announcing the rejection, and was blasted to media outlets, dozens of which ran the item almost word for word.
DeSantis’s announcement left the impression that the congressman was rejecting outright participation in the system. He did not qualify the rejection. The announcement was misleading, and was based on exaggerations and half-truths.
DeSantis never cited key facts in his announcement: first, that it would be illegal for him to bail out of the Federal Employee Retirement System, the defined benefit plan that covers millions of civilian employees of the federal government. (DeSantis is a lawyer by training.) Second, that he would not be vested—in order to eventually be eligible to tap into the benefit—for five years, which means he’d have to be reelected at least twice before having any benefits to swear off. Third, at age 34, DeSantis is at least 23 years away from drawing any kind of retirement benefit, assuming he manages to be reelected at least four times. If he doesn’t, he wouldn’t be eligible for any retirement pay from the federal retirement system until he is 62, in September 2040. If he chooses at that time to turn down the benefit—which he will be eligible for, regardless of his news-release claims—it might then be more significant news.
Members of Congress could, until 2004, elect not to participate in the federal retirement system. But for any member of Congress elected in 2004 or later, participation in the federal retirement system is mandatory, because the system relies on participants’ contributions to be viable: when individuals bail, the system is less sound for remaining participants. DeSantis doesn’t have a choice but to be part of it.
DeSantis wants to end members of Congress’ eligibility to participate in the system, and he says he’ll file a bill to do just that. The bill is not likely to gain much support, though it would be—as was his announcement on Monday—an effective way to gain positive press and a bit of attention without risking any political capital.
When contacted for clarification, Amy Graham, DeSantis’s communications director, said DeSantis is, in fact, participating in FRES. But that when the time comes to draw down the pension (assuming that time does come), he won’t do it. “He would be eligible to receive that pension,” Graham said. “He won’t accept those funds.”
A typical congressman has a staff of about 16 to 18, with a personnel allowance of $831,000 (as of 2007). All those employees fall under the federal retirement system, and in the aggregate cost taxpayers—to the extent that they do cost taxpayers—far more than the congressmen they serve, especially if staffers outlast politicians (as many do, shuttling from office to office). DeSantis is not proposing to end their retirement pensions.
Meanwhile, DeSantis is paying 1.3 percent of his annual salary of $174,000 (or $2,262 a year) into the retirement system, as required. (Congressmen pay more than other civil service employees, who are required to pay (0.8 percent).
But the freshman congressman also exaggerated claims about how much in retirement pay retired congressmen stand to make. “The National Journal,” DeSantis’s news release stated, “recently reported that Members of Congress are entitled to a pension program that costs roughly $28 million annually and which enables some lawmakers to pull down six-figure pensions on an annual basis.” (The National Journal article could not be immediately located.)
The $28 million figure is accurate, but still, on its own, misleading. It combines the cost of the older, costlier retirement system and the cost of the current, far cheaper retirement system.
Lawmakers who do pull down six figures are few either way. The Congressional Research Service calculated in November that the 215 members of Congress who have retired under the current Federal Employee Retirement System receive an average annual pension of $39,576. Few, if any, members of Congress retiring under FERS would manage to pull down a six-figure pension for the coming years, because that system, which went into effect in 1987, was created by Congress to reflect private-sector retirement benefits, and replace its predecessor—the more costly Civil Service Retirement System (CSRS). Under that older system, the average annual annuity for the 280 members of Congress was $70,620.
As members of Congress who were part of the Civil Service Retirement System die off, the total annual cost will continue to decline. The average age of those members was 78, as opposed to 70 for those retired and retiring under the current system.
DeSantis was also evasive in the crucial matter of who is paying for those annuities. “I do not believe that elected officials should be provided pensions at taxpayer expense,” he says in his release. But taxpayers are footing only a fraction of the cost of either retired congressmen’s pensions or of that of retired federal employees. Under the older, costlier plan, members of Congress contributed 8 percent of their pay to the retirement system, while the government contributed another 8 percent. Under the new plan, the federal government contributes 18.3 percent (and 16.7 percent to congressional employees). The funds are invested, by law, in Treasuries, and the system is considered sound in perpetuity.
(In Florida, public employees pay 3 percent, the state pays from 4 to 10.7 percent, depending on the employee’s classification. For example, the state contributes 4 percent to a teacher’s retirement, 13.8 percent to a firefighter’s or a cop’s, and 9 percent to an elected official other than a judge, who gets almost 11 percent.)
The congressman in his news release also said he would turn down health benefits offered members of Congress. There is no law against that. The Jacksonville Times Union reports that DeSantis is covered by the health benefits of his wife, who is covered by First Coast News in Jacksonville. His top priority as a congressman, he says, is to repeal the Affordable Health Care Act—better known as Obamacare—which would enable close to 50 million uninsured Americans to get affordable health insurance.