Windfall Elimination Provision May Have New Challenger

A resolution before the Alaska House calls for the state to join others in calling for the repeal of the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). 

Rep. Alyse Galvin (I-Anchorage) introduced House Joint Resolution 18 on Jan. 22, 2024. 

Alaska has the highest percentage of beneficiaries affected by the WEP of any other state or territory in the United States, says the resolution. Not only that, Alaska’s share of those beneficiaries amounts to 11.7% of all beneficiaries and 15.2% of all retired workers affected. 

The resolution adds that public employees and teachers who reside in the state are disproportionately and more negatively affected, per capita, by the WEP and the GPO than public employees and teachers who reside in any other state or territory in the United States.

Says the resolution, 

Nothing in the relationship between the Public Employees’ Retirement System of Alaska, the Teachers’ Retirement System of Alaska, or similar public employees’ or teachers’ retirement systems and Social Security legally or financially justifies a policy of reducing the amount of Social Security benefits earned by public employees or teachers for military service, including civilian military service, or time worked in the private sector. 

About the WEP and GPO 

WEP. The WEP came into being in 1983 as part of a measure enacted to address financing of Social Security. It is a modified benefit formula that reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security. 

The WEP is intended to remove an unintended advantage—“windfall”—those workers would otherwise receive because of the interaction between the regular Social Security benefit formula and the workers’ relatively short careers in jobs covered by Social Security. 

Most people who receive a pension from noncovered work (including certain foreign pensions) and also receive Social Security benefits based on fewer than 30 years of substantial earnings in covered employment or self-employment are subject to the WEP. 

The WEP affects beneficiaries of retired or disabled workers and their eligible dependents, but it does not affect survivor beneficiaries.

GPO. The GPO is intended to replicate the dual entitlement rule for spouses and widow(er)s who receive pensions based on noncovered employment.

The GPO reduces the Social Security spouse’s or widow(er)’s benefits of most people who also receive a pension from federal, state, or local government employment not covered by Social Security. It provides benefits to the spouses and widow(er)s of insured workers, because immediate family members are presumed to be dependent on a worker for their financial support and thus are presumed to be in need of such benefits when the family experiences a loss of income due to the worker’s retirement, disability or death. 

The Resolution 

The bill urges Congress to repeal the WEP and the GPO, arguing that Congress should do that for the following reasons. 

• Public employees, while employed by the State of Alaska or a political subdivision of the state that participates in the Public Employees' Retirement System of Alaska, are ineligible by law to earn Social Security credits. And teachers, while employed by a school district that participates in the Teachers' Retirement System of Alaska, are similarly ineligible. 
• The lowest-earning public employees and teachers are disproportionately and negatively affected by the WEP and the GPO. They reduce the amount of Social Security benefits public employees and teachers might otherwise receive if they qualify for Social Security benefits; in 2023, the WEP could reduce Social Security benefits by as much as $558 a month for each recipient. 
• The GPO may reduce the Social Security monthly benefit payment, for a current or former public employee or teacher who is eligible to receive a benefit, by an amount equal to two-thirds of the amount the public employee or teacher receives from a public employees' or teachers' retirement system each month. It also reduces Social Security spousal and survivor benefits for recipients of Social Security spousal or survivor benefits who also receive a benefit from a public employees' or teachers' retirement system.
• The WEP and GPO deter those eligible to earn Social Security credits for work in the private sector or in active or civilian military service from becoming public employees or teachers; further, they impair the ability of state and local governments to recruit and retain public school teachers, police officers, firefighters, and other public employees. 

Status

House Joint Resolution 18 was referred to the House State Affairs Committee.