Congressional Pension: Eligibility, Calculation, and Taxes

A congressional pension is a defined-benefit annuity paid to former members of Congress under the same federal retirement systems that cover other government employees, with a formula that has changed sharply for anyone hired since 2013. A rank-and-file member with 20 years of service and a $174,000 high-3 salary would receive about $59,160 a year under the older formula, or about $38,280 under the newer one. The pension sits alongside Social Security and a Thrift Savings Plan account, and members pay into it out of every paycheck.

Which System Covers a Member

Two federal retirement systems are in play. The Civil Service Retirement System (CSRS) is the older program and now covers only a small group of members who began federal service before 1984. CSRS members generally do not pay Social Security tax on their congressional salary, so the pension is meant to be the main source of retirement income.¹

Everyone who entered federal service in 1984 or later is under the Federal Employees Retirement System (FERS). FERS was built as a three-part structure: a smaller pension annuity, mandatory Social Security participation, and the Thrift Savings Plan with government matching.² Because congressional careers run shorter than typical federal careers, FERS originally used a higher per-year accrual rate for members than for other federal workers. Congress narrowed that gap for anyone hired in 2013 or later.

Vesting and When Payments Start

No pension is payable until a member is vested, and that takes at least five years of creditable civilian service. A single two-year House term isn’t enough. A member who leaves before vesting can get their own contributions refunded, but nothing more.

Once vested, three paths lead to an unreduced FERS annuity:

Age 62 with at least 5 years of service
Age 50 with at least 20 years of service
Any age with at least 25 years of service

A member who leaves earlier keeps the benefit but has to wait to draw it. Someone who leaves at 45 with six years of service simply starts collecting at 62.³

FERS also allows a reduced annuity at the Minimum Retirement Age with at least 10 years of service. The MRA depends on year of birth: 55 for those born before 1948, climbing gradually to 57 for those born in 1970 or later.⁴ Retiring at the MRA with fewer than 30 years costs a 5% penalty for each year the member is under 62. Retiring at 56 rather than 62 would trim the annuity by 30%.

How the Pension Is Calculated

The formula multiplies three numbers: the high-3 average salary (the highest average annual pay during any three consecutive years of service), total years of creditable service, and an accrual rate that depends on the system and the hire date.³ By law, the starting annuity under FERS or CSRS cannot exceed 80% of the member’s final salary.

FERS Members Hired Before 2013

These members use an enhanced accrual rate: 1.7% of the high-3 salary for each of the first 20 years of congressional service, and 1.0% for each year after that.⁵ The standard FERS rate for most federal employees is 1.0% (or 1.1% at age 62 with 20-plus years), so the congressional rate runs roughly 70% higher during those first two decades.

The math for 20 years at a $174,000 high-3 salary:

$174,000 × 1.7% × 20 = $59,160 per year

FERS Members Hired in 2013 or Later

Congress ended the enhanced rate for newer members. Under 5 U.S.C. § 8415(d), anyone classified as a “revised annuity employee” or “further revised annuity employee” uses the regular federal formula: 1.0% per year, or 1.1% per year at age 62 with at least 20 years of service.⁵

Same 20 years, same $174,000 salary:

$174,000 × 1.1% × 20 = $38,280 per year

About $21,000 less than the pre-2013 member gets for the same career.

CSRS Members

The remaining CSRS members accrue at 2.5% per year of congressional service. With no Social Security coming in from that salary, the pension is designed to carry the retirement, and a long career can push the starting annuity close to the 80% cap.³

What Members Pay In

The pension is not free. Members contribute a percentage of every paycheck, and the rate has climbed for newer entrants:

CSRS members: 8.0% of salary toward the annuity, no Social Security tax on congressional pay, plus the 1.45% Medicare tax.¹
FERS members (pre-2013): 1.3% toward the annuity, plus 6.2% Social Security and 1.45% Medicare.
FERS-RAE members (hired in 2013): 3.3% toward the annuity, plus Social Security and Medicare.
FERS-FRAE members (hired in 2014 or later): 4.4% toward the annuity, plus Social Security and Medicare.

The Middle Class Tax Relief and Job Creation Act of 2012 and the Bipartisan Budget Act of 2013 drove these increases. A member hired in 2020 pays more than three times what a pre-2013 member pays into the pension fund at the same salary, and collects a smaller annuity for it.

FERS members also participate in the Thrift Savings Plan, the 401(k)-style leg of the system, with automatic and matching government contributions of up to 5% of pay when the member contributes at least 5%.⁶ CSRS members can contribute to the TSP but receive no match.

Cost-of-Living Adjustments After Retirement

Once the pension is being paid, it adjusts for inflation, but the two systems handle that differently. CSRS retirees get the full Consumer Price Index increase each year. FERS retirees get a capped version:⁷

CPI increase of 2% or less: FERS retirees get the full CPI increase.
CPI between 2% and 3%: FERS retirees get 2%.
CPI above 3%: FERS retirees get the CPI figure minus 1 percentage point.

Over decades, that gap compounds. Two retirees who start with identical pensions, one CSRS and one FERS, drift apart as the FERS adjustment consistently lags real inflation.

Timing matters too. Most FERS retirees receive no cost-of-living adjustment at all until they turn 62, even if they retired earlier under the age-and-service rules. Disability retirees and survivors are exceptions.⁸ A member who retires at 50 with 20 years of service could wait 12 years for the first inflation bump.

Survivor Benefits

A retiring member can elect a survivor annuity so a spouse continues receiving pension income after the member dies. Under FERS, the maximum election pays the spouse 50% of the unreduced annuity and costs the member a 10% reduction in monthly pension for life. A partial election pays 25% and costs 5%. Under CSRS, the maximum survivor benefit is 55% of the unreduced annuity, and the reduction runs 2.5% on the first $3,600 of annual annuity plus 10% on the amount above that.

Waiving the survivor annuity requires spousal consent. A member who declines it at retirement generally cannot add one back later.

If a FERS-covered member dies while still in office with at least 18 months of service, the surviving spouse receives a basic employee death benefit equal to 50% of the member’s final annual salary plus a flat amount that adjusts for inflation. For deaths after December 2025, that flat amount is $43,800.53, payable as a lump sum or in 36 monthly installments.⁹ If the member had at least 10 years of service, the spouse also receives an ongoing annuity equal to 50% of what the member’s own annuity would have been.¹⁰

How the Pension Is Taxed

Congressional pension payments are subject to federal income tax, but not every dollar of each payment is taxable. Because the member’s own contributions (the 1.3%, 3.3%, 4.4%, or 8% coming out of each paycheck) were made with after-tax dollars, a portion of each monthly payment is treated as a tax-free return of those contributions. The rest is ordinary income.¹¹

For annuities that began after November 18, 1996, the tax-free share is figured under the Simplified Method. The total amount excluded over the retiree’s lifetime cannot exceed what the member actually contributed. Once that basis is fully recovered, every subsequent payment is fully taxable. If the retiree dies before recovering the full contribution amount, the unrecovered cost can be claimed as an itemized deduction on the final tax return.¹¹

State treatment varies. Some states exempt federal pension income in full, some offer partial exclusions tied to age or income, some tax it as ordinary income, and a few have no income tax at all.

Pension Forfeiture for Felony Convictions

Federal law strips pension credit from any member convicted of certain felonies tied to their official duties. The forfeiture rules are in 5 U.S.C. § 8332(o) for CSRS and 5 U.S.C. § 8411(l) for FERS. A final conviction for a covered offense erases all service credit earned as a member of Congress, disqualifying the member from any annuity based on that service.¹²

The list of covered offenses is long: bribery, acting as an agent of a foreign government, conspiracy to defraud the United States, mail and wire fraud (including honest-services fraud), money laundering, obstruction of proceedings before Congress, witness tampering, and RICO offenses, among others. Every element of the offense must have occurred while the person was serving as a member, and the conduct must directly relate to their official duties.¹²

Forfeiture reaches only the pension earned through congressional service. The convicted member still receives a lump-sum refund of their own contributions, and creditable service earned in other federal jobs before or after Congress is untouched. The default rule also cuts off survivor annuity payments to the spouse and children, though OPM can make exceptions based on family financial need and whether the spouse took part in the conduct. If the conviction is overturned on appeal, all forfeited benefits are restored retroactively.

1
U.S. Office of Personnel Management. CSRS Information
2
Federal Register. Retirement: Members of Congress and Congressional Employees
3
U.S. Office of Personnel Management. Computation
4
U.S. Office of Personnel Management. Eligibility
5
Office of the Law Revision Counsel. 5 USC 8415 – Computation of Basic Annuity
6
The Thrift Savings Plan (TSP). Contribution Types
7
U.S. Office of Personnel Management. How is the Cost-of-Living Adjustment (COLA) Determined
8
U.S. Office of Personnel Management. Learn More About Cost-of-Living Adjustments (COLA)
9
U.S. Office of Personnel Management. Survivors
10
eCFR. Federal Employees Retirement System – Death Benefits and Employee Refunds
11
Internal Revenue Service. Tax Guide to U.S. Civil Service Retirement Benefits (Publication 721)
12
Office of the Law Revision Counsel. 5 USC 8411 – Creditable Service