The Congressional Research Service (CRS) has released an updated version of its report concerning the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). It includes discussion of pending legislation that would affect both.
The updated version of “Social Security: The Windfall Elimination Provision (WEP),” the CRS report that concerns the WEP and the GPO—benefit formulas that reduce Social Security benefits for workers and their eligible family members if the worker receives (or is entitled to) a pension based on earnings from employment not covered by Social Security—now includes information concerning bills before chambers of Congress that would affect the formulae. “Recent legislation has generally proposed either to eliminate the provision for all or some affected beneficiaries, or replace the current-law provision with a new proportional formula based on past earnings from both covered and noncovered employment,” notes the report.
About the WEP
The WEP is a modified benefit formula that reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security and thus not subject to the Social Security payroll tax. It is intended to remove an advantage or “windfall” that these workers would otherwise inadvertently receive due to the interaction between the regular Social Security benefit formula and the workers’ relatively short careers in Social Security-covered employment.
In December 2021, the WEP affected approximately about 2 million people — mainly state and local government employees covered by alternative staff-retirement systems, as well as most permanent civilian federal employees hired before Jan. 1, 1984, who are covered by the Civil Service Retirement System (CSRS).
There are pro and con arguments concerning the WEP:
- Supporters argue that the formula is a reasonable means to prevent overgenerous payments and unintended benefits to people who have earnings not covered by Social Security and receive pensions from noncovered work.
- Opponents argue that the provision substantially reduces a benefit that workers may have included in their retirement plans, and it reduces benefits disproportionately for lower-earning households. Others criticize the current WEP formula as an imprecise way to determine the actual windfall when applied to individual cases.
Legislation that Would Affect the WEP
Pending federal legislation generally proposes either to eliminate the provision for all or some affected beneficiaries, or replace the current-law provision with a new proportional formula based on past earnings from both covered and noncovered employment.
The Equal Treatment of Public Servants Act of 2021
Rep. Kevin Brady (R-TX) introduced the Equal Treatment of Public Servants Act of 2021, H.R. 5834, on Nov. 3, 2021. The bill would replace the WEP with the new proportional formula for individuals who become eligible for Social Security benefits in 2023 or later. Individuals becoming eligible during the transitional period between 2023 and 2061 would receive the higher of their benefit under the current-law WEP or the proportional formula. For those who become eligible in 2062 and later, benefits would be based solely on the proportional formula. The bill also would provide a rebate payment starting nine months after enactment for workers (up to $100 per month) and their dependents (up to $50 per month) affected by the current WEP. The rebate payments would increase with cost-of-living adjustments.
Status. The measure was referred to the Ways and Means Committee; specifically, its Subcommittee on Social Security. It has not taken action.
Social Security 2100: A Sacred Trust
The Social Security 2100: A Sacred Trust was introduced in both chambers of Congress on Oct. 26, 2021. Rep. John Larson (D-CT) introduced the House version, H.R. 5723; Sen. Richard Blumenthal (D-CT) introduced the Senate version, S. 3071.
The bills include provisions that would repeal the WEP and the GPO for benefits payable during 2022-2026. The Social Security Administration’s Office of the Chief Actuary estimated that enactment of this provision alone would increase the net long-term cost by 0.01% of taxable payroll.
Status. H.R. 5723 was referred to the House Ways and Means Committee — specifically, its Subcommittee on Social Security; it also was referred to the House Energy and Commerce Committee — specifically, its Subcommittee on Health. S. 3071 was referred to the Senate Finance Committee. They remain pending in those bodies.
Wellbeing for Every Public Servant Act of 2021
Rep. Julia Letlow (R-LA) introduced the Wellbeing for Every Public Servant Act of 2021, H.R. 4788, on July 29, 2021. It provides that individuals whose combined monthly benefits from Social Security and noncovered public pensions are below a wage-indexed amount of $5,500 would be exempt from the WEP. Beneficiaries whose combined monthly benefits from Social Security and noncovered public pensions are between $5,500 and $6,333 would be subject to a partial WEP reduction. The legislation would apply to benefits payable for months after the enactment of this act.
Status. The measure was referred to the Ways and Means Committee; specifically, its Subcommittee on Social Security. It has not taken action.
Social Security Fairness Act of 2021
On Jan. 4, 2021, Rep. Rodney Davis (D-IL) introduced H.R. 82, the House version of the Social Security Fairness Act of 2021. The bill would amend title II of the Social Security Act to eliminate the WEP and the GPO; it also would repeal provisions that reduce Social Security benefits for individuals who receive other benefits, such as a pension from a state or local government. These changes would be effective for benefits payable after December 2021. On April 22, Sen. Sherrod Brown (D-OH) introduced the Senate version, S. 1302.
Status. On July 15, 2022, a motion was filed in the House to place the bill on the consensus calendar; on Sept. 20, the House did so; this means that the bill could be considered by the House of Representatives be the end of September. S. 1302 was referred to the Senate Finance Committee, which has not taken action on it yet.
Public Servants Protection and Fairness Act of 2021
On April 1, 2021, Rep. Richard Neal (D-MA), Chairman of the House Ways and Means Committee, introduced H.R. 2337, the Public Servants Protection and Fairness Act.
The bill would replace the WEP with the new proportional formula for individuals who become eligible for OASDI benefits in 2023 or later. A benefit guarantee provision would allow individuals to receive the higher of their benefit under the current-law WEP or the proportional formula. The proposal would also provide a rebate payment starting nine months after enactment for retired-worker and disabled-worker beneficiaries affected by the current WEP (up to $150 per month); the rebate payments would increase with cost-of-living adjustments.
Status. The measure was referred to the Ways and Means Committee; specifically, its Subcommittee on Social Security. It has not taken action.
CRS Updates Report on Windfall Elimination Provision to Reflect Pending Legislation - ASPPA Net
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