WASHINGTON — Along with the rest of America, Rep. George Miller has watched the value of his retirement investments plummet in recent weeks.
“I’ve lost 30 percent like everybody else. This hits home with the Miller family, too,” the California Democrat said in a recent interview.
But the blow is softer for members of Congress than for most. Although lawmakers have lost value in their thrift savings plans — the government’s version of a 401(k) — they are also offered a defined-benefit pension plan backed by the U.S. Treasury and largely insulated from Wall Street fluctuations.
That puts Miller and the other lawmakers into an increasingly privileged category — workers with guaranteed retirement benefits that aren’t subject to the vicissitudes of the financial markets.
Market meltdown or no, if Miller, 63, were to retire at the end of this year he’d take with him an annual pension of about $122,000, according to the National Taxpayers Union, a nonprofit advocacy group in Arlington, Va. On top of that he could tap whatever remains in his 401(k)-like savings plan.
Lawmakers’ retirement benefits start earlier and accrue faster than in plans offered to other federal workers, or by the average private company.
Only 5 percent of private sector workers have defined benefit pension plans, in which the employer pays into an account and promises them benefits based on years of service, salary levels and other factors. That’s down from 1980, when 60 percent of workers had such plans, according to the Center for Retirement Research at Boston College.
Increasingly, employers are putting the responsibility for retirement — and the risk — onto workers themselves by switching to investment plans like 401(k)s. About 30 percent of workers have 401(k)s, in which employees contribute to their own accounts, often with employers matching a small percentage of contributions, according to the Employee Benefit Research Institute.