On June 9, the House Ways and Means Subcommittee on Social Security held the fourth in a series of hearings on proposals aimed at protecting and strengthening Social Security. Other hearings covered by WPI took place in May (see The Source, 5/20/05 and 5/13/05).
The purpose of this hearing was to examine the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP), benefit adjustment provisions that affect federal, state, and local government employees. In a press release announcing the hearing, Chair Jim McCrery (R-LA) stated, “As we work to strengthen Social Security for the future, we should examine proposals to ensure teachers, police officers, firefighters, and other public employees are treated fairly under the program.”
Director of Education, Workforce, and Income Security at the Government Accountability Office (GAO) Barbara Bovbjerg stated that the Social Security Administration (SSA) estimates that there are nearly 5 million government employees in the United States not covered by Social Security because they participate in state or local pension plans, adding, “Even though non-covered employees may have many years of earnings on which they do not pay Social Security taxes, they can still be eligible for Social Security benefits based on their spouses’ or their own earnings in covered employment. SSA estimates that nearly all non-covered state and local employees become entitled to Social Security as workers, spouses, or dependents.” She explained that in order to address this issue, Congress approved creation of the GPO and WEP: “Under the GPO provision, enacted in 1977, SSA must reduce Social Security benefits for those receiving non-covered government pensions when their entitlement to Social Security is based on another person’s (usually a spouse’s) Social Security coverage. Their Social Security benefits are reduced by two-thirds of the amount of their government pension. Under the WEP, enacted in 1983, SSA must use a modified formula to calculate the Social Security benefits people earn when they have had a limited career in covered employment. This formula reduces the amount of payable benefits.”
Noting that some Members of Congress would like to eliminate the GPO and WEP provisions as part of a larger overhaul of Social Security, Ms. Bovbjerg pointed out that the proposals would be expensive in light of current solvency issues: “According to the most recent estimates from SSA, eliminating the GPO entirely would cost $32 billion over 10 years and cost 0.06 percent of taxable payroll, which would increase the long-range deficit by about 3 percent. Similarly, eliminating the WEP would cost nearly $30 billion and increase Social Security’s long-range deficit by 3 percent.”
Federally Employed Women President Patricia Wolfe expressed her support for eliminating the GPO, stating that it “prohibits federal retirees from collecting both a full Civil Service Retirement System (CSRS) annuity based upon his or her own government employment and full Social Security benefits based upon a spouse’s employment,” adding, “The victims of GPO are largely elderly women who are both CSRS annuitants and widows of private sector employees. Many of these women worked in lower grade/salaried positions and the loss of the Social Security benefit causes a major financial hardship. Had these women spent their careers anywhere but the federal government, they would be entitled to full, unreduced Social Security spousal or survivor benefits. But because they earned their pensions through federal service under CSRS, their Social Security benefit is ‘offset’ by their own earned retirement benefits.” Ms. Wolfe also offered a number of statistics to show that the current structure of Social Security discriminates against women: