We frequently hear from our readers wanting an update on the latest efforts to repeal or reform Social Security’s WEP/GPO. This update is current as of October 2019 and includes PERA’s efforts to advocate on behalf of its members on this important issue.
Most Colorado PERA members do not contribute to Social Security, but many of them expect to receive Social Security benefits from their non-PERA employment or through benefits earned by a spouse. Unfortunately, two provisions in federal laws might reduce those Social Security benefits for PERA members: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
These provisions reduce regular Social Security benefits for
workers or their eligible family members if a worker receives a pension (e.g.,
PERA) that is based on non-Social Security covered employment.
Many PERA members rely on Social Security benefits, and WEP/GPO reductions can have a real financial impact on their retirement income. For that reason, PERA advocates on behalf of its members for reform to the WEP and GPO.
The GPO was enacted in 1977 and reduces Social Security benefits paid to spouses and widow(er)s of insured workers if that person also receives a pension. In 1983, Congress enacted the WEP as part of major amendments designed to shore up the financing of Social Security and provide a different benefit formula to “remove an unintended advantage that the regular Social Security benefit formula provided.” According to information from the Social Security Administration (SSA), as of December 2018, about 2.3 million Social Security beneficiaries nationwide—including 78,780 Coloradans—had their benefits reduced by the WEP or the GPO.
Prior Repeal Efforts
Proposals to repeal these provisions have been steadily introduced in Congress without success for over 20 years. In some years, more than half the U.S. House of Representatives signed on as co-sponsors, yet a bill never made it out of committee. The cost of repeal, which the Social Security Administration estimated in 2016 would increase the long-term cost of the program by 0.13 percent of payroll, and general uncertainty surrounding Social Security’s financial future, have been roadblocks in Congress.
The latest projections included in the Social Security Board of Trustees 2019 annual report show that Social Security will be unable to pay scheduled benefits in full and on time starting in 2035. Specific program changes will likely involve intense debate in Congress, but at the same time comprehensive Social Security reform is likely to include meaningful discussion of WEP/GPO. Nancy A. Berryhill, Acting Commissioner of Social Security, recommends lawmakers “address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them.”
Current Reform Efforts
WEP reform efforts have gained momentum recently, including two proposals from members of the House Ways and Means Committee: Chair Rep. Richard Neal (D-Massachusetts) just introduced HR 4540, Public Servants Protection and Fairness Act (overview), and ranking member Rep. Kevin Brady (R-Texas), reintroduced HR 3934, Equal Treatment of Public Servants Act (overview), in July.
These bipartisan proposals would cost substantially less than full repeal by replacing the WEP with a new formula designed to offer relief to affected workers. Combined with the lower cost, focusing on the inequitable application of the offsets, rather than outright repeal, likely increases the chance of a successful outcome when Congress takes action on the issue.
PERA’s Congressional Outreach
PERA, other public pension plans across the country, state legislators, and various retiree organizations continue to educate Congress about the impact of these rules on pension recipients. PERA staff are in the process of meeting with members of Colorado’s congressional delegation to emphasize the way in which these provisions reduce retirement income that would otherwise be available through Social Security.