Despite having received overwhelming Congressional support in the recent past for a full repeal of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), it has become evident that any change in these offsets in Social Security would take place as part of a larger “reform” of the system scheduled for next year.
During the 2007-2008 Congressional Session, 435 Representatives and 36 Senators cosponsored bills to fully repeal the WEP/GPO laws. President Barack Obama, along with several of his key aides, also supported past repeal efforts.
The President is expected to announce an outline for Social Security reform in the coming weeks, which will provide a basis for debate to begin on Capital Hill.
The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) reduce, or in some cases, eliminate the Social Security benefit of retired MA public employees.
A majority of public retirees from Illinois, Massachusetts, California, Colorado, Louisiana, Ohio, and Texas, are impacted by the WEP or GPO.
While most Washington observers do not expect Social Security reform to be an issue advanced by the new president or Congress in 2009, officials from the affected non-Social Security states continue coalition building and lobbying efforts.
The 2008 U.S. federal poverty levels are $10,400 a year for a single person household and $14,000 a year for a two-person household.
Officials with the Teachers’ Retirement System of Louisiana, called TRSL, and Louisiana State Employees’ Retirement System, called LASERS, said they do not know how many retirees survive on pensions alone.
Louisiana is one of seven states where state employees do not typically participate in Social Security. If employees receive Social Security benefits from other jobs or spousal employment, the benefits could be reduced because of federal restrictions.
LASERS Executive Director Cindy Rougeou said she believes attempts to repeal the federal restrictions — called the Windfall Elimination Provision and Government Pension Offset — stall in the U.S. Congress because of an estimated $80 billion price tag.
“But, as you know, that’s like a drop in the bucket,” Rougeou said. “It’s just negatively impacting so many state retirees and so unfairly.”
If a person worked in the private sector at some point and paid into Social Security, two federal provisions — the Windfall Elimination Provision and Government Pension Offset — would reduce the amount returned to them.
“There’s a real equity issue there,” said Maris LeBlanc, deputy director of the Louisiana State Employees’ Retirement System, which has nearly 100,000 active and retired members.
Congress is considering the repeal of those provisions. But previous Congresses have tried and failed to eliminate them, LeBlanc said.
According to the most recent estimate, undoing the provisions could cost as much as $80 billion, said Robyn Ekings, spokeswoman for the state employees’ retirement system.
U.S. Rep. Don Cazayoux, D-New Roads, and co-sponsor of the legislation seeking to repeal the provisions, calls it a fairness issue.
The bill, sponsored by Reps. Howard Berman, D-Van Nuys, and Howard P. "Buck" McKeon, R-Santa Clarita, has about 336 supporters - three-quarters of the U.S. House.
"The people who need this bill made their Social Security payments for as long as they were required to. But they don't receive full benefits in return. Why? Because they also worked as public servants," Berman said after the hearing in the House Ways and Means Committee.
The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) originally were designed to prevent those earning government pensions and Social Security spousal or survival benefits from "double-dipping" - or obtaining the
maximum benefits under both systems.
But the practical effect has been that retirees in California and 14 other states have their Social Security benefits chopped by about two-thirds if they take up a second career in the public sector after retiring from private employment.
Rep. Michael McNulty, D-N.Y., chairman of the subcommittee on Social Security who convened the hearing, agreed that the rules are no longer working the way they were intended.
Berman called the laws "a classic case of the law of unintended consequences hard at work," and said he is hopeful Congress will repeal the provisions.
The US House of Representatives will hold a public hearing on Social Security’s Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) on Wednesday January 16, 2008.
The WEP and GPO are provisions of federal law that reduce the Social Security benefits of recipients who also receive public pension benefits.
In announcing the hearing, Chairman McNulty stated “Hardworking public servants, widows, people with disabilities, and low-income workers and their families may face hurdles in achieving financial security in retirement, or in case of disability. Congress needs to consider the unique circumstances and vulnerabilities of these and other groups as we look to ensure that Social Security meets the needs of American families today and for generations to come.”
The Subcommittee will examine the needs and concerns of low-income workers, people with disabilities, public servants and other at-risk groups, as well as proposals to improve their economic security, and the costs of such proposals. The hearing will also consider the history and policy rationales for the GPO, the WEP, and exempting some public employees from Social Security coverage.
Anyone wishing to submit comments to the Subcommittee on Social Security regarding this topic can do so by clicking this link.
About a fourth of public employees do not pay into Social Security because they are in government-sponsored pension plans. That category includes federal employees hired before 1984, when Congress created a new federal retirement system and made Social Security part of it.
Many public sector retirees think they are unfairly penalized by the WEP and GPO, and a half-dozen bills have been introduced in Congress to repeal or modify the two provisions. One introduced by Sens. Susan Collins and Dianne Feinstein came up at the hearing yesterday.
The GPO "is most harsh for those who can least afford the loss, and that is lower-income women," Collins testified yesterday. The offset reduces benefits by more than $3,600 a year for more than 200,000 retirees, "an amount that can make the difference between a comfortable retirement and poverty," Collins said.
Efforts to repeal the two provisions have stalled, in large part because of the cost -- billions of dollars over the next decade. Some proposals would extend Social Security coverage to all state and local government employees, but that transition might be difficult to pull off, since many public pension funds rely on stock market investments for income.
Although Senator John Kerry co-sponsored bills that would permanently repeal both the WEP and GPO, it now appears that the Senator would rather address the legislation within the context of an overhaul to the Social Security System.
"During this Congress and in the past, I have cosponsored bills that would permanently repeal both the GPO and WEP. I am currently a co-sponsor of S.206, Social Security Fairness Act of 2007, which Senator Feinstein introduced. I will continue to support partial relief measures to help people adversely affected by the GPO and WEP in the hope that such a bill would pass in the Senate.
"In addition, for your suggestion of a hearing on S.206. I personally believe that the best way to address this legislation is in the context of an overhaul to the Social Security Program. I fear a hearing on this issue has the potential to reopen the debate on private accounts and actually move us backwards in terms of finding a solution."
Based on Senator Kerry's letter, we can draw no other conclusion other than he is not in favor of calling a hearing on the WEP and GPO, the two laws that are so devastating to many public employees.
Therefore, we will focus on the House, where the leadership has indicated a willingness to give our members and their Congressmen an opportunity to be heard. We just can't sit back and wait for Social Security's overhaul, which may or may not happen for many years.
