History will determine whether the November 20th Congressional Field Hearing on the Social Security Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) laws marks a true turning point in the 40-year struggle to end the two inherently unfair federal laws. Currently, next steps within the current Congressional session remain unclear.

However, there are some key takeaways and observations from the Baton Rouge hearing.

1) Pressure from retirees is a difference maker

One thing is crystal clear, the pressure being brought by public retirees has been felt by Congress. As of December 31, 2023, just over 2 million current retirees are impacted by the WEP – a number that continues to grow by approximately 70,000 retirees each year. Another 745,000 retirees are harmed by the GPO.

In addition to organizations like Mass Retirees, most prominently the Texas Retired Teachers Association (TRTA), and public employee unions organizing their members to advocate for change, a whole new group of retirees have organized online via social media to create a true grassroots campaign focused on WEP and GPO repeal. This has served to amplify the message beyond traditional channels, helping to gain media attention and generate public awareness of the unfairness of WEP and GPO.

One example of these diverse, yet coordinated efforts is the speed with which HR82 (legislation to fully repeal both the WEP and GPO) has reached 300 House cosponsors this year. While similar bills routinely gained more than 300 cosponsors in the 1990s and early 2000s, it took advocates years to achieve what today’s grassroots have done in the matter of months.

Elected officials know that public retirees vote in higher percentages than any other demographic group. The fact that public retirees continue to relentlessly pressure Congress to act has not gone unnoticed.

2) Witnesses did an excellent job representing harm caused by WEP/GPO

Four witnesses testified in person at the hearing representing law enforcement, public educators, firefighters, and state workers. Like Massachusetts, the majority of Louisiana’s public workforce is not covered by Social Security subjecting public retirees to the WEP and GPO.

Each of the four witness testified, in great detail, as to the harm caused to them and their families by the two unfair federal laws. They also spoke to the problems the laws have caused in terms of recruitment and retention of public sector workers.

Importantly, the witnesses also explained to the Committee how they came to qualify for Social Security. Like many public retirees, they qualify for Social Security through private sector employment and/or military service. They paid their federal FICA taxes, earned a benefit, and are now being wrongly denied the benefits for which they paid.

3) Lack of notification that WEP/GPO exist

A major point driven home during the hearing is the fact that many public employees do not know of the existence of the WEP/ GPO laws until they begin to plan for their retirement. In some cases, the retiree only became aware of the laws when they applied for their Social Security benefits or even after they begin to collect their benefits.

Each of the four public retirees who testified at the November 20th hearing stated that they were unaware of the existence of WEP/ GPO when they first began their public service careers. Some questioned whether they would have taken a public sector job had they known that their Social Security benefit would be reduced or even eliminated (GPO).

Throughout the hearing, House Ways and Means Chairman Jason Smith (R-Missouri) made it a point to focus on the lack of awareness and notification of the laws. This includes the current inability of the Social Security Administration to accurately calculate estimated benefits of those employed in jobs not covered by Social Security. This leads to incorrect Social Security estimates being given to public employees and retirees – which in turn leads to flawed retirement planning.

It appears that any legislation involving changes to WEP/GPO will likely include requirements for improved notification and estimated benefit calculations.

4) Lack of understanding of how WEP/GPO laws function

In addition to testimony regarding the lack of notification surrounding the existing of WEP/GPO, the hearing also made it clear that a lack of clear understanding exists on how the laws function.

For instance, one witness testified that he was concerned that the GPO would reduce his wife’s Social Security benefit should she collect a survivor’s pension in the event of his death. A spouse, who is a private sector retiree, is not subject to the GPO. Only the public sector retiree themselves would be subject to the GPO or WEP laws.

Thankfully the Ways and Means Committee staff, who are Social Security experts, were able to speak with the retiree following the hearing to explain that his wife’s benefit would not be reduced. Hopefully, this provides some peace of mind.

Another frequent misconception among retirees harmed by the WEP is how their Social Security benefit was calculated. Many wrongly believe that the WEP reduced their monthly Social Security benefit by “thousands” of dollars. The truth is that there is a maximum WEP reduction, which is based on the number of years of substantial earnings a retiree has under Social Security. The WEP reduction is set based on the year in which a retiree becomes eligible for Social Security (normally age 62). The WEP is applied based on year of eligibility – not the year in which a retiree begins to collect Social Security.

For retirees with 10-20 years (40-80 quarters) of substantial earnings covered by Social Security the maximum monthly WEP reduction is $557.50 for those first eligible in 2023. Last year the maximum reduction was $512. In 2021 it was $498.

For retirees with 21-29 years of substantial earnings the WEP reduction becomes proportional, with the reduction decreasing as the years of contributions increase. With 21 years the monthly reduction is $501.80, with 22 years is $446. A retiree with 29 years of substantial earnings would see a monthly reduction of $55.80. By way of reference, the maximum reduction for those retirees who became eligible for Social Security in 1990 was $178 a month.

At 30 years of substantial earnings the WEP is no longer applied, allowing the retiree to receive their full Social Security benefit. Should legislation repealing the WEP pass into law, Social Security benefits would be adjusted going forward to restore the portion of the benefit reduced by the WEP.

5) Next steps unknown

Despite universal bipartisan comments that WEP and GPO are “unfair” and “harmful” to public retirees, it is unclear as to what action Congress may take on the issues prior to the end of the current legislative session a little more than a year from now in January 2025.

What seems clear is that another public hearing is likely to occur in the first half of 2024. We base this assumption on the use of the plural word “hearings” that was quoted by Chairman Smith and other members of the Committee.

If a second hearing does take place, it will likely be held on Capitol Hill and focus on potential policy changes. We envision that the Social Security Administration will be a likely witness, focusing on the financial impact of changes to the WEP and GPO law, as well as administrative reforms that would be required to better inform the public of the WEP and GPO.

A Capitol Hill hearing would also likely include discussion of the various repeal and reform proposals now pending before the Committee. These bills include HR82 (full repeal of both WEP and GPO), as well as the WEP reform bills HR5342 and HR4260.

While the direction Congress ultimately chooses remains to be seen, the comments by Chairman Smith and Subcommittee Vice Chair Mike Carey may prove instructive. While calling the WEP and GPO laws unfair and indicating that changes in the laws are needed, each stopped short of calling for repeal. They also mentioned the law’s original intent, which was to ensure that retirees receiving a pension from employment not covered by Social Security did not receive an unfair increase in their Social Security benefit.

Whether full repeal is achieved, or both the WEP/GPO laws are reformed, Congressional action on these issues is long overdue. What is clear is that the pressure being brought about by public retirees from all across the country has placed WEP/GPO firmly on the Congressional radar.

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