[Senate Report 116-153]
[From the U.S. Government Publishing Office]


                                                       Calendar No. 274

116th Congress }                                            { Report
                              SENATE
 1st Session   }                                            { 116-153

_______________________________________________________________________


                     END PLUSH RETIREMENTS ACT

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                           GOVERNMENT AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                 S. 439

   TO ALLOW MEMBERS OF CONGRESS TO OPT OUT OF THE FEDERAL EMPLOYEES 
    RETIREMENT SYSTEM, AND ALLOW MEMBERS WHO OPT OUT OF THE FEDERAL 
 EMPLOYEES RETIREMENT SYSTEM TO CONTINUE TO PARTICIPATE IN THE THRIFT 
                              SAVINGS PLAN


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                October 28, 2019.--Ordered to be printed
                
                
                                  ________
                       
                       U.S. GOVERNMENT PUBLISHING OFFICE
                
99-010                          WASHINGTON: 2019               
                
                
                
                
                
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio                    GARY C. PETERS, Michigan
RAND PAUL, Kentucky                  THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma             MAGGIE HASSAN, New Hampshire
MITT ROMNEY, Utah                    KAMALA D. HARRIS, California
RICK SCOTT, Florida                  KYRSTEN SINEMA, Arizona
MICHAEL B. ENZI, Wyoming             JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri

                Gabrielle D'Adamo Singer, Staff Director
                   Joseph C. Folio III, Chief Counsel
 Courtney Allen Rutland, Deputy Chief Counsel for Governmental Affairs
                       Clark A. Hedrick, Counsel
               David M. Weinberg, Minority Staff Director
               Zachary I. Schram, Minority Chief Counsel
                    Anne E. Nelson, Minority Fellow
              Marie E. Talarico, Minority Staff Assistant
                     Laura W. Kilbride, Chief Clerk
                     
                     

                                                       Calendar No. 274
116th Congress }                                          { Report
                                 SENATE
 1st Session   }                                          { 116-153

======================================================================

 
                       END PLUSH RETIREMENTS ACT

                                _______
                                

                October 28, 2019.--Ordered to be printed

                                _______
                                

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 439]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 439), to allow 
Members of Congress to opt out of the Federal Employees 
Retirement System, and allow Members who opt out of the Federal 
Employees Retirement System to continue to participate in the 
Thrift Savings Plan, having considered the same, reports 
favorably without amendment and recommends the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................2
 IV. Section-by-Section Analysis......................................3
  V. Evaluation of Regulatory Impact..................................3
 VI. Congressional Budget Office Cost Estimate........................3
VII. Changes in Existing Law Made by the Bill, as Reported............5

                         I. Purpose and Summary

    S. 439 allows Members of the U.S. House of Representatives 
to opt-out of the annuity plan under the Federal Employees 
Retirement System (FERS), the retirement system for employees 
of the Federal Government that consists of an annuity plan, the 
Thrift Savings Plan (TSP), and Social Security. The bill also 
allows any Member of Congress who opts out of the annuity plan 
to continue to hold a TSP account.

              II. Background and the Need for Legislation

    FERS is the retirement system for employees of the Federal 
Government, including Members of Congress, which consists of an 
annuity plan, the TSP, and Social Security.\1\ Under the 
annuity plan, Members can receive a pension at age 62 after 
only five years of service in Congress, the Federal Government, 
or both.\2\ Members can receive a pension at age 50 if they 
have served for 20 years and at any younger age if they have 
completed 25 years of service.\3\ The TSP portion of FERS is a 
retirement savings and investment plan that allows Members to 
decide on the amount they wish to invest into a TSP account 
that then accumulates earnings over time.\4\ TSP is similar to 
401(k) plans offered in the private sector, and a Member can 
continue investing into his or her TSP account after leaving 
Congress or Federal service.\5\
---------------------------------------------------------------------------
    \1\Off. of Personnel Mgmt., FERS Information, available at https://
www.opm.gov/retirement-services/fers-information.
    \2\5 U.S.C. Sec. 8412(c).
    \3\5 U.S.C. Sec. 8412(f).
    \4\Federal Retirement Thrift Investment Board, About the TSP: 
Purpose and History, available at https://www.tsp.gov/
PlanParticipation/AboutTheTSP/index.html.
    \5\Id.
---------------------------------------------------------------------------
    Under Federal law, all Members of Congress are 
automatically enrolled in FERS.\6\ If a Member does not want to 
pay into the annuity plan of FERS, and thus not receive a 
pension upon leaving Federal service or reaching retirement 
age, he or she may do so only if the Member is a Senator or has 
served in the U.S. House of Representatives since before 
September 30, 2003.\7\ However, if a Member elects not to 
participate in the annuity plan, he or she is also ineligible 
to participate in TSP.\8\ Further, Members of the U.S. House of 
Representatives who began serving after September 30, 2003, are 
not permitted to opt-out of the annuity plan.\9\
---------------------------------------------------------------------------
    \6\See 5 U.S.C. Sec. 8402.
    \7\5 U.S.C. Sec. 8401(20).
    \8\5 U.S.C. Sec. 8431(a).
    \9\5 U.S.C. Sec. 8401(20).
---------------------------------------------------------------------------
    S. 439 allows all Members to choose a retirement plan that 
they feel is appropriate. Under S. 439, all Members, regardless 
of when they first began serving in Congress, may elect not to 
receive the annuity plan under FERS. The bill allows all 
Members to maintain an account under the TSP plan and determine 
the amount they will contribute from their own income towards 
their retirement savings.

                        III. Legislative History

    Senator Mike Braun (R-IN) introduced S. 439, the End Plush 
Retirements Act, on February 12, 2019. The bill was referred to 
the Committee on Homeland Security and Governmental Affairs.
    The Committee considered S. 439 at a business meeting on 
July 24, 2019 and the bill was ordered reported favorably by 
voice vote en bloc with Senators Johnson, Portman, Paul, 
Lankford, Romney, Scott, Enzi, Hawley, Peters, Carper, Hassan, 
Sinema, and Rosen present.

        IV. Section-by-Section Analysis of the Bill, as Reported


Section 1. Short title

    This section established the short title of the bill as the 
``End Plush Retirements Act.''

Sec. 2. Making FERS optional for members

    This section allows Members to adjust the retirement 
benefits they receive under FERS.
    Subsection (a) allows all Members of Congress, regardless 
of the date on which they began serving in Congress, to opt-out 
of participating in the annuity plan under FERS. Subsection (b) 
allows Members who have opted out of FERS to participate in 
TSP.

                   V. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 16, 2019.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 439, the End Plush 
Retirements Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Amber 
Marcellino.
            Sincerely,
                                                 Phillip L. Swagel.
    Enclosure.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    S. 439 would allow Members of the House of Representatives 
who are elected after enactment and all Senators, including 
those elected before enactment, to opt out of the Federal 
Employee Retirement System (FERS) and still participate in the 
Thrift Savings Plan (TSP). Under current law:
           Members of the House of Representatives who 
        entered office in fiscal year 2004 or later may not opt 
        out of FERS. Members who entered office before that 
        date can opt out, but if they do so, they also lose 
        their ability to participate in the TSP.
           Senators can opt out of FERS, regardless of 
        when they entered office, but are then unable to 
        participate in the TSP.
    CBO estimates that enacting S. 439 would reduce revenues by 
$3 million over the 2020-2029 period, because retirement 
contributions paid by some Members of Congress while in office 
would decline. (Retirement contributions by federal employees 
are recorded as revenues in the federal budget.) CBO estimates 
that enacting the bill also would reduce direct spending by an 
insignificant amount over the same period, mainly related to 
eliminating retirement annuities. In addition, CBO estimates 
that implementing the bill would reduce spending subject to 
appropriation by $3 million over the 2020-2024 period, assuming 
appropriations are reduced by the estimated amounts.
    Revenues: On the basis of a historical review, an average 
of 43 new Members begin serving in each session of Congress. 
Under S. 439, CBO assumes that 25 percent of new Members in 
each session of Congress (an average of 11 Members) would opt 
out of FERS. If Members opt out, the portion of their salaries 
that would have been deposited as revenues into the Civil 
Service Retirement and Disability Fund (CSRDF) would instead be 
paid to them directly and revenues to the government would 
decline. The required contribution rate for newly elected 
Members is 4.4 percent of salary (salaries currently equal 
$174,000 for Members not in leadership roles). Thus, 
eliminating those contributions would reduce revenues by $3 
million over the 2020-2029 period, CBO estimates, but that 
amount would change if the number of Members choosing to opt 
out was larger or smaller than CBO's estimate.
    Direct Spending: For most of the Members who would opt out 
of FERS, the reduction in direct spending from eliminating 
future payments for retirement benefits would occur after the 
2020-2029 period; the average length of service for Members 
retiring under FERS is about 16 years. Some Members are 
eligible to retire with as few as five years of service (at age 
62 or older), though the annuities associated with short 
periods of service are relatively small. Thus, enacting the 
bill would reduce direct spending over the 2020-2029 period by 
an insignificant amount, CBO estimates.
    If any current Senators were to opt out of FERS because of 
the bill's provisions allowing them to continue to participate 
in the TSP, enacting S. 439 would increase direct spending. 
Those Senators would receive a refund of the contributions they 
paid into FERS prior to opting out; those refunds would be 
recorded as increases in direct spending. CBO expects that the 
Senators who would choose to opt out as a result of the bill 
would be a small number of those who were relatively recently 
elected; as a result, the increase in direct spending from 
refunded contributions for that group would be insignificant, 
and likely smaller than the reductions in direct spending from 
eliminated retirement benefits.
    Spending Subject to Appropriation: Opting out of FERS would 
eliminate the retirement contributions paid on those Members' 
behalf by their employing House of Congress--which would reduce 
spending subject to appropriation by $3 million over the 2020-
2024 period, CBO estimates. However, those contributions (paid 
at a rate of 14.2 percent of salary, including an increase that 
goes into effect in 2020) are recorded as intragovernmental 
transactions that have no net effect on the deficit: They are 
paid from the salaries and expenses accounts of Congress and 
deposited into the CSRDF as offsetting receipts, or reductions 
in direct spending. (The effect on direct spending, however, is 
not attributed to the cost estimate because the deposit of 
those receipts is subject to future appropriation action.)
    The CBO staff contact for this estimate is Amber 
Marcellino. The estimate was reviewed by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

       VII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows: (existing law 
proposed to be omitted is enclosed in brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

UNITED STATES CODE

           *       *       *       *       *       *       *


TITLE 5--GOVERNMENT ORGANIZATIONS AND EMPLOYEES

           *       *       *       *       *       *       *


PART III--EMPLOYEES

           *       *       *       *       *       *       *



Subpart G--Insurance and Annuities

           *       *       *       *       *       *       *



CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

           *       *       *       *       *       *       *



                    Subchapter I--General Provisions


SEC. 8401.

    For the purpose of this chapter--
    (1) * * *

           *       *       *       *       *       *       *

          (20) [the term ``Member'' has] the term ``Member''--
                  (A) has the same meaning as provided in 
                section 2106, except that, subject to 
                subparagraph (B), such term does not include an 
                individual who irrevocably elects, by written 
                notice to the official by whom such individual 
                is paid, not to participate in the Federal 
                Employees' Retirement System [, and who (in the 
                case of an individual who is a Member of the 
                House of Representatives, including a Delegate 
                or Resident Commissioner to the Congress) 
                serves as a Member prior to the date of the 
                enactment of the Legislative Branch 
                Appropriations Act, 2004]; and
                  (B) for the purposes of subchapter III, has 
                the same meaning as provided in section 2106, 
                without regard to whether the individual elects 
                not to participate in the Federal Employees' 
                Retirement System.

           *       *       *       *       *       *       *


                  Subchapter III--Thrift Savings Plan


SEC. 8431. CERTAIN TRANSFERS TO BE TREATED AS A SEPARATION.

    (a) For purposes of this subchapter, except as provided in 
section 840(20)(B), separation from Government employment 
includes a transfer from a position that is subject to one of 
the retirement systems described in subsection (b) to a 
position that is not subject to any of them.