Members’ Frustration Grows
NOVEMBER 2012 VOICE: After more than a decade of starts and stops in the effort to repeal both the Social Security Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), Association members impacted by one or both of the laws have grown understandably frustrated.
Members’ Frustration Grows
NOVEMBER 2012 VOICE: After more than a decade of starts and stops in the effort to repeal both the Social Security Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), Association members impacted by one or both of the laws have grown understandably frustrated.
The GPO and WEP laws, which became law in 1977 and 1983 respectively, are federal laws, which reduce or eliminate the Social Security benefits available to many public retirees. Across the country, a growing number of public retirees (now over 5 million) have been impacted by one or both laws.
Massachusetts is one of seven states that does not participate in Social Security for its public sector work force (CA, CO, IL, LA, OH, and TX are other states not participating). However, a segment of the public work force in each of the fifty states works outside of the Social Security system. Nationally, two-thirds of all teachers, police officers and firefighters do not participate in Social Security.
However, many Association members are not impacted by either law due to the fact that they were eligible to retire from public service before the GPO or WEP law took full effect. To retire, they must have had 20-years of creditable service or have been 55 years old with at least 10 years of service.
“If you did not pay into Social Security as a public employee, then there is a good chance of you being impacted by either the WEP or the GPO. These are federal laws, passed back some 30 years ago to stop what some wrongly considered to be ‘Double Dipping’,” explained Association General Counsel Bill Rehrey. “Both laws are regressive, but it’s the GPO which is devastating to most members. While many long time members are exempt, nearly all recent and future retirees are impacted”
Under the GPO, which applies to retirees attempting to collect Social Security through their spouse’s work history, two-thirds of one’s public pension is used to offset the Social Security benefit. If the value of two-thirds of the pension is larger than the Social Security benefit – which is typically the case – then no Social Security benefit is granted.
However, despite receiving no Social Security benefit, a public retiree may still be eligible for Medicare A & B, which is then billed directly to them by the feds.
Retirees with at least 40 quarters (10 years) of credit under Social Security due qualify for their own Social Security benefit, which may then be reduced by the WEP law. Under the WEP, a formula reduces the Social Security benefit for those with less than 30 years of “substantial earnings” under Social Security. Retirees with thirty or more years under Social Security are exempt from the WEP.
Log Jam
For those members impacted by the WEP or GPO, the impact of potentially losing thousands in Social Security benefits annually can cause significant hardship.
Retirees, without their own 40 quarters under Social Security are hit the hardest. Due to the GPO, what would normally be a monthly Social Security benefit that averages $600 a month (half of their spouses benefit) is wiped out.
Those with their own 40 quarters tend to fare a little better, but still face a maximum reduction of $383 under the WEP if they have less than 20 years of service. A sliding scale formula is set by Social Security under the WEP law, which serves to gradually reduce the benefit for those with 20-29 years of service under Social Security.
Making Sense of It All
Association officials have long contended that the WEP and GPO laws serve no legitimate purpose, should not have been passed in the first place and that they must be repealed. If our repeal bill were to pass Congress and signed into law by the president, current retirees would see their Social Security benefits increased going forward
“The anger and frustration felt by our members, who are effected by WEP and GPO, is completely justified. I’d feel the same way, if it were me. In fact, all of us are upset that these issues have not been addressed after so many years,” says the Association’s Shawn Duhamel, who serves as our point man on federal issues. “I truly believed that WEP and GPO would have been either repealed or at least modified by now.
“In part, the delays have been caused by circumstances beyond anyone’s control. The fact that we’ve endured the 9/11 Terrorist Attack, two wars and two serious recessions all occurred within the past eleven years serving as a major roadblock to this sort of issue being addressed. By CBO (Congressional Budget Office) estimates, repealing both laws would cost federal tax payers $100 billion over 10 years.”
As the country slowly emerges from the 2008 financial collapse and resulting recession, federal policymaking has increasingly been
gripped by partisan politics. And, while repeal bills have once again been filed in both the US House and US Senate, neither has the support needed to become law.
“What we’ve expected is that the WEP and GPO would be included as part of a bigger overhaul of Social Security. Reforms are needed in order to strengthen it for future retirees. While anything that alters Social Security is bound to be controversial, the types of reforms needed are relatively simple,” continued Duhamel.
“The problem we now have is that the Republican leadership in the House wants to allow for partial privatization of Social Security, whereby active employees would be allowed to set some of their contributions aside in private accounts. This is a move our Association and many others, including the Democrats oppose. Our position is that Social Security can be strengthened through relatively minor changes to the program.”
Association officials oppose Social Security privatization for two main reasons: It places future retirees at risk under the fluctuations of Wall Street. And, it diverts money away from paying current benefits, including COLAs.
“The outcome of the 2012 election, and the agenda set by the president and congressional leadership are going to determine the prognosis for the coming session. As frustrating as it is, we cannot give up the fight or take the pressure off,” says Association President Ralph White. “If anything, we need to increase the pressure and make sure Social Security is a top priority for whomever is in office come January 2013.”