Consideration of legislation that would have replaced the current formula used in the Windfall Elimination Provision (WEP) was postponed on July 13. The House Ways and Means Committee postponed consideration of H.R. 711, legislation that was first introduced by Congressman Kevin Brady (R-TX) and Congressman Richard E. Neal (D-MA) in 2015.
The proposal would have implemented a different WEP formula designed to treat public employees who paid into Social Security the same as other American workers.
In a statement, Brady, Chairman of the Ways and Means Committee, said that “it has become clear…that public servants are not in agreement” about his proposed bill.
While the legislation had 120 cosponsors, no Colorado Representatives had signed on. (The PERA advocacy center provides simple steps for contacting elected officials about any issue, including opinions on the WEP.)
Recent amendments to the legislation by Rep. Brady were quickly opposed by employee groups such as the National Active and Retired Federal Employees Association (NARFE). This opposition may have led to Brady’s decision not to move forward with the bill at the current time.
“We need the community to come together on what they can all support or the consequence, unfortunately, is to see the current WEP harm people on a daily basis that frankly don’t deserve being harmed,” Brady stated. “We will postpone consideration of H.R. 711 until that agreement is found.”
In other Social Security news…
The 2016 annual report from the Trustees of the Social Security and Medicare trust funds was released in June. Looking at the results can offer recent information about the current status of the trust funds as well as projections of how that status may change in the future.
This year’s report shows that payroll deductions have not been enough to fund current benefit payments since 2010 and interest income must be spent to fully fund benefits.
After 2019, the savings process is projected to turn negative. At that point, assets from the trust fund will need to be sold to raise money to make benefit payments.
Projections show that 18 years from now, in 2034, all trust fund savings will have been spent and, moving forward, benefits will need to be paid from current payroll deductions. At the same time, the number of workers relative to the number of retirees and recipients of benefits is expected to decline, while payroll deductions are projected to only be enough to pay three quarters of benefits at current levels.
There are a broad range of options for restructuring Social Security benefits such as later retirements, changes to the benefit formula, applying the FICA tax to higher maximum earning levels, or requiring all new public employees to contribute to Social Security. Using the current system, the plan’s actuaries estimate that Social Security faces an actuarial deficit of 2.66 percent of taxable payroll to cover benefits over the next 75 years. So for Social Security benefits to be there for the next generation and beyond, payments would have to be reduced or payroll deductions would have to increase.
PERA on the Issues posts are written and compiled by the staff of Colorado PERA under the direction of Executive Director Greg Smith and the PERA Board of Trustees. We encourage you to comment with your thoughts and feedback.
Windfall elimination provisionA provision of federal law that may reduce Social Security benefit payments to retirees who receive a pension based on work during which they did not contribute to Social Security. The WEP does not apply to those with 30 or more years of substantial earnings in Social Security.Trust fundA fund in which money and/or other assets are held and managed by trustees on behalf of plan participants. PERA maintains trust funds for each of its Defined Benefit Plan divisions (State, Local Government, School, Denver Public Schools, and Judicial).Trust fundA fund in which money and/or other assets are held and managed by trustees on behalf of plan participants. PERA maintains trust funds for each of its Defined Benefit Plan divisions (State, Local Government, School, Denver Public Schools, and Judicial).
I worked 1/2 my career paying into Social Security. Now I will be penalized by earning a State pension. WEP is a bunch of hooey.
Congress also needs to pay back the Social Security funds they borrowed years ago.
How about H.R.973 – Social Security Fairness Act of 2015 and related Senate Bill 1651? This proposed legislation would repeal WEP not just tinker with the formula.
Thank you for your question. You are correct that H.R. 973/S. 1651 to repeal the WEP was introduced in 2015. No action has been taken on H.R. 973/S. 1651 since mid-2015. H.R. 973 had 154 cosponsors and Rep. Ed Perlmutter was the only one from Colorado.
What happened to Social Security funds that were “borrowed” for the general budget??
WEP is punishment! Every year when I get my PERA increase, SSA comes along and takes two-thirds of it. This is so unfair!
I worked 3/4 of my career in the PRIVATE sector (social security system), however, at the request of my employer that their employees be involved in the community by teaching a college class, etc, I have had to take a reduction in my social security check (because of spending work time in the public system). I paid into the social security system as well as the public employees retirement system. Upon retirement, was penalized for trying to save for my future.
Repeal the WEP
I tried reading H.R. 711 and it’s quite complex. Is there some layman’s description of the proposed WEB Reform formula and how it compares to the current law?
I’m reluctant to support such legislation unless I know how it would apply to various work history situations.
Mr. Griffin, please see this story on WEP repeal legislation: https://peraontheissues.com/index.php/2015/04/27/proposed-federal-legislation-could-eliminate-windfall-elimination-provision/
I continue to work in my retirement and pay social security each month…Why?? I would earn $600 from social security but currently I only receive about $100. The system is not fair.
Can’t understand how the Feds would penalize committed long term workers in more than one occupation
Have the supporters of changing the formula considered presenting a new proposal? The NARFE delivers an important service to the community that is limited by government guidelines. Postal workers are their main membership.
Finding a fair WEP formula may not be a one size fits everybody situation.
Couldn’t agree more. It’s very disheartening to realize there is a penalty for those of us who have worked very hard & tried to plan for retirement. If I paid the money into Social Security, I am entitled to receive that as part of my retirement without deduction simply because I also have PERA. It’s called hard work and we should receive full compensation for that.
Well said. I continue to work in my retirement and continue to pay into Social Security……for no benefit.
I worked in NYC and in Albuquerque, New Mexico collecting my SOcial Security ! Moved to Colorado Springs, Colorado and worked for the school system as I did in New Mexico! I retired two years ago, and applied to go on my husbands Social Security and drop mine! I was denied his Social Security because of my Pera! Very unfair!
WEP IS SO UNFAIR! I have paidinto SS FOR 50 + quarters, b4, during and after working in the school system and also paying into PERA for 33 years. I receive only a fraction of SS retirement I would have received if not negtively impacted by WEP.