The windfall elimination provision (WEP) reduces the Social Security benefits of certain workers who also are eligible for pension benefits from jobs not covered by Social Security. It engenders active discussion, and a Nov. 20 hearing offered a fresh opportunity for people to weigh in on the WEP. 
The Social Security Subcommittee of the House Ways and Means Committee, not content to rely only on testimony of witnesses who come to Washington to express themselves, conducted a field hearing to better understand sentiments concerning the WEP as well as the government pension offset (GPO), a formula intended to replicate the dual entitlement rule for spouses and widow(er)s who receive pensions from jobs not covered by Social Security.
The subcommittee held the field hearing, “Social Security’s Disservice to Public Servants: How the Windfall Elimination Provision and Government Pension Offset Mistreat Government Workers,” in Baton Rouge, LA. Witnesses included people whom the WEP directly affects: Patrick Yoes, a retired Louisiana policeman and National President, Fraternal Order of Police; Ann Dugas, a retired Louisiana state employee; Bernard Piro, a retired Louisiana fire fighter; and Paula Porter, a retired Louisiana teacher.
Yoes told the subcommittee “Law enforcement officers who served in an agency outside the Social Security system may lose up to 60% of the Social Security benefit to which they are entitled by virtue of secondary or post-retirement employment, which requires them to pay into the Social Security system.” He continued, “The FOP contends that this provision has a disparate impact on law enforcement officers.”
Yoes noted that “after 20 or 25 years on the job, many law enforcement officers who retire begin second careers and work in jobs that do pay into the Social Security system,” and that many also are likely to “moonlight” while still part of the police force so they can augment their income. “Because of the WEP,” he said, “if their second career resulted in less than 20 years of substantial earnings, upon reaching the age they are eligible to collect Social Security, they will discover that they lose 60% of the benefit for which they were taxed!” Yoes told the subcommittee, “I doubt many officers will live long enough to ‘break even’—that is, collect the money they paid into the system, let alone receive any ‘windfall.’”
Dugas, a widow, had received Social Security survivor benefits. She eventually worked for the Louisiana Attorney General’s Office. She retired earlier this year from a job in which she earned approximately $50,000 per year, and reported to the subcommittee that her survivor benefit has been eliminated and the WEP will reduce her pension from the state, which already is less than half of what her monthly income had been.
Dugas added that she cannot say with certainty that she had been told about the effect of the WEP and GPO when she was employed. “I feel that it would have been quite beneficial to have known the drastic impact that these provisions would have on my retirement when I was hired,” she said.
Piro told the subcommittee that he retired as a Shreveport, LA firefighter and chose to take the option to leave his wife his retirement funds at the time of his death. That cost him $835.83 per month. He added that his Social Security benefits will be cut at approximately 60%, and that according to the GPO calculator she will receive $0 in Social Security benefits.
Porter, a teacher widowed when she had five minor children and who now is age 80, told the subcommittee that she took additional after school jobs to make ends meet. She was not able to obtain any of her husband’s Social Security funds, nor her own. In addition, one of her adult children continues to be her dependent.
The Bottom Line
“Ultimately, this is about fairness to the men and women who have sworn to serve and protect our communities. It is not unreasonable to expect that the men and women who spent their careers putting their lives on the line for their fellow citizens be treated fairly after they retire,” said Yoes.
“The extreme importance to my future wellbeing during retirement, as well as a large number of other American citizens who are affected by these provisions, rests in your hands,” Dugan said to the subcommittee.
About the WEP
The WEP, enacted in 1983 is intended to remove an advantage or “windfall” such workers would inadvertently receive, since they would receive not only Social Security benefits, but also pension benefits from jobs the earnings from which were not subject to FICA taxes.
About the Proportional Formula
Shortly before the WEP was enacted, the National Commission on Social Security Reform described two different methods of eliminating windfall benefits:
- The current-law method of adjusting the first replacement factor (90%).
- A proportional formula that would apply the regular Social Security benefit formula to all past earnings from both covered and noncovered employment. The resulting benefit would then be multiplied by the ratio of career-average earnings (average indexed monthly earnings, or AIME) from covered employment only to career-average earnings (AIME) from both covered and noncovered employment.
The Congressional Research Service (CRS) in September released a report concerning proposals for a new proportional formula for use with the WEP. The CRS report is here.
About the GPO
The GPO is a formula intended to replicate the dual entitlement rule for spouses and widow(er)s who receive pensions based on noncovered employment. It reduces the Social Security spouse’s or widow(er)’s benefits of most people who also receive a pension based on federal, state, or local government employment not covered by Social Security.
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