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House Subcommittee Addresses Social Security Benefits for Economically Vulnerable

On January 16, the House Ways and Means Social Security Subcommittee held a hearing on Social Security benefits for economically vulnerable beneficiaries, including public employees and women.

Chair Michael R. McNulty (D-NY) said that despite Social Security’s benefits to many retirees, “some groups remain economically vulnerable in old age or while disabled. For example, non-married women continue to have higher rates of poverty than other retirees…Those who earned low wages throughout their careers may face economic insecurity in retirement.” He noted that two modifications to Social Security benefits the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) decrease the Social Security benefits of public employees who do not contribute to Social Security if the employees receive a public pension. “While these provisions were intended to help equalize the treatment of workers across employment sectors, many of the approximately one million individuals whose benefits are affected by these provisions believe the GPO and WEP are unfair,” he said.

Ranking Member Sam Johnson (R-TX) said that the GPO and WEP “were enacted to help ensure that workers who pay into a government retirement system outside of Social Security are treated no better than those who work in jobs covered by Social Security…To repeal those two provisions of law would be to give an unfair bonus to individuals who work in jobs not covered by Social Security. Also, the repeal of those two provisions would cost taxpayers roughly $80 billion over 10 years.” He applauded the Public Servant Retirement Protection Act (H.R. 2772), introduced by Rep. Kevin Brady (R-TX). “Under Mr. Brady’s legislation the Social Security retirement benefits of people who worked in and outside of Social Security are calculated using the standard benefit formula that applies to those who worked in jobs only covered by Social Security.” He added, “Public servants…would be given credit for their work in jobs covered by Social Security in the same manner as all other working Americans no better and no worse. The preliminary 10-year cost of Mr. Brady’s proposal is under $5 billion…[and it] reflects a fair treatment of those who have paid into two retirement systems.”

Joseph Rugola, international vice president of the American Federation of State, County and Municipal Employees, testified, “Individuals hit the hardest by these two provisions [the GPO and WEP] are low- and moderate-income women, particularly widows. He added, “About 75 percent of public pensioners affected by the GPO are women. Of these, 85 percent lost their entire spousal Social Security benefits…Many of these employees retire after a full-length career, but may have worked only a 30-hour week, a pattern we call ‘short hours.’ Others may have had less than a full career, say 15 or 20 years following child rearing or divorce. Most of those adversely affected are women who began their careers expecting to retire with both a public pension and a Social Security spousal benefit. It’s a shock when they realize that they will not receive a much-needed portion of their expected retirement income.”

Joan Entmacher, vice president and director of Family Economic Security at the National Women’s Law Center, testified in support of increasing the minimum benefit for retirees with low lifetime earnings and improving the benefits for surviving spouses. “In 2006, Social Security reduced the number of poor elderly women by 7.7 million, and the number of poor elderly men by 4.9 million…Social Security provides 90 percent or more of the retirement income for nearly half (46 percent) of all single women 65 and older who receive Social Security, over half (55 percent) of black single women 65 and older, and six out of ten single Hispanic women 65 and older,” she said. Ninety-eight percent of the recipients of spousal benefits are women, but Ms. Entmacher testified that Social Security benefits “drop substantially at widowhood, by 33 percent to 50 percent…Increasing the survivor benefit to 75 percent of the couple’s benefits could increase benefits for many surviving spouses, other things being equal.” To increase the minimum benefit for retirees, she recommended lowering the number of years required to get a higher benefit, providing credits for years of child care, and increasing the benefit for each year worked.

David A. Rust, acting deputy commissioner for Disability and Income Security Programs at the Social Security Administration; Laura R. Haltzel, specialist in social legislation with the Congressional Research Service; Frances Rosenfield, on behalf of the National Association of Postmasters; Margaret Cagle, a teacher with the Los Angeles Unified School District; John O’Sullivan, secretary-treasurer of the Texas American Federation of Teachers; Terry Moakley, vice president for public affairs with the United Spinal Association; and Sue Melton, state president of the Association of Texas Professional Educators, also testified.

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