"AIG insures the pension trust of the United States Congress!"
Chain email on Wednesday, March 18th, 2009 in a chain e-mail
AIG does not insure the pensions of Congress
An anonymous e-mail making the rounds claims that Congress has its own selfish reasons for bailing out the insurance company American International Group, better known as AIG.
"Remember when this economic crisis hit, and Congress let Bear Sterns go under, pushed a bunch of forced marriages between banks, etc.?" the e-mail asks.
"Then they bailed out AIG. At the time, I thought: 'That's strange. What does an insurance company have to do with this crisis?'
"I think I just found the answer. Among other things, AIG INSURES THE PENSION TRUST OF THE UNITED STATES CONGRESS!! No wonder they got bailed out right away!"
Note the classic signs of the chain e-mail — all capital letters and LOTS OF EXCLAMATION POINTS!!! But we digress ...
To recap the history here, AIG is an insurance company that collapsed in September 2008. Because the firm had so many obligations, the federal government concluded the broader economy could be badly damaged if AIG were simply allowed to go under.
So the government gave AIG access to credit to make good on its obligations, more than $150 billion so far. AIG has in turn paid billions to customers such as Goldman Sachs, Merrill Lynch, Bank of America, Citigroup and Wachovia.
We looked into the claim that AIG insures the pensions of members of Congress.
"It's not true — totally bogus," said Mike Orenstein, spokesman for U.S. Office of Personnel Management, which oversees federal pensions. He said he's been asked the question at least three times since the beginning of the year.
AIG does sell retirement services like annuities. But it does not insure federal pensions, said AIG spokesman Joseph Norton.
Next we turned for confirmation to the National Taxpayers Union, a nonprofit advocacy group that favors lower taxes and smaller government.
"Neither federal pensions in general nor congressional pensions in particular are insured by any private entity," said Pete Sepp, vice president for policy and communications.
The government doesn't need to insure its pensions because the pensions are ultimately paid for by government revenues. That means Congress will get their pensions "until the federal government itself goes broke. If that were to happen, we would be a Third World country," he said.
The National Taxpayers Union believes this dynamic puts off needed reforms to the Civil Service Retirement System and Social Security, he added.
We should add that Congress members do not receive their full salary for life, as some Internet sources suggest. (This year, congressional pay is scheduled to be $174,000 a year, though there is a possibility Congress will reject a recent cost-of-living raise.) Instead, members accrue benefits based on how long they serve. In 2006, the average pension was about $61,000 a year for 20 years of service, according to the Congressional Research Service.
If anyone insures congressional pensions, it's U.S. taxpayers, not AIG. The chain e-mail that claims AIG insures congressional pensions is just plain wrong. In fact, we rate it Pants on Fire!