Legislative Update: June 2021

Congress May Consider Ending Two Provisions That Reduce Social Security Benefits of Public Employees

Shannon Benton, Executive Director

Two provisions of law, known as the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) unfairly reduce, or even completely eliminate, the Social Security benefits of millions of Americans who have devoted their careers to public service, in addition to having worked other jobs that withheld payroll taxes for Social Security.

In December of 2020, about 1.9 million people, or about 3% of all Social Security beneficiaries, were affected by WEP.  This provision applies to workers who are entitled to both Social Security benefits as well as to pension benefits from employment not covered by Social Security.  School teachers and firemen are two good examples.  Before 1983, those whose primary employment wasn’t covered by Social Security could still receive the full amount of any Social Security benefits they may have earned, assuming they had worked long enough to qualify (usually 10 years of work credits).  Today though, people affected by the WEP must have their benefits calculated using a different benefit formula.  The WEP can reduce Social Security benefits by up to half the amount of the individual's pension from non-covered work.

The GPO reduces the Social Security benefit received by spouses and surviving spouses who also collect a government pension.  Nine out of 10 public employees affected by the GPO lose their entire spousal benefit, even when their spouse paid Social Security taxes for many years.  According to the Congressional Research Service, in 2018 approximately 6.6 million state and local government workers (28%) were in non- Social Security covered jobs.  About 83% of all affected by the GPO are women.

The rationale for both the WEP and the GPO — that the Social Security benefit formula is overly generous to these individuals and that they are reaping unintended benefits — is very hard to justify today.  In fact, Social Security benefits are quite modest when compared to the national pension systems of other developed nations.   The modified benefit formulas used under each of these two provisions substantially reduces the benefit that workers were counting on, but these are benefits that were earned and paid for by Social Security taxes.

In January of 2021, bipartisan legislation, the Social Security Fairness Act (H.R. 82), which would eliminate the WEP and the GPO, was introduced by Rep. Rodney Davis (IL).  To date, the bill has 136 co-sponsors including BOTH Democrats and Republicans.  TSCL strongly endorses this legislation and we encourage you to ask your Representative to support it.  Public service employees deserve to get all the Social Security benefits they rightfully have paid for.